BorgWarner sees hybrid gains

FRANKFURT — BorgWarner Chief Technology Officer Hakan Yilmaz says the propulsion specialist is poised to gain from a rapid shift to electrified powertrains, a move driven in part by tougher European emissions standards that start to take effect next year. Yilmaz, 41, who joined BorgWarner in 2018 after more than 15 years with Robert Bosch, says the supplier's products will help automakers reach this short-term and longer-range targets.

He explained why in an interview last month with Automotive News Europe Managing Editor Douglas A. Bolduc during BorgWarner's media day here. Here are edited excerpts.

Q: Which BorgWarner products offer the greatest hope for the company's future?

A: If you are talking about immediate impact, we see a massive volume shift toward 48-volt and high-voltage hybrids, driven by the tougher CO2 legislation [that starts to take effect next year in Europe]. There, our primary focus is on the 48-volt side.

Secondly, we are seeing great demand for our P2 on-axis drive module [that converts a combustion-powered vehicle into a hybrid without changing the engine or transmission]. It is an easy way of achieving hybridization, because all you need to do is open up a space of about 6 inches between your engine and transmission and package it in.

Is the product scalable?

Yes. You can start with a 48-volt hybrid P2 on-axis for the 2020-22 time frame, and on the same architecture in 2025 you can upgrade that to a high-voltage solution. For 2030, you can upgrade that system by adding some batteries and downsizing your transmission to come up with a plug-in hybrid. That means if you add the P2 architecture to your propulsion system now, it is there to stay for at least a decade. This is why we are seeing such strong growth.

Could you quantify that?

Eighteen customers have ordered or are in development with us on pieces of the P2 that they will integrate in-house. Two of those customers have bought the complete P2 module. Our first launch is in China at the end of next year. And we are not talking about a few thousand units. We are talking about multiple hundreds of thousands of units.

How is BorgWarner positioned for providing components for full-electric vehicles?

With the addition of our planned partnership with battery module and pack supplier Romeo Power Technology, we will have the entire ecosystem — all the way from plug to wheel.

How does BorgWarner decide what to add and cut from its parts portfolio?

We have a very structured and systematic portfolio management team that looks at the market potential and the market growth. Then we ask ourselves: Can we keep the lead position in the market? Is the market growing?

We are investing heavily in areas where we think we can grow with the market or beat the market. And we have some products moving down, completing their life cycles, like our thermostat business, and we decide to divest. As a publicly traded company we cannot get emotionally attached to our products. We have to be very pragmatic. If we don't see the growth and it doesn't fit our future portfolio, we find a better owner for that business.

What spaces does BorgWarner need to fill?

Our primary focus is to build up our scale and capabilities in power electronics. This includes inverters, onboard chargers, the entire power electronics system. We are looking at organic and inorganic options every day.

How do BorgWarner's turbochargers fit into this electrified future?

We are seeing a massive move toward high-volume hybridization. This is great for us because we're growing about two times faster than the market itself. And the hybrid architectures with the biggest growth are very synergistic with turbos. Therefore, in Europe especially, turbochargers seem to be here to stay and will continue to grow with the hybrid market.

Is that true even with plug-in hybrids and electric vehicles?

You might need fewer turbos. But even so, most of the automakers are announcing that they will keep their turbo engines even with plug-in hybrids because customers are used to the performance they get with a turbo.

Do these changes require new Tier 2 and Tier 3 suppliers?

The products that we have today are very different than the product we had five years ago. And the products that we will have in the next five years will be very different than what we have now. Therefore, we have to adapt our supplier base continuously, otherwise we will be behind. In the electrification market, if you are not one of the first three in the market before the market consolidates, you're out. It is very competitive.