BorgWarner Inc. (BWA): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear, actionable breakdown of the forces shaping BorgWarner Inc. (BWA), and that's smart. The automotive transition is messy, so you need a precise map of the risks and opportunities for 2025. The company's core challenge is executing its 'Charging Forward' strategy-moving from combustion to electric components-while navigating a choppy macroeconomic environment. The success hinges on hitting the aggressive 2025 e-product revenue target of approximately $5.6 billion, but political mandates (like the US Inflation Reduction Act) and raw material inflation are defintely pulling the margins in opposite directions. We need to map these Political, Economic, Social, Technological, Legal, and Environmental forces precisely to see if the payoff is worth the near-term risk.

BorgWarner Inc. (BWA) - PESTLE Analysis: Political factors

The political landscape in 2025 is a critical accelerant for BorgWarner Inc.'s shift to e-products, but it also introduces significant supply chain risk through trade policy. You are seeing a clear, dual-sided mandate: massive government subsidies pushing domestic EV manufacturing in the US, and aggressive CO2 penalty targets in the EU that force automakers to buy zero-emission components. This is not a slow trend; it's a hard regulatory wall driving billions in investment and creating a stable demand floor.

US Inflation Reduction Act (IRA) provides significant tax credits and subsidies for North American EV component manufacturing.

The US Inflation Reduction Act (IRA) is the single biggest political driver for BorgWarner's North American strategy, offering direct financial incentives to localize production. The core mechanism is the Section 45X Advanced Manufacturing Production Tax Credit (AMPTC), which provides a production-based subsidy for components like battery cells and modules manufactured in the US. This is a powerful, cash-generating incentive that can be sold for cash through transferability.

For BorgWarner, this policy directly supports its shift away from internal combustion engine (ICE) parts. The legislation is designed to reduce reliance on foreign entities of concern (FEOCs), which, starting in 2025, will disqualify vehicles from the consumer tax credit if their critical minerals were extracted, processed, or recycled by an FEOC. This forces OEMs to prioritize North American-made components, creating a massive competitive moat for BorgWarner's domestic operations.

• AMPTC provides a credit of $35 per kWh for each battery cell and $10 per kWh for each battery module produced domestically.
• The credit is available in full through 2029, offering long-term financial visibility for capital expenditure planning.

Geopolitical tension, especially US-China trade policy, complicates sourcing and market access for critical components like power electronics.

While the IRA offers a carrot, the US-China trade policy is the stick, creating a complex and costly environment for a global supplier like BorgWarner. The existing Section 301 tariffs of 25% on a wide array of Chinese-made auto parts, including power electronics and other critical components, continue to inflate the cost of goods sold. This is a tangible headwind: BorgWarner reported a net headwind from tariffs of approximately 40 basis points on its adjusted operating margin in the second quarter of 2025. To be fair, that's a manageable headwind given the company's full-year adjusted operating margin guidance of 10.3% to 10.5%, but it's defintely a drag.

The risk is escalating. Proposed legislation in 2025 could raise the total tariff on Chinese vehicles to as high as 135% and auto parts to 35%. This forces a costly and rapid restructuring of the supply chain, pushing BorgWarner to onshore or nearshore production, even for components where China currently dominates the global supply chain, such as rare-earth magnets used in e-motors.

European Union's Green Deal policies mandate aggressive CO2 reduction targets, directly driving demand for BWA's e-products.

The European Union (EU) Green Deal provides a non-negotiable demand signal for BorgWarner's e-products, particularly for its heavy-duty vehicle (HDV) and light commercial vehicle (LCV) components. The targets are immediate and carry severe financial penalties for non-compliance, forcing automakers to accelerate their transition to zero-emission vehicles (ZEVs).

For manufacturers of new heavy-duty vehicles (lorries over 7.5 tonnes and buses), the fleet-wide average CO2 emissions must fall by 15% by the end of 2025, compared to 2019 levels. The penalty for missing the HDV target is a steep €4,250 per gCO2/tkm (gram of CO2 per tonne-kilometer) starting in 2025. This regulatory pressure is a clear catalyst for BorgWarner's light vehicle eProduct sales, which saw a strong increase of 47% year-over-year in Q1 2025.

Government fleet electrification mandates create a stable, long-term demand floor for EV components.

Government fleet mandates, both at the federal and state levels in the US, provide a stable, long-term demand floor that is insulated from consumer sentiment swings. The federal government's Executive Order requires 100% of all federal fleet purchases to be zero-emission by 2035, which translates to replacing a fleet of around 650,000 vehicles. That's a huge, predictable order book for the entire EV supply chain.

On top of the federal push, several states have set aggressive near-term targets for 2025, creating immediate demand for EV components. This is a clear, actionable opportunity for BorgWarner to secure high-volume, long-cycle contracts with OEMs supplying these government fleets.

• California's state fleet must ensure at least 50% of light-duty fleet purchases are zero-emission by 2025.
• New York requires 25% of light-duty non-emergency vehicle purchases to be ZEVs by 2025.
• Pennsylvania has a goal of introducing 990 electric or plug-in hybrid vehicles by 2025, representing 25% of its passenger car fleet.

BorgWarner Inc. (BWA) - PESTLE Analysis: Economic factors

The economic landscape for BorgWarner Inc. (BWA) in 2025 is a study in conflicting pressures: modest market growth is being offset by persistent cost inflation and the high cost of capital for consumers. You're seeing BWA's full-year guidance reflect this tightrope walk, projecting net sales between $14.1 billion and $14.3 billion, which is essentially flat year-over-year, despite strong internal execution.

High global interest rates are defintely slowing new vehicle sales, pressuring Original Equipment Manufacturers (OEMs) and BWA's order books.

The biggest near-term headwind for the auto sector is the cost of financing. Central banks have kept rates elevated to fight inflation, and that directly hits the car buyer's monthly payment. In the U.S., for example, average new vehicle loan rates hit around 9.66% in June 2025, a significant headwind to affordability. While global new vehicle sales are technically expected to rise by a modest 1.7% to 89.6 million units in 2025, this growth is tempered and below historical norms.

For BorgWarner, this translates to a cautious outlook from its OEM customers. The company expects its weighted light and commercial vehicle markets to be in the range of a 1% decline to approximately flat in 2025, meaning organic sales growth is hard to come by. When the end-consumer is hesitant, the OEM cuts production schedules, and that immediately pressures BWA's order books. It's a classic cyclical squeeze.

Persistent inflation in raw materials and labor is squeezing gross margins across the supply chain.

Even with some supply chain normalization, the cost of inputs remains stubbornly high. Manufacturers surveyed in Q1 2025 anticipated that raw material prices and other input costs would rise by an average of 5.5% over the next year. Plus, labor costs, including wages and benefits, are expected to climb by around 5.2% in the manufacturing sector as companies compete for skilled workers.

BorgWarner is managing this pressure well through cost controls, but it's a constant battle. Here's the quick math: the company reported a Gross Margin of 18.2% in Q1 2025. However, the full-year adjusted operating margin is forecast at 10.3% to 10.5%, showing that the cost of doing business-from R&D to SG&A-is eating up nearly half of the gross profit. That's the reality of a high-inflation environment.

Currency volatility, especially the Euro and Chinese Yuan against the US Dollar, impacts the value of BWA's international revenue.

As a global supplier, BorgWarner generates a significant portion of its sales outside the U.S., making foreign exchange (FX) fluctuations a critical factor. For 2025, the company actually saw a net tailwind from FX movements, which is a positive surprise.

• Stronger foreign currencies, primarily the Euro (EUR), are expected to increase BWA's reported sales by approximately $30 million compared to the previous guidance.
• This favorable FX impact helped offset some customer production disruptions in North America and Europe.

Still, currency risk remains a structural challenge. A strengthening U.S. Dollar (USD) would immediately devalue international earnings when translated back into USD, requiring constant hedging (financial derivatives used to mitigate risk) to protect the bottom line.

Global auto production is projected to grow modestly in 2025, but the mix shift to higher-cost EVs is the real story.

The overall market volume is sluggish, with global light vehicle production forecast to slightly decline by 0.4% to 88.7 million units in 2025. However, the composition of that volume is shifting dramatically toward electrification, which is BWA's core long-term opportunity.

The major shift is the adoption of Battery Electric Passenger Vehicles (BEVs). Global BEV sales are projected to reach 15.1 million units in 2025, representing a robust 30% increase year-over-year. This means BEVs will account for an estimated 16.7% of global light vehicle sales. BorgWarner's PowerDrive Systems segment, which handles EV components, saw a Q1 2025 revenue increase of approximately 28.7% to $561 million, demonstrating the immediate revenue potential from this mix shift, even as its traditional segments like Turbos & Thermal Technologies decline.

BorgWarner Inc. (BWA) - PESTLE Analysis: Social factors

Consumer demand for Electric Vehicles (EVs) is strong but uneven, creating forecasting risk for BWA's e-product ramp-up.

The global shift to electric vehicles (EVs) is defintely happening, but the pace is highly inconsistent by region, which creates a complex forecasting risk for BorgWarner Inc.'s (BWA) electrification strategy. The company is aggressively targeting its 'Charging Forward' vision, aiming for approximately $4 billion of electric vehicle revenue by the end of 2025. This is a massive ramp-up, and the market volatility makes it tricky.

For example, in China, New Energy Vehicles (NEVs) hit a 50% share of new sales in 2025, which is a huge market for BWA's e-products. But in the U.S., the Battery Electric Vehicle (BEV) adoption rate stalled, representing only 7.5% of new sales in the first quarter of 2025. This unevenness is why you see BWA making tough, pragmatic decisions, like exiting the charging business in Q2 2025, citing unfavorable market conditions and a highly competitive landscape that was unlikely to create shareholder value in the near term. Still, the company's light vehicle e-products sales surged by 31% year-over-year in Q2 2025, proving the underlying demand is there, just not everywhere at the same time.

Growing public and investor focus on Environmental, Social, and Governance (ESG) performance demands transparent, ethical supply chains.

Investor capital is increasingly tied to strong ESG performance, which means BWA must do more than just sell electric components; they must prove their entire operation is sustainable and ethical. This isn't a soft metric anymore; it's a core financial risk. The company's 2025 Sustainability Report highlights significant progress, which helps keep the cost of capital low and attracts ESG-mandated funds.

Here's the quick math on their recent performance:

• Revenue from EV and emissions-reducing hybrid/combustion products: 87%.
• Absolute reduction in Scope 1 and 2 greenhouse gas (GHG) emissions from 2021 baseline: 36%.
• Completion rate on annual compliance questionnaire (a proxy for supply chain transparency): 100%.

This focus on the 'S' (Social) and 'G' (Governance) factors, particularly the 100% compliance rate, is crucial for mitigating risks like forced labor in the battery supply chain, which is a major concern for automakers. You need to show your customers-the OEMs-that your components won't create a public relations or regulatory crisis for their final product.

A tight labor market requires significant investment in re-skilling the manufacturing workforce for EV component production.

The shift from mechanical to electrochemical manufacturing is creating a skills gap in the automotive labor market. This is a huge challenge for a company with approximately 37,800 employees globally. Workers need new digital, advanced manufacturing, and specialized skills, such as how to safely handle high-voltage EV components.

The pressure is real: nearly half of automotive workers (42%) are concerned advancing technology could replace their role in the next two years. BWA is responding by restructuring operations to align with the new reality. They are consolidating their North American Battery Systems operations into a single location in Seneca, South Carolina, and closing facilities in Hazel Park and Warren, Michigan. This consolidation is projected to generate annual run-rate cost savings of approximately $20 million by 2026, but it also underscores the need for a focused, re-skilled workforce in the new EV hubs. You can't just move people; you have to train them.

Shifting mobility preferences, like car-sharing and subscription models, could alter long-term vehicle ownership rates.

Consumers, especially in urban centers, are moving toward 'access over ownership' (Mobility-as-a-Service or MaaS). This change in consumer behavior, driven by a desire for flexibility and cost predictability, could shrink the total volume of new cars produced long-term, even if the content per vehicle (COPV) for BWA's components is higher in an EV (up to $2,569 for a BEV versus $548 for a combustion vehicle).

The vehicle subscription market is growing fast, which is a trend BWA cannot ignore. The global market size is valued at $4.96 billion in 2025, and EV subscriptions, specifically, are projected to surge at a 37.65% Compound Annual Growth Rate (CAGR) through 2030. What this estimate hides is that fewer, more heavily utilized fleet vehicles might replace multiple privately owned cars. This means BWA's sales mix may shift toward supplying high-durability components for fleet operators and subscription services, rather than just traditional OEMs selling to individual consumers.

BorgWarner Inc. (BWA) - PESTLE Analysis: Technological factors

You're seeing the automotive industry's biggest technological shift in a century, so BorgWarner's entire strategy is now a high-stakes race to dominate electric vehicle (EV) components. The company's focus has pivoted from optimizing combustion engines to becoming a leader in e-propulsion systems, which is a massive capital and R&D undertaking. Honestly, their success hinges on their ability to translate decades of powertrain expertise into high-efficiency electronics and software.

BorgWarner's 'Charging Forward' Strategy: The $5.6 Billion Pivot

The core of BorgWarner's technological transformation is the 'Charging Forward' strategy, which explicitly targets a significant revenue mix change. The goal is ambitious: achieve approximately $5.6 billion in e-product (EV and hybrid) revenue for the 2025 fiscal year. This is a huge leap, and it means the company is betting its future on electrification technology. They are already seeing results, with light vehicle e-product sales surging 31% year-over-year in the second quarter of 2025.

The company's organic EV bookings for 2025 have already exceeded their initial target of $2.5 billion, reaching around $3 billion. This growth is driven by winning new programs across their portfolio, including a contract to supply a 7-in-1 integrated drive module for a major OEM. That's a clear signal: the market is buying their new tech.

Intense R&D Focus on Advanced Power Electronics

The key technological battleground is power electronics, especially the inverter, which converts the battery's direct current (DC) into the alternating current (AC) needed by the electric motor. BorgWarner is pushing the boundaries here, focusing on 800-volt (800V) systems and silicon carbide (SiC) technology, which significantly boosts efficiency and vehicle range. They are supplying 800V SiC inverters to a premium European OEM, with production for this high-value program starting in 2024.

Their R&D is also yielding integrated solutions, such as the iM-575 integrated inverter-motor drive module, which combines a High Voltage Hairpin motor with a SiC-powered inverter. This integration is crucial because it reduces complexity and cost for the original equipment manufacturers (OEMs). BorgWarner is also leveraging Artificial Intelligence (AI) to enhance efficiency in both manufacturing and R&D processes.

Here's a quick look at the value proposition for their new technology stack:

• 800V SiC Inverters: Enable faster charging and higher power density.
• Integrated Drive Modules: Cut OEM integration costs and complexity.
• Permanent-Magnet-Free Motors: Reduce reliance on rare earth magnets, lowering supply chain risk.

Rapid Evolution of Battery & Thermal Management Systems

The continuous, rapid evolution of battery chemistry and vehicle thermal management systems necessitates continuous, high-cost investment just to stay competitive. BorgWarner has a comprehensive portfolio covering energy storage and thermal management. For example, they are developing Lithium Iron Phosphate (LFP) battery packs, which use innovative blade cell technology and are engineered for high durability and modular flexibility.

Thermal management is the silent hero of EV performance. Their double-sided cooled (DSC) 800V SiC power module, which uses next-gen Viper SiC switches, is a direct answer to this, enhancing thermal efficiency to allow for smaller, higher-performance inverters. Managing heat is managing range and battery life. Still, the company is also making tough portfolio decisions, like exiting its Charging business in the second quarter of 2025, which is expected to eliminate approximately $30 million of annualized adjusted operating losses by 2026.

New Software-Defined Vehicle Architectures Demand Pivot

The shift to software-defined vehicle (SDV) architectures is the biggest long-term risk and opportunity. Vehicles are moving from being hardware-defined systems to being software-defined, which means suppliers must pivot from selling mechanical parts to selling integrated hardware/software solutions. BorgWarner's strategy implicitly addresses this by focusing on increasing the content per vehicle (CPV) they supply, which inherently includes more complex electronics and control software.

The financial incentive for this pivot is clear, as their CPV increases dramatically with electrification:

This nearly fivefold increase in CPV for BEVs over combustion vehicles shows why the technological pivot is non-negotiable. Their focus on integrated systems, like the 7-in-1 drive module, is the defintely necessary step toward providing the centralized, software-controlled components that the new SDV platforms demand.

BorgWarner Inc. (BWA) - PESTLE Analysis: Legal factors

Stricter US Corporate Average Fuel Economy (CAFE) standards and European emissions rules (like Euro 7) accelerate the obsolescence of BWA's legacy combustion products.

You're seeing regulatory bodies worldwide continue to tighten the screws on the internal combustion engine (ICE), which is defintely a headwind for BorgWarner's legacy business, even with their strong pivot to electric vehicle (EV) components. In Europe, the Euro 7 emissions standard is the immediate, tangible threat. This new rule is set to phase in for new light-duty vehicle (LDV) model approvals starting in July 2025, with full effect by late 2026.

Euro 7 mandates a drastic reduction in pollutants like Nitrogen oxides (NOx), with a proposed unified limit around 30 mg/km or lower, a significant drop from the Euro 6 limits of 60-80 mg/km. Plus, it's the first time non-exhaust emissions-like brake dust and tire debris-are regulated. This makes the cost and complexity of ICE after-treatment systems skyrocket, effectively forcing automakers to accelerate their shift to hybrid and battery-electric platforms. BorgWarner is mitigating this, reporting in their 2025 Sustainability Report that 87% of 2023 revenue came from EV and emissions-reducing hybrid/combustion products.

Here's the quick map of the key regulatory deadlines:

What this estimate hides is the political risk in the US. The 'One Big Beautiful Bill Act,' enacted in July 2025, eliminated civil penalties for noncompliance with federal CAFE standards for passenger cars and light trucks. This change removes the financial stick for automakers, potentially slowing the transition rate in the US market, which could temporarily extend the life of some of BorgWarner's less-efficient combustion products, but the overall global trend is still clear.

Increased scrutiny on intellectual property (IP) protection, particularly in the Chinese market, for new EV technologies.

As BorgWarner pushes its 'Charging Forward' strategy, the focus shifts to protecting its new, high-value EV intellectual property (IP) in key growth markets like China. The Chinese market is critical for future revenue, but its IP environment remains a significant legal risk. BorgWarner is actively moving advanced technology into this region, which heightens the exposure.

For example, BorgWarner secured a new program in July 2025 to supply its electric cross differential (eXD) technology to a leading Chinese Original Equipment Manufacturer (OEM). They also won contracts to supply their Ultra-Short High-Voltage Hairpin (S-HVH) eMotor technology, with production starting in August and October 2025. This S-HVH eMotor is a proprietary design that reduces end size by over 5mm and increases power density.

This rapid deployment of proprietary technology necessitates a massive investment in legal defense and IP registration, especially with a new manufacturing base for electric drive systems nearing operation in Wuhu, China, in 2025. The risk of reverse engineering or patent infringement suits, while always present, is amplified by the sheer volume and speed of EV technology adoption in China.

New data privacy and cybersecurity regulations for connected vehicle components add compliance costs.

The rise of the connected vehicle means BorgWarner is no longer just a hardware supplier; its components increasingly involve software, sensors, and data processing, which brings them under a new wave of data privacy and cybersecurity laws. This is a complex compliance challenge because the rules are global and often overlap.

The European Union's regulatory framework is leading the charge, with two major acts impacting BorgWarner's connected vehicle components:

• EU Data Act: Most obligations take effect on September 12, 2025, giving users greater control over vehicle-generated data. This forces suppliers to build data-sharing and access mechanisms into their components.
• EU AI Act: In force since August 1, 2024, it introduces strict requirements for 'high-risk' Artificial Intelligence (AI) systems, which includes many autonomous and connected vehicle features.

On the security side, the US Bureau of Industry and Security (BIS) Final Rule on Connected Vehicles, effective March 17, 2025, creates a significant supply chain mandate. This rule prohibits transactions involving certain Vehicle Connectivity Systems (VCS) hardware and software linked to 'countries of concern' like China and Russia. For a global supplier like BorgWarner, this means a costly, comprehensive audit and restructuring of their Bill of Materials (BOM) to ensure compliance, with prohibitions on software taking effect for Model Year 2027 and hardware for Model Year 2030. Cybersecurity is now a mandatory product feature, not an afterthought.

Global trade tariffs and local content requirements (e.g., in Mexico or Canada) complicate manufacturing footprint decisions.

The United States-Mexico-Canada Agreement (USMCA) continues to be the central legal factor shaping BorgWarner's North American manufacturing strategy, especially around local content rules (Rules of Origin or ROO). The current USMCA rules require a Regional Value Content (RVC) of 75% for core auto parts like engines and transmissions to qualify for zero tariffs.

However, the political landscape is volatile. An April 2025 US Executive Order raised the RVC requirement for full tariff exemptions to 85% immediately, with a further increase to 90% by 2026. While this move is subject to legal and political challenge, it creates significant uncertainty. Auto parts that fail to meet these new USMCA rules face a 25% tariff on imports.

This pressure forces BorgWarner to localize its supply chain more deeply in the US, Mexico, or Canada. The US International Trade Commission (ITC) reported in July 2025 that the USMCA ROOs have already led to increased investment in US parts manufacturing. Total investment in U.S. automotive manufacturing was $34.1 billion in 2024, demonstrating the capital required to meet these localization mandates. BorgWarner must weigh the cost of paying a tariff against the massive capital expenditure of reshoring production.

BorgWarner Inc. (BWA) - PESTLE Analysis: Environmental factors

BorgWarner has a stated goal to achieve carbon neutrality in its operations by 2035, requiring substantial capital expenditure.

You're watching the automotive industry shift to electric vehicles (EVs), but the real capital challenge for a Tier 1 supplier like BorgWarner Inc. (BWA) is decarbonizing its own factories. The company has a firm commitment to achieve carbon neutrality for its Scope 1 (direct) and Scope 2 (indirect from purchased energy) emissions by 2035. This isn't cheap; it means fundamentally changing how they operate.

Here's the quick math on their commitment: BorgWarner expects combined R&D and capital spending for e-Products to be greater than $3 billion over the five years leading up to 2025. By 2025, e-Products are projected to approach 50% of their total R&D spend before acquisitions, showing a massive reallocation of investment toward the 'Charging Forward' strategy that underpins their environmental goals. This shift is defintely a core strategic pillar.

The company is making measurable progress in its operations, too:

• Reduced absolute Scope 1 and 2 GHG emissions by 36% from a 2021 baseline.
• Installed or expanded solar panels at 16 facilities in 2024.
• Generated approximately 9.2 gigawatt-hours of solar power annually from those installations.

OEMs are demanding detailed Scope 3 emissions data from suppliers like BWA, pushing for green energy use in manufacturing.

The biggest environmental risk for any supplier is often in its value chain-the Scope 3 emissions. Original Equipment Manufacturers (OEMs) like Ford and General Motors are now requiring detailed carbon footprints for every component, forcing suppliers to clean up their own manufacturing and their suppliers' as well. BorgWarner is tackling this head-on with a Science Based Targets initiative (SBTi)-validated goal to reduce absolute Scope 3 GHG emissions by at least 25% by 2031 from a 2021 baseline.

To meet this, BorgWarner has partnered with a decarbonization software provider, Manufacture 2030, to help its direct material suppliers track and reduce their energy usage and carbon footprint. The pressure is real, so they are cascading the compliance requirement:

This supplier engagement is crucial because the emissions are moving upstream. You need to know what your partners are doing.

Stricter regulations on material sourcing, particularly for conflict minerals and battery materials, increase supply chain complexity.

The push for electrification brings a new layer of regulatory complexity, particularly around the ethical sourcing of raw materials. The US Dodd-Frank Act's conflict minerals reporting requirements for tin, tantalum, tungsten, and gold (3TGs) remain a compliance hurdle, but the scope is widening dramatically in 2025.

New regulations like the European Union's Batteries Regulation (EUBR) are taking effect in August 2025, which will impose strict due diligence requirements on critical battery materials like cobalt, lithium, and mica. The US government is also heavily focused on securing these supply chains, with the Department of Energy (DOE) announcing its intent to issue nearly $1 billion in funding opportunities in 2025 to advance domestic processing, recycling, and manufacturing of critical minerals. This regulatory environment forces BorgWarner to invest heavily in supply chain traceability and due diligence programs, using tools like the Conflict Minerals Reporting Template (CMRT) to ensure compliance and mitigate geopolitical risk.

Focus on circular economy principles requires BWA to design components for easier recycling at end-of-life.

The industry is moving from a linear 'take-make-dispose' model to a circular one, and for BorgWarner, this means designing parts with end-of-life (EOL) in mind. The overall Automotive Circular Economy Market is valued at $148.2 billion in 2024 and is forecasted to reach $398.3 billion by 2034, making circularity a massive commercial opportunity, not just a compliance issue. BorgWarner's Scope 3 reduction strategy directly includes furthering circular product development.

This focus translates into concrete design and operational actions:

• Increasing the content of recyclable and remanufactured material in new components.
• Prioritizing product weight reductions to conserve raw materials.
• Achieving a waste diversion rate of 92.8% at tracked sites in 2023, surpassing their 85% goal.

They are working to ensure their components, especially for EV systems, can be easily disassembled and the materials recovered, which is a key competitive differentiator for OEMs facing their own EOL battery obligations.