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BorgWarner says Delphi purchase will help it move faster to electric cars

Delphi Automotive, the former parts division of General Motors, spun off its powertrain operations more than two years ago.

The remaining business was called Aptiv, with a mission to focus on self-driving and connected vehicle technology.

It was seen as a sign of things to come.

Now, a new chapter is being written for the powertrain piece, Delphi Technologies.

But its acquisition by Auburn Hills-based supplier BorgWarner — an all-stock deal valued at $3.3 billion and announced Tuesday — appears to be following the path envisioned in 2017 when Delphi Technologies was pitched as a company that could help automakers accelerate their shift to electrification.

The companies touted cost savings of $125 million by 2023, which could include salaries and administrative costs, but it’s too early to say how that will manifest. The deal is expected to close in the second half of the year.

The companies in a joint statement highlighted what Delphi would bring to BorgWarner, noting that the combined company would be positioned to take advantage of “future propulsion migration.”

“Delphi Technologies’ breadth of combustion propulsion products complements BorgWarner’s innovative portfolio of clean technologies,” according to the statement.

Internal combustion engines aren’t going away in the near future, and electrification today can mean technology that helps make those combustion engines more efficient.

But the future is expected to be electric. Getting there will mean lots of change ahead for the industry.

Pure electric vehicles remain a small but growing fraction of the light vehicle market, even as automakers announce ambitious plans to expand their electric options. Offerings like Ford’s Mustang Mach-E SUV, Fiat Chrysler Automobiles’ plans for 30 electrified nameplates in the next two years and General Motors’ $2.2 billion investment to turn Detroit-Hamtramck Assembly into an all-electric vehicle plant demonstrate that change is afoot.

Michelle Krebs, executive analyst for Autotrader, said the BorgWarner/Delphi deal is a hint of things to come, with more consolidation and pooling of resources on the horizon.

Much of the news about consolidation and partnerships has involved automakers, with the planned merger of Peugeot-maker PSA Groupe and FCA on the horizon and Ford’s partnership with Volkswagen as examples.

Tesla’s recent surpassing of Volkswagen in stock market value highlights the pressures at work in an industry facing a softening global economy paired with a need for intensive investments to fund new technologies.

“We are on the verge of significant transformation of the industry that’s just requiring tremendous investment by automakers and suppliers, and yet no one knows where the tipping point is and more importantly when they (will) make money from these investments,” Krebs said. “We are not even close to the switchover to electrification, and we’re far off” from autonomous vehicles.

Krebs said suppliers and automakers need to have a plan for the present as well as the future.

Mary Gustanksi, the former chief technology officer at Delphi Technologies, said two years ago that the industry was at an inflection point.

“It’s a point in time that we’ve all waited for for years where everything that we’ve said is going to happen tomorrow, well, I think we’re at the turning point where you’re going to see it start happening,” Gustanski said then.


Posted By: Detroit Free Press on January 29, 2020.  For more information, please click here to read the source article.

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