BorgWarner exec sees bright future in Chinese market and new-energy vehicles
Print Edition
AUTO part giant BorgWarner intends to leverage its confidence and core competence in the Chinese market, with vision for the EV trend unhindered by the pandemic.
Through its recent US$3.2 million acquisition of Delphi Technologies, a powertrain and aftermarket parts supplier based in London, the US supplier in turbochargers and electric motors expects to enhance its electrified propulsion portfolios, and boost businesses in combustion, commercial vehicle and aftermarket.
During an interview with Shanghai Daily, Tom Tan, vice president of BorgWarner Inc and president of BorgWarner China, shares his perspective on the company’s future performance in the China market and the NEV trend.
“The combination shows BorgWarner better positioned with leading propulsion products and systems across combustion, hybrid and electric vehicles,” said Tan.
After acquiring Delphi Technologies, it is expected to own an impact integrated drive system in terms of reduction gear, motor and inverter, a key advantage in competing with many suppliers in the C-H-E market.
As Tan put it, few of their competitors own technology in all three realms, and the company’s vision is to integrate these three sub-systems together to build the most effective and the highest efficient e-drive systems for electric vehicles.
The company has provided thermal management and eGearDrive to the Ford Mustang Mach-E. Its latest innovation, Integrated Drive Module (iDM), which enables eco-friendly driving, will also be put into mass production soon.
Another new technology is the P2 system, which is similar to a clutch integrated with the motor that will boost competitiveness in the market combined with the Delphi inverter.
The system can highly motivate the efficiency of electric vehicles with longer mileage and higher output of the same energy source and battery pack.
Tan holds great expectations for China, one of the largest automotive markets in the world.
“This means we have a much bigger market with a good infrastructure already. China has built the longest highway system in the world ready for a larger flow of vehicles on the road,” said Tan.
To explore this market potential, Tan stresses the importance of BorgWarner strategies in China, and for China.
“We strive to put our capabilities, resources and investment in China and develop talent for the Chinese market. It also means localization in five levels.”
They include building local plants; localization of large skill components, which means sourcing most of the components in the China market; and localization of application engineering, which means taking products that have been developed overseas to fit the China market.
BorgWarner set up its first plant in Beijing back in 1993, with operations now in seven cities in China, showing its capability in application engineering in almost every product of its supply chain.
“We are now emphasizing product development in China, which is the real localization requiring an understanding of the Chinese market and customer needs,” said Tan.
“You also need to have a very sophisticated lab to test component capabilities and engineers to develop the products to speed up the customer response time.”
The company also strives to establish cooperation with the local market. It has shipped its products to not only multinational brands, but also domestic Chinese original equipment manufacturers (OEMs).
“Chinese OEMs have been through very difficult times to get key components and substitute systems. At that time they’re very small and we support them along the way.”
Tan also praises the Chinese government’s effort in improving the investment environment over the years.
“Regulations released by the Chinese government, especially to promote new- energy vehicles, have become one of the key factors accounting for China’s fast development in hybrid and electrical vehicles,” Tan said.
“We continue to see a huge opportunity in the China market and that’s why we believe we will grow our business and along the way we will continue to invest.”
BorgWarner China has managed to maintain its business against the headwind during this year’s pandemic, as its total sales dipped 3 percent in the first half of 2020, while the overall market suffered a 17 percent drop. For the single month of June, its sales actually grew by 45 percent.
According to Tan, the total sales of the combined company in China this year are expected to increase another 10 percent from US$2.8 billion of last year.
Tan contributes the continuous growth to its ability of identifying the growing segment within the market.
“If we are in for air conditioning, we have zero chance as every vehicle must have it already. But we have been identifying growing segments, such as the turbo charge, in the past ten years and striving to launch new programs to get in these segments despite the slowdown of the overall market.”
Confident as the company is for the local market, Tan notes that the biggest challenge for BorgWarner, in the short term, is to facilitate integration after the acquisition of Delphi Technologies. While in the long run, he raises the possibility of a “black swan” new technology such as solar power.
“Electric vehicles might be replaced by another disruptive technology in the future, say, the solar power. It is hard to predict, but we can still imagine.”
But for BorgWarner, the company right now will still be highly focused on leveraging its core competence.
“On your overall business, you also need to diversify. If you have a hundred eggs in one basket, it’s possible that one day you may lose everything,” he said.
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