Even as BorgWarner is building on its traditional products to develop its electrification portfolio, it has embarked on a program of M&A activity with the clear goal of filling gaps in expertise — and targeting $2 billion in revenue by 2025 from the results of that activity.
Recent full or partial acquisitions have included Akaso, which makes commercial vehicle battery packs; Rhombus Energy Solutions (software and fast charging); Drivetek (power electronics; SSE (fast charging); and Santroll Automotive Components (light-vehicle electric motors).
“It’s a business where you need to invest upfront,” Lissalde said of electrification, “and M&A has been an integral part of that strategy.”
“We identify technological gaps on products where we want to be present, where we can differentiate ourselves in the marketplace,” he said. “Then we ask whether we can fill those gaps internally, organically, or inorganically.”
If a merger or acquisition makes sense, BorgWarner whittles down a long list of candidates to a few companies and starts making phone calls. “The calls can be very short, or drive longer discussions,” Lissalde said, adding that none of the companies that BorgWarner has acquired over the past five years were for sale.
BorgWarner is an attractive partner for startups because of its decentralized operating model, he said. “We can offer being part of a big group and leveraging our know-how and available funds, but also giving a newly acquired company autonomy and empowerment to drive their business and grow.”
That operating model extends to within BorgWarner, with about 150 executives who have their own profit/loss lines. “When they can drive their business on their own, they should proceed as if it was their own money,” Lissalde said. “If they need the help of the bigger corporation, they can raise their hand and we will help them.”
Daily operations are handled by BorgWarner’s five business units, with some shared functions such as legal or billing. “Decentralization brings ownership on the ground, and it also brings agility and speed. That is what I think has made a difference for us in the past few years,” he said.