AURBURN HILLS, Mich.—BorgWarner's pending acquisition of Delphi Technologies would combine the resources of two powertrain tech leaders as both attempt to move from a world dominated by internal combustion to one that is electrified.
But the proposed $3.3 billion deal illustrates the cold new reality of the industry: Companies that were on top in the 20th century are having to reinvent themselves to stay on top in the 21st.
Delphi Technologies, a maker of fuel injectors, ignition components and fuel and emissions management systems, has been a symbol of that difficult transition.
Delphi is the descendant of Delphi Automotive, once the world's largest supplier of parts to auto makers. Since its launch as an independent supplier at the end of 2017, it has combated a public perception that it represented "old technologies" while the other piece of Delphi — renamed Aptiv—kept the cards for such new-age auto technologies as sensors, electrical architectures and connected services.
But speaking on a call with analysts last week after the announcement, Delphi Technologies CEO Rick Dauch painted a picture of a major supplier deeply engaged in a makeover.
"We have focused our investments and efforts on technologies and programs that have the potential to provide the most attractive profitable growth and support our mission to make vehicles that drive cleaner, better and further," Dauch told analysts.
"We recently completed the construction and launch of three new facilities in China, Poland and Mexico, which demonstrates our industry leadership and confidence in the future of electrification," he said. "We have developed a unique portfolio of advanced automotive-grade technologies that include inverters in our patented Viper Power Switch, DC/DC converters, onboard charging and battery management solutions, as well as propulsion control and diagnostic software for both onboard and cloud-based systems and networks."
But it has been a rough ride. In December, Dauch told Automotive News Europe that the market shift away from diesel powertrains in Europe "drags on our financials a little bit because we have gone from a profitable diesel business to a weakening diesel business to a money-losing gasoline business until we get our orders above fixed costs."
He said the company was determined to become profitable in the gasoline engine business by the end of the fourth quarter of 2020.
"We have been making diesel engine components for decades, and that was really the backbone of the company," said Dauch, who took over as CEO in January 2019. "We have invested more than half a billion dollars in 2018 and 2019 to refit plants around the world. We are installing capacity to produce more gasoline components to meet the needs of our customers as they shift from diesel to gasoline."