# Dear Fellow Stockholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/NYSE_BWA_2022/NYSE_BWA_2022.mmd` · pages 1-7_

---

Dear Fellow Stockholders,

As I look back at 2022, I am incredibly proud of how BorgWarner successfully navigated the challenging global macro environment and continued to thrive despite the conditions.

The main headlines for this past year center on four important accomplishments. First, we made significant advancements in our Charging Forward strategy, which culminated with the announcement in December of the planned separation of PHINIA, our Fuel Systems and Aftermarket segments. Second, we secured a significant number of organic electrification program awards during the year. Third, we continued to execute disciplined acquisitions, which have significantly expanded our EV capabilities and are expected to generate approximately $1.3 billion of EV-related revenue in 2025. And fourth, we continued to take decisive actions toward our sustainability efforts, emphasizing both progress on our current Environmental, Social & Governance (ESG) objectives, as well as setting additional ambitious goals, as noted in our annual Sustainability Report.

Let me provide more information on the intended separation of PHINIA into a new publicly traded company. Once complete, BorgWarner will consist only of the Air Management and e-Propulsion & Drivetrain segments of our business, both of which we expect to continue to contribute toward our Charging Forward strategy and advance our position as a market leader in EV propulsion.

We believe that this separation is the most significant step we have taken to deliver our Charging Forward strategy since it was announced in 2021. BorgWarner and PHINIA are each expected to continue BorgWarner's legacy of disciplined financial and operational management with top-quartile margins and strong free cash flow generation, as each company pursues its respective strategies focused on maximizing shareholder value. As such, we are working diligently through the various work streams and continue to expect the separation to be complete in late 2023. As a leader in fuel systems and aftermarket distribution, PHINIA will focus on the Commercial Vehicle, Light Vehicle and Aftermarket end markets, and is expected to benefit from its strong relationships with global OEMs. We have seen significant operational and segment margin improvement in recent years despite the challenging industry volume environment, and we believe this positions PHINIA well for success as a stand-alone public company.

In addition, we recently announced that Brady D. Ericson will serve as President and Chief Executive Officer, while Chris Gropp will serve as Executive Vice President and Chief Financial Officer for PHINIA. Both Brady and Chris have been at the company for more than 20 years and have served in numerous important roles across a variety of business units. They are well-rounded and respected leaders, and each possesses a breadth of knowledge and significant experience that will place them in good stead as they lead PHINIA in the years ahead.

We delivered strong financial and operational performance in 2022, and I continue to be very proud of the strength of our revenue relative to the overall industry. We delivered approximately 14% organic revenue growth for the year, significantly higher than growth in overall industry production. And more importantly, our revenue from electric-related products made a meaningful contribution to this growth.

The company delivered solid margin performance in 2022 despite significant production and inflationary headwinds. We also delivered record free cash flow performance, which allowed us to continue to make investments to support our future while continuing to return cash to our shareholders. We feel very positive about our 2022 results and accomplishments, and we are also progressing well along our Charging Forward plan, with ambitious goals to do even more in the years ahead.

Building on a successful 2022, we are excited about our plans for 2023 and beyond. We believe BorgWarner is now on track to achieve \(4.3 billion in pure EV revenue by 2025, which includes \)3.0 billion of booked organic revenue and

<--- Page Split --->

$1.3 billion of revenue from acquisitions. We expect to gain additional business across our electric vehicle product portfolio and invest our cash to further grow as the world continues to pivot quickly toward electrification.

Since the announcement of our Charging Forward strategy in 2021, we have completed five important acquisitions that have expanded our EV portfolio and that we expect to drive future growth: AKASOL, Santroll, Rhombus, DriveTek and Hubei Surpass Sun Electric.

In June, BorgWarner released its 2022 Sustainability Report, "Charging Forward Together," emphasizing significant work the company has made toward meeting our ESG objectives, as well as outlining additional ambitious future goals we have set going forward. As stewards of the environment helping to build a cleaner, healthier and safer future, we remain committed to being a sector leader in sustainability and advancing electrification and eMobility efforts.

There are a few significant environmental highlights that I would like to point out. Early last year, we announced a target to achieve 85% absolute Scope 1 and Scope 2 emissions reduction by 2030 (from a 2021 baseline), and more recently in December, we announced a commitment to reduce our absolute Scope 3 emissions by at least 25% by 2031 (also from a 2021 baseline). Both of these science-based targets were formally submitted for validation to the Science Based Target initiative (SBTi) and align with our Charging Forward strategy to further our vision of a clean, energy-efficient world. These targets are fully supported by BorgWarner leadership and encourage a company-wide effort to meet our objectives as we continue to support and collaborate with our partners to achieve environmentally sustainable operations.

These past few years have been challenging. At BorgWarner, we have drawn strength from our 100-plus years of history and dynamic culture to lead the industry and continually thrive during these difficult times. I am so proud of the remarkable achievements our team has delivered, and I continue to be inspired by the tireless work our world-class team puts in every day. Since announcing Charging Forward, we believe we are exceeding our organic targets and are on track for our M&A plans, and we expect to complete our dispositions well in advance of the 2025 target.

BorgWarner has consistently demonstrated its willingness and ability to evolve. Our product leadership, agile, decentralized operating model and disciplined financial and operational management are expected to continue to serve us well as we enter the important next phase of our evolution. Although we have made tremendous progress in recent years, the pace of change is set to continue as we move aggressively to build upon our market-leading position and deliver shareholder value.

Finally, I'd like to thank all of our stakeholders for your continued support of the company over the years. I'd particularly like to express my ongoing appreciation for our resilient and committed global workforce for everything they do to ensure our company continues to succeed every day. We are confident in our abilities to execute our stated plans and unlock value for our shareholders. I have never been more excited about the future of BorgWarner and look forward to keeping you updated on our growth and achievements in the near future.

Best regards,

![](images/2_0.jpg)

Frédéric B. Lissalde
President and Chief Executive Officer

![](images/2_1.jpg)