Borgwarner (BWA) risk factors, FY2025 10-K

Borgwarner's FY2025 10-K, filed Feb 11, 2026, lists 37 risk factors in 7 groups. Against the prior year's 37: 3 new, 3 dropped, 13 substantially reworded.

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Risk factors listed
377 groups
New this year
3vs 37 last year
Dropped
3since the prior 10-K
Substantially reworded
13of those kept
Section length
9k wordsItem 1A

What the changes say

  • Tariffs from the U.S. and retaliatory measures create significant cost pressures on raw materials and components.
  • Customer concentration remains high, with Volkswagen and Ford accounting for 13% and 12% of 2025 sales.
  • Chinese domestic OEMs are expanding market share and increasingly insourcing components previously bought from Tier 1 suppliers.

What changed since the prior 10-K

New

  • NewRisks related to our business

    We are involved, from time to time, in legal proceedings and commercial or contractual disputes, which could have an adverse impact on our business

    We face potential adverse impacts from normal-course legal proceedings, commercial or contractual disputes, and product liability claims where insurance may be inadequate.

  • NewRisks related to our customers

    We rely on sales to major customers and our supply agreements with them are generally requirements contracts, and a decline in the production requirements of any of our customers, and in particular our major customers could adversely impact our revenues and profitability

    In 2025, Volkswagen and Ford accounted for 13% and 12% of our consolidated net sales, and our top ten customers represented 71% of sales.

  • NewRisks related to our suppliers

    Suppliers’ economic distress could result in supply interruptions and, in turn, disrupt our operations and adversely affect our business

    Supply chain disruptions and increased commercial disputes could arise from volatile EV adoption, OEM price pressure, and supplier financial distress.

Dropped

  • DroppedRisks related to our business

    We could incur additional restructuring charges as we continue to execute actions in an effort to improve future profitability and competitiveness and to optimize our product portfolio and may not achieve the anticipated savings and benefits from these actions

  • DroppedRisks related to our customers

    We rely on sales to major customers

  • DroppedRisks related to our suppliers

    Suppliers’ economic distress could result in the disruption of our operations and could adversely affect our business

Reworded

  • 85% rewrittenRisks related to our business

    Changes in administrative policy on the part of the U.S. or other countries, including the imposition of or increases in tariffs, changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on us

    Updated to reflect specific 2025 U.S. tariffs on imports from the EU, Canada, Mexico, and China, and resulting retaliatory tariffs.

    Was: Changes in U.S. administrative policy, including the imposition of or increases in tariffs, changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on us

  • 67% rewrittenRisks related to our industry

    Conditions in the automotive industry may adversely affect our business

    Added geopolitical and trade-related issues, borrowing costs, and consumer credit availability as factors affecting industry production levels and our sales.

  • 63% rewrittenRisks related to the spin-off of PHINIA Inc

    Potential liabilities pursuant to the spin-off of PHINIA could materially and adversely affect our business

    Clarified that agreements with PHINIA have led to disputes, specifically noting our September 19, 2024 lawsuit to recover roughly $120 million in VAT refunds.

  • 44% rewrittenRisks related to the spin-off of PHINIA Inc

    The spin-off of PHINIA may not achieve anticipated tax benefits and may expose us to additional tax risks

    Narrowed the risk heading and text strictly to potential loss of anticipated tax benefits from the PHINIA spin-off.

    Was: The spin-off of PHINIA may not achieve the anticipated benefits and may expose us to additional risks

  • 42% rewrittenRisks related to our business

    We are under substantial pressure from OEMs to reduce the prices of our products

    Added that virtually all automakers implemented aggressive price-reduction initiatives and that price reductions have already impacted sales and profit margins.

  • 42% rewrittenRisks related to our business

    Changes in tax laws or tax rates by taxing authorities and the outcome of tax audits could adversely affect our business

    Added the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, and its impact on domestic R&D expensing.

    Was: Changes in tax laws or tax rates taken by taxing authorities and tax audits could adversely affect our business

  • 41% rewrittenRisks related to our strategy

    Our portfolio strategy may prove unsuccessful

    Minor phrasing tweak regarding whether our portfolio strategy will prove successful amidst EV adoption volatility.

  • 40% rewrittenRisks related to our business

    Our business in China is subject to aggressive competition and is sensitive to economic, political, and market conditions

    Added that domestic Chinese OEMs are expanding market share inside and outside China and increasingly insourcing components once bought from Tier 1 suppliers.

  • 38% rewrittenRisks related to our business

    A failure of or disruption in our information technology infrastructure, including a disruption related to cybersecurity, could adversely impact our business and operations

  • 31% rewrittenRisks related to our business

    We have been and are exposed to liabilities related to environmental, product warranties, product recalls, litigation and other claims

    Was: We have liabilities related to environmental, product warranties, litigation and other claims

  • 29% rewrittenRisks related to our customers

    We are sensitive to the effects of our major customers’ labor relations

  • 25% rewrittenRisks related to our business

    Part of our workforce is unionized, which could subject us to work stoppages

  • 20% rewrittenRisks related to our business

    We are subject to risks related to our international operations

All 37 risk factors

Headings as the filing states them, in filing order.

Risks related to our strategy

  1. 01Our portfolio strategy may prove unsuccessful41% rewritten
  2. 02Goodwill and indefinite-lived intangible assets, which are subject to periodic impairment evaluations, represent a significant portion of our total assets. An impairment charge on these assets could have a material adverse impact on our financial condition and results of operations
  3. 03The failure to realize the expected benefits of acquisitions and other risks associated with acquisitions could adversely affect our business
  4. 04We may not be able to execute dispositions of assets or businesses successfully

Risks related to our industry

  1. 05Conditions in the automotive industry may adversely affect our business67% rewritten
  2. 06We face strong competition
  3. 07If we do not respond appropriately, the evolution of the automotive industry could adversely affect our business
  4. 08We may be subject to potential governmental investigations and related proceedings relating to vehicle emissions standards

Risks related to our business

  1. 09We are under substantial pressure from OEMs to reduce the prices of our products42% rewritten
  2. 10We continue to face volatile costs of commodities used in the production of our products and elevated levels of inflation
  3. 11We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring actions may adversely affect our business
  4. 12Changes in administrative policy on the part of the U.S. or other countries, including the imposition of or increases in tariffs, changes to existing trade agreements and any resulting changes in international trade relations, may have an adverse effect on us85% rewritten
  5. 13We use important intellectual property in our business. If we are unable to protect our intellectual property or if a third party makes assertions against us or our customers relating to intellectual property rights, our business could be adversely affected
  6. 14We are subject to business continuity risks associated with increasing centralization of our information technology (“IT”) systems
  7. 15A failure of or disruption in our information technology infrastructure, including a disruption related to cybersecurity, could adversely impact our business and operations38% rewritten
  8. 16Our business success depends on attracting and retaining qualified personnel
  9. 17Our profitability and results of operations may be adversely affected by new business launch difficulties
  10. 18Part of our workforce is unionized, which could subject us to work stoppages25% rewritten
  11. 19Work stoppages, production shutdowns and similar events could significantly disrupt our business
  12. 20Our benefit plan expenses and obligations may fluctuate depending on various factors, including changes in interest rates, changes in regulations and plan asset returns
  13. 21We are subject to extensive environmental regulations that are subject to change and involve significant risks
  14. 22Our operations may be affected by greenhouse emissions and climate change and related regulations
  15. 23We have been and are exposed to liabilities related to environmental, product warranties, product recalls, litigation and other claims31% rewritten
  16. 24We are involved, from time to time, in legal proceedings and commercial or contractual disputes, which could have an adverse impact on our businessNew
  17. 25Compliance with and changes in laws could be costly and could affect our operating results
  18. 26Changes in tax laws or tax rates by taxing authorities and the outcome of tax audits could adversely affect our business42% rewritten
  19. 27We are subject to risks related to our international operations20% rewritten
  20. 28Our business in China is subject to aggressive competition and is sensitive to economic, political, and market conditions40% rewritten
  21. 29A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets

Risks related to our customers

  1. 30We rely on sales to major customers and our supply agreements with them are generally requirements contracts, and a decline in the production requirements of any of our customers, and in particular our major customers could adversely impact our revenues and profitabilityNew
  2. 31We are sensitive to the effects of our major customers’ labor relations29% rewritten

Risks related to our suppliers

  1. 32We could be adversely affected by supply shortages of components from our suppliers
  2. 33Suppliers’ economic distress could result in supply interruptions and, in turn, disrupt our operations and adversely affect our businessNew
  3. 34We are subject to possible insolvency of financial counterparties

Risks related to the spin-off of PHINIA Inc

  1. 35The spin-off of PHINIA may not achieve anticipated tax benefits and may expose us to additional tax risks44% rewritten
  2. 36Potential liabilities pursuant to the spin-off of PHINIA could materially and adversely affect our business63% rewritten

Other risks

  1. 37A variety of other factors could adversely affect our business

Other Borgwarner 10-Ks

  • FY2024 10-K risk factors
    37 risks

    BorgWarner faces significant risks from volatile electric vehicle adoption rates and shifting global regulatory mandates for emissions. The company depends heavily on major automotive OEMs and is vulnerable to pricing pressures and labor disruptions. Operations are exposed to international trade policies, commodity price volatility, and supply chain concentration.

    Filed Feb 06, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.