BorgWarner lands major hybrid vehicle heater deal

AUBURN HILLS, Mich. - BorgWarner (NYSE: BWA), a prominent player in sustainable mobility solutions with a market capitalization of $6.47 billion and annual revenue of $14.09 billion, has announced securing a significant contract to supply its 400-volt high-voltage coolant heater (HVCH) technology to a major global automaker for use in various plug-in hybrid electric vehicles (PHEVs). According to InvestingPro analysis, the company appears undervalued at its current price of $29.45, suggesting potential upside for investors. The contract encompasses mid-size pickup trucks, SUVs, and minivans, with production slated to commence in 2027.

This agreement represents BorgWarner’s largest HVCH PHEV contract in North America based on projected volumes. The 400V HVCH technology is praised for its flexible and compact design, which allows it to be integrated into the automaker’s vehicle platforms without necessitating modifications. The company’s strong financial health, evidenced by an "GOOD" rating from InvestingPro, and its ability to maintain dividend payments for 13 consecutive years, demonstrates its capacity to execute such significant contracts. It boasts a high thermal power density, owing to its unique brazed aluminum fin technology, capable of delivering up to 10 kW of power. This design ensures efficient heat transfer, improved flow distribution, and aids in the prevention of bubble accumulation.

Dr. Volker Weng, Vice President of BorgWarner Inc. and President and General Manager of Turbos and Thermal Technologies, commented on the collaboration with the OEM, highlighting the HVCH technology’s robustness and cost-effectiveness while maintaining the integrity of the vehicle environment.

The HVCH system is designed to provide a dependable heat source that operates independently of external temperatures, ensuring cabin and battery warmth. This contributes to faster charging times, prolonged battery life, enhanced durability, and improved vehicle performance and range.

BorgWarner has been at the forefront of mobility innovation for over 130 years, with a strong commitment to sustainability and the advancement of cleaner, healthier, and safer transportation solutions.

The company’s forward-looking statements indicate a positive outlook based on management’s current expectations, with InvestingPro data showing expected net income growth this year and sufficient cash flows to cover interest payments. While these statements reflect the company’s intentions and projections, they are not guarantees of future performance. InvestingPro subscribers have access to 8 additional key insights about BorgWarner, including detailed financial health metrics and expert analysis through the comprehensive Pro Research Report, available for over 1,400 US stocks.

This news is based on a press release statement from BorgWarner and does not include any promotional content or endorsements of the claims made therein. The information presented is focused on the factual aspects of the contract and the technology involved.

In other recent news, BorgWarner reported fourth-quarter earnings that exceeded analyst expectations, with an adjusted earnings per share of $1.01, surpassing the consensus estimate of $0.96. However, revenue fell by 2% to $3.44 billion, slightly missing the consensus by $30 million. Despite the revenue shortfall, the company achieved an adjusted operating margin of 10.2%. For 2025, BorgWarner projects earnings per share between $4.05 and $4.40, which is below the analyst estimate of $4.23, and anticipates revenue in the range of $13.4 billion to $14 billion, falling short of the $14.12 billion consensus.

BorgWarner has also announced the extension of a seven-year partnership with a German OEM and a new contract with a Chinese transmission manufacturer to expand its dual-clutch technology in China. Mass production for the new contract is expected to begin by the end of 2025. In analyst activity, Goldman Sachs upgraded BorgWarner from Neutral to Buy and raised its price target to $34, recognizing the company’s market position and its significant sales exposure to the Chinese market. Meanwhile, CFRA maintained a Hold rating but lowered its price target to $32, citing concerns about a slowdown in electric vehicle demand growth and potential pressures from tariffs. Despite these challenges, BorgWarner has secured multiple new business awards, including Variable Cam Timing systems and turbocharger program extensions, supporting its future growth prospects.

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