CTTAF - BorgWarner Offers An Undervalued ICE-Pack For EV Adoption Aches And Pains

2024-06-07 07:46:31 ET

Summary

• BorgWarner's stock has been caught up in the nearly year-long EV sentiment downturn, but the reaction has been too harsh relative to the company's long-term strategic positioning.
• The company is well-positioned to become a leader in critical EV components like inverters, chargers, and e-motors, particularly as Western OEMs abandon their prior in-sourcing plans.
• A slower transition away from ICE-powered vehicles will drive more demand for BorgWarner's efficiency and emissions-enhancing technologies, and the company can win both with BEVs and/or PHEVs.
• BorgWarner's flexibility in the EV transition, a strong lineup of OEM customers, and focus on becoming a leading supplier make it an attractive investment below the mid-$40.

Since Tesla ’s ( TSLA ) warnings of weakness in the EV market in 2023 and several subsequent monthly auto sales reports that have shown fairly sluggish EV adoption rates, the market has been pretty rough on auto suppliers with above-average exposure (or perceived exposure) to that EV adoption curve. While EV adoption is certainly an important part of BorgWarner ’s ( BWA ) future, I’d argue the reaction since my last update (the shares are down about 20%) has been too harsh relative to the company’s broad exposure and how it is actually positioned for this lengthy transition process....

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