WEBVTT

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I'm Manveen Rana here at Davos
2024, and I'm joined by Paul

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Farrell, who is the Executive
Vice President and Chief

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Strategy Officer at BorgWarner.

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Welcome, Paul.

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Thanks for joining us.

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Thank you very much.

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Tell us about the world of
e-mobility at the moment.

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I mean, how much has changed
recently, and where do you think

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we need to get to?

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Yeah, it's a great question.

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I mean it's the space, it's
changing a lot, right.

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There's really been a lot of
growth.

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Just to put it into context, if
you go back just three years, so

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2020, 3% of vehicles produced,
light vehicles produced were

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electric vehicles, just in 2020.

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We fast forward just to last
year, that's now up to 12%.

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So really significant gains in a
relatively short period of time.

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So you know I think we've moved from
early adopters and we're

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starting to get into it being
more of a mainstream technology.

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So and we expect that growth to
continue in the coming years.

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What do you think the challenges have been?
You know, why has it

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been so slow for people to adopt and what are the challenges that

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still exist?

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How do you get past that 12%?

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Yeah, I think, I mean there were
a lot of challenges early on,

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that's clearly evolved, but
there's still those challenges

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that still exist.

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And if you take a step back and
you think about the internal

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combustion engine, it's been
around for over a century, right.

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All the infrastructure and just
consumer adoption, all that is

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people are comfortable
with that.

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And so now in a very short
period of time, we're trying to

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make a big change.

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Maybe it still feels like it
when you're driving down the

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road that it's the same, but
it's quite different.

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So in the auto industry itself,
changes to the products
you have

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to engineer, changes the
production processes, changes

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all the supply chain.

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So it's a big shift all while
you're still doing all the other

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things you were doing before.

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So there's a big change in the
auto space. Consumers.

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So, consumers have to get
comfortable with one: slightly

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higher price points, at least
for now.

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And also with charging, you
know, that's an area where

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everybody's still like, all
right, is this really going
to work?

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And so that's on the consumer
side. And then you've got the

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infrastructure question, which
ties back into charging and
other things.

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So all those things have to come together and
it ebbs and flows, right?

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So I think it's natural that you
would have these
mismatches in

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supply and demand, but I think
the trend's very clear and

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where, you know, you ask where
we need to go.

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You know, the EU just recently
put out regulations last summer

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that said, all right, by 2035,
all new vehicles will have zero

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CO2 emissions.

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So they've probably set the bar.

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Others, that trend has been in
place for a long time, improving

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fuel economy, reducing CO2.

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But I think that's the direction
different spaces will go, or

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different regions will go faster
or slower.

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But that's clearly the ultimate,
I'd say, endpoint in terms of

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decarbonizing transportation.

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Have the infrastructure changes
been fast enough?

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I think that's actually probably
one of the bigger lags.

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You know, you can see it with
Tesla, for example, where they

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have an established
infrastructure and it works

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fairly well.

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But if you you don't have a
Tesla, there's anxiety there, right?

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And even just in terms of
uptime, reliability, are also challenges.

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And so that's where I think
there's a lot of work to do.

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The vehicle manufacturers are
now putting out a lot of new models

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There's a lot they're starting to pick from.

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But still people have to get
comfortable that, OK, I spent a

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lot of money on this car.

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Can I actually use it in a
practical way, day in and day out?

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So I think that's an area where
you'll see a big uptick and a

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big emphasis, just in the coming years.

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I mean, you see it with the IRA
in the U.S. and I'm sure it's

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similar in other parts of the
world.

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And for you at BorgWarner, how
are you sort of combating these

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challenges, whether it's sort of
the consumer and how they view

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it or whether it is
infrastructure.

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So for us, we're propulsion
companies.

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So whether we like it or not,
we're in the middle of all of this.

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So we're a company that has over 100 years of history
very much

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tied to the internal
combustion engine.

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And so it's a big shift also
for us.

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And we started that journey a
little over eight years ago.

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And I actually came to
BorgWarner with one of the

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acquisitions that was really
foundational to support that

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journey, that electrification
journey.

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But in 2021, we announced our
Charging Forward strategy which

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is really focused on, one is
growing our portion of our

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business that supports the
electric vehicle space, both

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organically and through M&A,
and also reducing our exposure

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to combustion vehicles or the
combustion business.

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And so we've been making steady progress on that.

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We've been very successful I
think in leveraging the assets

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we had and growing the business
organically.

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And then we've made in the last three years, six acquisitions

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and also announced a JV, all
supporting that strategy.

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And then in parallel, we spun
off a portion of our business

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last last summer to reduce our
exposure on the combustion side.

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So it's a very high priority for
us as you would imagine.

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Again I think we're making good
progress, a lot of work to do,

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big focus on execution.

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You know now the rubber is
really hitting the road but we

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really feel like we're well
positioned for the e-mobility future.

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And if you think about the
change that's already occurred

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in the last five years, where
would you like to see this

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industry end up in five years'
time?

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Five years...so what are we
looking at? Or ten. Ten?

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Well, we can pick 2030 or
something, right?

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2030, yeah. You know, I think as
we look out, we would expect

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you'll get different views,
right?

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And it's hard to predict the
future, but you know, probably

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close to 50%, high 40s of EV
penetration, it won't all be done.

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And even at the same time, if
you look at all the vehicles

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that are on the road today,
there's a lot of vehicles on the

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road that have internal
combustion engines.

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So there's a lot of work to do
to continue to support those vehicles.

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Half in the future will have an
internal combustion engine in

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2030, but that, you know, in
terms of growth and just

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transition and technology,
electrification is clearly the

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major trend and a top priority
for us.

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That's great.

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Thanks so much for joining us
here to tell us all about the

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future of e-mobility.