Aptiv (APTV) Morgan Stanley‘s 12th Annual Laguna Conference summary

Industry trends and positioning

• Electrification, software-defined vehicles, and vehicle rearchitecture are ongoing trends, with regional variations in adoption pace.

• Operational challenges from COVID, supply chain, and inflation have been absorbed, improving cost structure and margins.

• Revenue issues are isolated to a few customers, while broader business performance remains strong.

• Electrification and software-defined trends are expected to provide continued tailwinds, with new program opportunities emerging.

• The company is well-positioned to benefit from these industry shifts.

Revenue outlook and guidance

• Revenue growth is projected at four points above vehicle production, with 2024 vehicle production expected to be down 3%.

• 2025 revenue growth is anticipated to be mid-single digits on flat vehicle production, with more precise guidance to come.

• Customer mix issues in 2024 are expected to be digested, supporting a stronger growth profile ahead.

• Guidance incorporates a 5% production decline in the second half of the year and additional risk overlays.

Electrification and EV market dynamics

• EV demand has been weaker than expected, especially in Europe, despite supportive policies.

• Key barriers include high cost, limited utility, and infrastructure challenges, with OEMs focusing on lower-cost EVs and hybrids.

• Chinese EVs have a 20% cost advantage due to simplified architectures and reduced mass.

• Electrification trends, including hybrids and plug-in hybrids, continue to offer significant content and revenue opportunities.