BorgWarner Inc.

What they do

BorgWarner manufactures and sells vehicle propulsion and thermal products worldwide, mainly to original equipment manufacturers of light vehicles, and also to commercial, off-highway and tier one customers, with a limited aftermarket presence. It operates manufacturing in Europe, the Americas and Asia and describes itself as an original equipment supplier to nearly every major automotive OEM in the world. The portfolio spans turbochargers, emissions and thermal systems, drivetrain components, power electronics and battery systems. eProducts revenue was approximately $2.6B, or 18% of total revenue, in 2025, while Foundational products were approximately $11.7B, or 82%.

Revenue drivers

• Turbos & Thermal Technologies — The largest segment, with 2025 net sales of $5,772M, down from $5,887M in 2024 and $6,012M in 2023. Products include turbochargers, eBoosters, eTurbos, emissions and thermal systems, cabin and battery heaters and battery cooling systems. Turbochargers for light vehicles alone represented approximately 21% of Company revenue in 2025.
• Drivetrain & Morse Systems — Second-largest segment, with 2025 net sales of $5,654M, up from $5,577M in 2024 and $5,549M in 2023. The segment grew modestly while the two larger technology segments were mixed.
• PowerDrive Systems — 2025 net sales of $2,347M, up from $1,937M in 2024 but below $2,166M in 2023. This segment contains the power electronics and electric drive products tied to the eProducts portfolio, including Integrated Drive Modules and inverters.
• Battery & Charging Systems — The smallest segment, with 2025 net sales of $590M, down from $729M in 2024 and up from $546M in 2023. The Company decided in February 2025 to exit the charging business within this segment, with production ceasing in the second quarter of 2025.

Recent performance

Second quarter 2026 U.S. GAAP net sales were $3,648M, up about 0.3% year over year, while organic net sales declined 1.2%. Excluding an approximately $60M decline in Battery Energy Systems segment sales, organic net sales were up modestly year over year. GAAP operating margin was 10.1%, up 220 basis points, and adjusted operating margin was 11.3%, up 100 basis points, which management attributed to cost controls amid lower industry production. GAAP net earnings were $1.34 per diluted share and adjusted net earnings were $1.42 per diluted share, up 17.4% year over year; operating cash flow was $586M and free cash flow was $492M. Full-year 2025 revenue was $14,316M with net income of $277M and diluted EPS of $1.28, down from $338M and $1.50 in 2024.

Strategy

The stated strategy is profitable growth across a portfolio supporting electric, hybrid and combustion vehicles, funded by organic investment and technology-focused acquisitions. The Company frames its balanced portfolio as a response to uneven EV adoption across regions, and eProducts grew to 18% of 2025 revenue from 14% in 2023. Portfolio actions include the February 2025 decision to exit the charging business, expected to eliminate about $30M of annualized adjusted operating losses by 2026, and consolidation of the North American battery systems business, expected to save about $20M annually by 2026. In the second quarter of 2026, BorgWarner announced seven new awards across its portfolio, including an eTurbo award with a major European OEM, two high-volume inverter extensions, and an Integrated Drive Modules award with a global OEM. The Board raised the share repurchase authorization by $1B to approximately $1.35B, intended to allow buybacks through 2029, and the Company plans to increase 2026 R&D spending for data center and industrial market opportunities.

Risks

• Portfolio strategy may not succeed — The Company states that if EV adoption is slower than expected, it may fail to realize expected returns on eProducts investments and may incur further losses on them.
• Dependence on cyclical OEM production — Revenue depends on automotive and truck production, which the Company describes as highly cyclical and subject to disruptions, and on a concentrated base of major OEM customers.
• Tariffs and trade policy — The Company cites uncertainty around global trade policies, including tariffs and export restrictions, and their impact on the Company, its customers and its suppliers.
• Demand forecasting for EVs — The Company identifies difficulty in forecasting electric vehicle demand and its EV revenue growth as a specific risk to its plans.

Outlook

Management increased 2026 adjusted EPS guidance and raised the share repurchase authorization by $1B to approximately $1.35B, intended to permit repurchases through 2029. It said cost controls supported strong second quarter results despite lower industry production, and plans to increase 2026 R&D spending to accelerate data center and industrial market opportunities. The Company also pointed to seven new business awards across the portfolio as support for long-term profitable growth, with production start dates ranging from the fourth quarter of 2026 to 2029.