eProduct Revenue Growth
Q: Is the $4.5B–$5B 2025 eProduct revenue target still achievable?
A: Management believes that the 2025 eProduct revenue target of $4.5 billion to $5 billion is still attainable if customer volumes hold as currently forecasted. They expect a significant ramp-up in eProduct revenues this year, with many programs launching in 2024 and higher jump-off points in both commercial vehicles and light vehicles by the end of the year. "

Eldor Acquisition Impact
Q: How does the Eldor acquisition affect margins and losses?
A: The Eldor acquisition was fully anticipated to have a near-term impact on margins, reducing them by 30 to 40 basis points. The company expects operating losses from Eldor of around $50 million in 2024, which aligns with their original expectations. Management is confident that Eldor will contribute to long-term profitable growth in the $30 billion addressable market by 2030. " " "

Flexibility Between EVs and Hybrids
Q: Can the company adapt if there's a shift from EVs to hybrids?
A: Management states that their eProduct portfolio is highly fungible between hybrids and battery electric vehicles (BEVs). The same motors, power electronics, and other components are used for both, making R&D and capital investments flexible. They are well-positioned to support customers regardless of shifts between EVs and hybrids. " " "

Mid-Teens Conversion Margin
Q: What are the expected contribution margins on incremental revenue?
A: The company expects mid-teens conversion on incremental revenue, both in the foundational business and in eProducts. Despite revenue pressures in the foundational portfolio, they aim to sustain margins through pricing, cost management, and restructuring. " " " " "

Capital Allocation and M&A Strategy
Q: How does the current environment affect capital allocation and M&A plans?
A: The company continues to view M&A as important for strengthening electrification capabilities, with $2 billion of M&A assumed in the 2027 targets. They remain disciplined in evaluating opportunities and believe the current environment may offer attractive buying opportunities. They also highlight their commitment to shareholder returns through dividends and share buybacks. " "

CapEx and R&D on eSystems
Q: How much of the 2024 CapEx and R&D is allocated to eSystems?
A: A significant portion of R&D is allocated to eProducts, with about $475 million invested in 2023 and an expected organic increase of $40 million to $50 million in 2024. Capital expenditures will remain elevated in 2024, particularly for ePropulsion and battery pack businesses, with expectations to normalize to around 5% of sales in the future. " "

Battery Pack Production Ramp
Q: What is the visibility into the battery pack production ramp?
A: The company is ramping up a second production line in Seneca, North Carolina, with another line being commissioned in Europe. They anticipate a 65% year-over-year growth at the midpoint for battery packs, with strong demand exceeding production capacity and no issues with cell supply. "

Foundational Business Revenue Decline
Q: How will declining combustion revenues affect margins?
A: The company anticipates foundational revenues to decline by 0.5 to 2 percentage points year-over-year due to a market decline of 3% to 6%. However, they plan to sustain margins through cost management, restructuring, and by outperforming the underlying market, expecting to decrement at mid-teens rates. " " "