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BorgWarner’s New China Plant to Produce EV and HEV Systems

Zacks

BorgWarner Inc. BWA opened manufacturing plant at one of the provincial-level development zones of Wuhan, China. Built in the Caidian Economic Development Zone, the hub has floor area of 26,000 square meters and land area of 48,595 square meters.

The new plant is created to support the increasing demand for combustion, hybrid and electric vehicles (EVs) in China. It will produce drive motors, belt alternator starter systems, starters, alternators, drive motors and associated components.

The company’s technology and system integration capability, along with local manufacturing and engineering capability, will support the facility to meet the increasing demand for EVs and hybrid electric vehicles (HEVs). The addition of this plant in China is a new milestone for BorgWarner, enabling it to witness sustained growth in upcoming years.

BorgWarner Inc. Price and Consensus

BorgWarner Inc. Price and Consensus | BorgWarner Inc. Quote


Construction of the facility was initiated in 2016; a year after BorgWarner acquired Remy International, Inc. The new plant is an assimilation of the Remy plant with close by production sites. In addition to its previous capacity, the upgraded plant will manufacture drive motors, P2 motors, and other EV and HEV products.

Apart from manufacturing, the hub will integrate comprehensive functions that include engineering, quality, sales, logistics, administration and finance. At present, the facility employs more than 300 employees, which is anticipated to double in the next five years.

China has good prospect for EVs, which pushed the company to look for new business opportunities related to EV and HEV technology in the market. Further, this is in sync with the company’s long-term growth strategy of developing hybrid and electric technologies. In April 2018, it launched a broad range of product portfolio in China that will enable automakers to manufacture combustion, hybrid and electric vehicles. In the last month, the company entered an agreement with WM Motor to set up transportation model for smart city in China.

Price Performance

In the past six months, BorgWarner’s stock has lost 20.3%, underperforming 14.9% decrease recorded by the industry it belongs to.



Zacks Rank & Key Picks

BorgWarner currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the Auto space are AutoZone, Inc. AZO, Navistar International Corporation NAV and Advance Auto Parts, Inc. AAP. AutoZone and Navistar carry a Zacks Rank #2 (Buy) while Advance Auto Parts sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone has an expected long-term growth rate of 12.2%. Over the past six months, shares of the company have gained 27.8%.

Navistar has an expected long-term growth rate of 5%. Shares of the company have increased 5.8% over the past six months.

Advance Auto Parts has an expected long-term growth rate of 12.3%. Shares of the company have rallied 50.1% over the past six months.

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