When Albert and Edward Rockwell started manufacturing electric doorbells in Bristol, Conn., in 1888, it was quite a departure; until then, doorbells had been mechanical, and were activated by pulling on a cord. Even their company’s name signaled the dawn of a new era: New Departure Bell Company.
The multibillion-dollar successor to that doorbell company, newly formed Aptiv PLC, still sees itself as an innovative startup, only now it’s developing essential technology for self-driving cars.
Aptiv made its debut on the New York Stock Exchange this week, the offspring of auto parts supplier Delphi Automotive, which split itself in two. While Aptiv will focus on high-tech electronics and software for autonomous vehicles, Delphi Technologies will specialize in next-generation powertrain technology, including power electronics (the “brains” that make cars move).
The split is a reflection of the changing dynamics of the automotive industry, and an effort to extract a higher value on Wall Street, where investors are looking for ways to capitalize on trends like autonomous vehicles and electrification. Aptiv expects to end this year with revenue of $12.5 billion, growing to more than $17 billion by 2022. Delphi Technologies, with revenue of about $4.5 billion, expects $6 billion by then.
The split also marks yet another new beginning for the automotive supplier whose rocky history dates back to Albert and Edward Rockwell and their electric doorbell.
“At the end of the day, our culture is that we keep remaking ourselves because the industry keeps changing,” said Kevin Clark, who helmed Delphi Automotive and has transitioned to CEO of the newly formed Aptiv.
There’s no doubt that Aptiv looks a lot different today from the auto parts supplier that spun out of General Motors in 1999 and spent four years in bankruptcy from 2005 to 2009. Under former CEO Rodney O’Neal, who became president in 2004, the company began a radical transformation by focusing on three guiding trends that O’Neal described as Delphi’s “North Stars” – safe, green and connected. If an operation didn’t fit one of those trends, it was jettisoned.
“One of the things we always said is that we were in the business of value creation, not the automobile business,” O’Neal said in an interview. “As a public company, you owe it to your shareholders. We never fell in love with the portfolio. We always looked to add and subtract things to stay sustainable and relevant.”
There were painful consequences, however. The company dumped many of its old-line auto parts units, eliminating tens of thousands of U.S. jobs while focusing much of its growth in overseas markets. Even its headquarters moved from suburban Detroit to the U.K. for tax purposes. (The IRS tried to collect hundreds of millions in back taxes, but in 2016, Delphi won an appeal so it doesn’t have to pay U.S. taxes on its worldwide profit.)
Freed from its old baggage, the pace of change has accelerated dramatically in the last few years under Clark, who had been chief financial officer under O’Neal until his retirement in 2015.
Right now, most of Aptiv’s revenue comes from supplying electrical wiring, electronic systems and infotainment technology to global automakers. But through a flurry of recent acquisitions, it is rapidly expanding its advanced safety offerings – things like radar and camera systems that help drivers avoid accidents or stay in their lane (the building blocks for self-driving cars) – as well as its data management capabilities.
In the past year, Aptiv has acquired Movimento, a company that enables over-the-air software updates for vehicles, and nuTonomy, a self-driving technology startup. It has also made strategic investments in Otonomo, a data services firm; Valens, a high-speed data transmission startup; and two LiDAR companies, Innoviz and LeddarTech.
Working with tech giant Intel and its vision-sensing unit, Mobileye, Aptiv plans to be the “systems integrator” for a $5,000 autonomous technology system it will sell to customers that don’t have the resources to develop their own self-driving cars. By 2025, Aptiv expects $1 billion in revenues from autonomous-car technology.
Aptiv sees additional revenue opportunity from collecting and monetizing data from millions of connected vehicles. “If you believe the car is a digital platform, and part of the broader Internet of Things, then…we think we’re uniquely positioned to collect and monetize that data,” Clark said in an interview.
Aptiv will continue to evolve, Clark promised. “Our customers’ problems are getting more difficult. They have more sophisticated needs and higher tech requirements,” he said. “How do we solve the biggest challenges our customers have? How do we make ourselves more valuable to customers?”
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