Good day, and welcome to Aptiv's Q4 2023 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jane Wu, Vice President of Investor Relations and Corporate Development. Please go ahead, ma'am.

Thank you, Jenny. Good morning, and thank you for joining Aptiv's fourth quarter 2023 earnings conference call. The press release and related tables, along with the slide presentation, can be found on the Investor Relations portion of our website at aptiv.com. Today's review of our financials excludes amortization, restructuring, and other special items, and will address the continuing operations of Aptiv. The reconciliations between GAAP and non-GAAP measures for our fourth quarter and full year 2023 results, as well as our 2024 outlook, are included at the back of the slide presentation and earnings press release. During today's call, we will be providing certain forward-looking information that reflects Aptiv's current view of future financial performance and may be materially different for reasons that we cite in our Form 10-K and other SEC filings. Joining us today will be Kevin Clark, Aptiv's Chairman and CEO; and Joe Massaro, CFO and Senior Vice President of Business Operations. Kevin will provide a strategic update on the business, and Joe will cover the financial results in more detail before we open the call for Q&A. With that, I'd like to turn the call over to Kevin Clark.

Thank you, Jane, and thank you all for being here this morning. Let's begin on Slide 3. Aptiv finished the year strongly with fourth quarter results generally aligning with our expectations, highlighting our ability to perform in a less predictable market. Some highlights include new business bookings of $7.7 billion, driven by sustained demand for our leading advanced technologies; revenue at $4.9 billion, with growth impacted by the UAW strike and customer mix, details of which Joe will discuss later; operating income was $600 million, showing a 90 basis point margin increase; the beneficial impact of volume growth and operating performance outweighed the challenges from foreign exchange, commodities, and the UAW strike; we repurchased $300 million of stock during the quarter, leveraging our share price and cash position. In conclusion, our team is performing exceptionally well in a rapidly evolving environment, finding ways to offer solutions to our customers while also addressing ongoing cost pressures. Moving to Slide 4, we fulfilled our commitments and achieved record outcomes in 2023 despite navigating unexpected challenges. New business bookings hit a record $34 billion, reflecting robust ongoing demand for our products. As vehicles become more complex and software-driven, customers increasingly value Aptiv as a key technology partner, especially in areas like smart vehicle architecture, active safety, and high voltage electrification, where we are industry leaders in providing high-performance, flexible, and cost-effective solutions. Aptiv is also well-positioned to capitalize on the shift towards a software-defined future in various industries, with growing opportunities in telecom, aerospace, defense, and industrial markets. Revenue rose 12% to over $20 billion in 2023, marking a new record, mainly driven by our high-growth active safety and high voltage product lines. This strong revenue growth led to record operating income of $2.1 billion, with operating margin increasing by 150 basis points to 10.6%, as strong volume flow-through and operational performance effectively countered the pressures from foreign exchange, commodities, and the UAW strike. Finally, we achieved a record operating cash flow of $1.9 billion for the year, giving us flexibility in capital deployment, which allowed us to efficiently repurchase shares and reduce debt. Looking at Slide 5, as previously mentioned, bookings reached $34 billion, marking our third consecutive year of record new business awards, including nine different customers who each awarded Aptiv over $1 billion in new business. Advanced Safety and User Experience bookings set a record at $12 billion, driven by active safety bookings of $3.4 billion, which included next-generation hardware and perception software components, as well as full system turnkey solutions. This strength is reflected in over $11 billion of cumulative bookings over the last three years and $5.2 billion of customer awards for our smart vehicle architecture solutions from three OEMs, bringing cumulative awards since the launch of our SVA products to over $10 billion from eight OEMs. Signal and Power Solutions achieved record new business bookings of over $22 billion, aided by a record $6.2 billion in high voltage electrification bookings, an increase of roughly $2 billion from 2022, coming from both traditional and new mobility providers and bringing cumulative high voltage customer awards to roughly $14 billion since 2021. Our leading portfolio, combined with our global reach and capacity to execute complex programs, positions Aptiv excellently for attracting new business and gives us a clear path toward $35 billion in business awards in 2024. Moving to Slide 6, we can review our Advanced Safety and User Experience segment's full year highlights, where we realized considerable commercial success across our critical product lines, further establishing ourselves as the partner of choice with our OEM customers. Wind River continued to gain solid commercial traction across various end markets. In the fourth quarter, one of Canada's largest communication service providers selected Wind River Studio for their full O-RAN deployment in North America. OMRON, a leader in healthcare systems and industrial automation, also selected Wind River Studio for their industrial edge platform development. Additionally, Hyundai Mobis expanded their partnership with Wind River by opting for Wind River Studio to streamline development time and costs from product design to system validation and mass production testing. Demand for Aptiv's complete system solutions in active safety, user experience, and smart vehicle architecture also remains robust, with significant bookings across all regions, including from Japanese OEMs and emerging Chinese local players, creating a growing pipeline of further opportunities. To support our customers while optimizing our cost structure, we've implemented several initiatives within our engineering and supply chain sectors. To accelerate and streamline our product development process, our AS&UX engineers have integrated Wind River Studio's DevSecOps toolchain into their frameworks. We've centralized our engineering activities in India at a new and larger technology center in Bangalore, allowing better collaboration between Aptiv and Wind River teams on our software product platforms, effectively doubling our engineering capacity in the country and enabling a more cost-efficient rotation of our engineering footprint. From a supply chain standpoint, we're on track to fully map our global supply chain into a digital twin by the year's end. Throughout 2023, we completed the mapping of our semiconductor suppliers, enhancing our visibility and our ability to proactively address potential sourcing risks. We've also closely collaborated with about a dozen local Chinese semiconductor suppliers for both domestic and international applications, positioning us to meet increasing demands from our Chinese customers with local supply sources, while improving the resilience and flexibility of our supply chain for our global OEM clients. Turning to Signal and Power Solutions' full year highlights on Slide 7, from a commercial perspective, we continued to leverage our industry-leading portfolio and global scale, which uniquely positions us to provide optimized vehicle architecture solutions for both emerging EV manufacturers and leading global OEMs. In 2023, we secured significant vehicle architecture projects from a global EV manufacturer, including optimized electrical distribution and 48-volt connection systems. In China, while we are selective in our customer and platform choices, we are actively enhancing our reach with a select group of local OEMs. In 2023, bookings with local Chinese OEMs amounted to $3 billion, making up about 60% of total SPS bookings in the area. Intercable Automotive recorded unprecedented new business awards and added four new global customers thanks to their industry-leading busbar technology, which enables more efficient power distribution and optimized battery pack design. Additionally, we've noticed a surge in customer demand for solutions that minimize complexity, weight, and costs, including our integrated power electronics solutions that aid in combining the onboard charger, battery distribution unit, and DC to DC converter. From an operational standpoint, several initiatives have been undertaken to enhance manufacturing efficiency. Within our electrical distribution sector, we are launching our first highly automated production line, encompassing all system assembly aspects. With this new technology, we expect to elevate current automation levels to around 30% by 2026, paving the way for over 50% automation by 2030, which will boost efficiency and product quality while also reducing labor dependence and the associated risks from inflationary pressures. Concurrently, we've been working toward creating a more resilient and sustainable business by supporting local production trends and minimizing cross-border product flows. We aim to rotate our manufacturing footprint in various regions and have successfully established production capabilities for Intercable Automotive in North America to serve regional customers. Looking at Slide 8, at this year’s Consumer Electronics Show in Las Vegas, we showcased our industry-leading product portfolio through a comprehensive range of functional, fully integrated solutions, both in our technology theater and via drivable demo vehicles on the roads. Our software-defined vehicle demonstrator encapsulated advanced ADAS and user experience applications, embedded on Wind River’s cloud-native software platform and operating on Aptiv's smart vehicle architecture hardware. This was our first demonstration of driving a vehicle on public roads, supported by SVA, further confirming our leadership in next-generation architectures. We exhibited key components of our Gen 6 ADAS platform, such as our urban point-to-point hands-free driving application, along with in-cabin monitoring capabilities. Additionally, we displayed our high voltage capabilities through a custom-built 800-volt electric vehicle featuring optimized high voltage cabling and busbars, connection systems, and integrated power electronics. We also introduced Aptiv's containerized battery management system on our central vehicle controller, both supported by Wind River’s VxWorks operating system, while telemetric data was visualized through Wind River Studio. All these solutions and more were showcased in our technology theater for in-depth exploration. Altogether, the solutions represented our complete system portfolio, showcasing capabilities ranging from sensor to cloud. Over 1,000 stakeholders visited our pavilion, including customers, vendors, and industry partners. Following CES, we arranged a variety of customer engagements, including participation in the Mobile World Congress in late February and other customer-oriented tech shows throughout the year. Our leading product portfolio reinforces our standing as the preferred partner for developing and delivering next-generation solutions. Moving to Slide 9, before I hand the call over to Joe to discuss financials, I want to provide context on our expectations for 2024. As our industries evolve, we are witnessing a rising demand for our complete system capabilities, covering hardware and edge-to-cloud software solutions. This growing level of strategic interaction has resulted in three consecutive years of record new business bookings, which will continue to promote strong revenue growth and suggest growth that outpaces the market. Joe will provide more details about our revenue growth outlook, but we now anticipate our growth above market to be in the 6% to 8% range, reflecting the changing pace of EV adoption and customer trends. As I previously mentioned, we have proactively taken steps to lower our cost structure, adapting to the evolving market landscape and countering ongoing inflationary pressures. We remain disciplined in our approach to capital allocation, which will also focus on further enhancing our competitive edge through investments in advanced technology and operational excellence. To that end, while our Motional joint venture continues to progress on its technology roadmap, we have decided to cease capital allocations to Motional and are exploring alternatives to lower our ownership interest. Finally, while we will keep prioritizing organic investments and strategic M&A opportunities that promote profitable growth, our stock price currently offers an appealing opportunity to return capital to our shareholders, with plans for up to an additional $750 million in share repurchases during 2024. The last few years have presented the industry with significant macro challenges, including COVID and supply chain disruptions. Throughout this time, our management team has remained focused on execution, strengthening our competitive position, and enhancing the resilience of our business model, which is reflected in our 2023 financial outcomes and our forecast for 2024. We have greater conviction than ever in the long-term value of our business and are determined to deliver that value to our shareholders. Now, I will pass the call to Joe to go over the numbers in greater detail.

Thanks, Kevin, and good morning, everyone. Starting with a recap of the quarter on Slide 10. Revenues were $4.9 billion, in-line with our expectations, including the impact of the UAW strike in October. Adjusted growth in the quarter was 2% over the prior year, representing negative growth over market of 5% in the quarter. As Kevin noted, and I will discuss in more detail, the growth over market primarily resulted from the impact of the UAW strike and North American OEM production mix, as well as customer mix in China and slower high voltage growth. Adjusted EBITDA and operating income of $772 million and $600 million, respectively, in-line with our expectations. Operating income margins expanded 90 basis points versus the prior year, reflecting strong flow-through on incremental volumes, the benefit of customer recoveries of direct material increases, and strong operating performance, including the benefit of cost-saving actions taken in the second half of 2023, offsetting the impact of the strike, which totaled approximately $50 million in the quarter, and foreign exchange was a 20-basis point headwind in the quarter. EPS was $1.40, an increase of 10%, driven by higher operating income, partially offset by interest and tax expense. Operating cash flow totaled $624 million, and capital expenditures were approximately $200 million for the quarter. During the fourth quarter, we repurchased $300 million of stock, bringing full year repurchases to approximately $400 million. Looking at revenue in more detail on Slide 11. As noted, revenue in the fourth quarter was $4.9 billion, reflecting sales growth of $188 million, a favorable $62 million contribution from net price downs and commodities, and foreign exchange tailwinds of approximately $29 million. From a regional perspective, North American revenues were down 7% or 11% below market, driven in part by the UAW strike impact, which totaled $100 million in October. In addition, as we cautioned during the fourth quarter, foreign manufacturers, primarily the Japanese OEMs with whom we do not have significant content, experienced very strong year-over-year production growth in the quarter, further impacting the relative production mix in the North American market. In Europe, adjusted growth was 6%, in-line with vehicle production, driven by active safety growth of 18%, partially offset by slower high voltage growth in the region. And in China, revenues were up 12%, driven by SPS growth with local OEMs. China growth over market was 8 points below vehicle production, primarily impacted by lower production at multinational joint venture customers, as well as slower high voltage growth of 4% in the quarter. As I will discuss in more detail shortly, we do expect growth over market to increase in 2024 from the second half 2023 levels. Moving to the AS&UX segment on the next slide. Revenue growth was flat in the quarter. Active safety growth was 11% despite the UAW strike, which primarily impacted the active safety product line in North America. User experience was down 16% in the quarter, driven in large part by the previously noted China customer mix shift, impacting our user experience volumes with multinational joint venture OEMs in China. For the full year, adjusted revenue growth was 17% with strong active safety growth of 29% and user experience growth of 4%. Segment adjusted operating in the quarter was $141 million, up 83% over the prior year, despite the negative strike impact of $10 million in the quarter. Operating income margins expanded 440 basis points to 10.4% as performance and cost-saving initiatives offset higher labor costs. Full year operating income and margins were in-line with our original expectations, as margins improved by almost 40 basis points, inclusive of a full year strike impact of $15 million. As we have previously discussed, given the nature of the AS&UX business and the timing of certain customer reimbursements and engineering credits, the quarterly profitability of the business is cyclical and weighted to the fourth quarter. We would expect this trend to continue in 2024. Turning to Signal and Power on Slide 13, revenue in the fourth quarter was $3.6 billion, an increase of 3% or 4% below vehicle production. As anticipated, overall SPS growth over market was impacted in North America by the UAW strike and OEM mix, representing approximately 5 points of growth in the quarter. Lower high voltage growth, which primarily impacted the European region, was lower by 2 points. For the full year, adjusted revenue growth was 11% despite the impact of the strike. High voltage growth was approximately 20% for the year and segment growth in China was 13%. Segment adjusted operating income was $459 million in the quarter, up 3% from the prior year, despite a $40 million or 90 basis point strike impact. Operating performance was strong, including the benefit of lower supply chain disruption costs, offsetting the impact of higher labor and other costs. Customer recoveries offset the impact of material inflation and commodities in the quarter, and foreign exchange continued to present a headwind, equal to 60 basis points on a year-over-year basis. Full year operating margins were up 50 basis points despite the significant headwinds related to foreign exchange and the strike. Turning now to Slide 14 and 2024 macro expectations. We are forecasting global vehicle production to be flat for the year, reflecting approximately 93 million units. Regionally, we expect North America to be up approximately 1% at 16.5 million units, Europe down 2% or approximately 18 million units, and China flat at approximately 30 million units. While we remain cautious about the impact of macroeconomic and geopolitical factors, we do believe that supply chain constraints have improved significantly, and based on what we see today, should not have a significant impact on overall customer production levels. Our macro assumptions also assume copper at $4, Mexican Peso at 18.25, the Euro at 110, and the RMB at 7. Moving to Slide 15 and our 2024 full year outlook. We expect revenue in the range of $21.3 billion to $21.9 billion, up 7% at the midpoint compared to 2023, reflecting 7 points of growth over market. EBITDA and operating income are expected to be approximately $3.28 billion and $2.55 billion at the midpoint, reflecting strong flow-through on volume growth, continued margin expansion in higher growth product lines, and operating performance and cost reduction initiatives to offset increasing labor headwinds, including higher-than-expected labor inflation in Mexico, as well as the stronger Peso. Adjusted earnings per share is estimated to be between $5.55 and $6.05. EPS growth of 19% is primarily driven by strong earnings and lower interest expense, partially offset by an increase in the expected tax rate to 17.5%. As I will discuss further, we are targeting share repurchases of $750 million in 2024 and have reflected a full year benefit estimate of $0.05 per share at the midpoint of our guidance. As it relates to Motional, as Kevin mentioned earlier, Aptiv will not participate in future funding rounds. Despite the continued progress made by the Motional team on their technology roadmap, given the pushout of the commercialization of the Level 4/5 robo-taxi business model, we no longer believe capital allocation to Motional is appropriate for Aptiv. In addition, we are also exploring steps to reduce a significant portion of our common equity holdings. Working within the construct of the joint venture agreement, we will look to sell or otherwise reduce our holdings during 2024, reducing the dilutive earnings per share impact of the Motional losses on Aptiv's earnings. Given that the exact timing of the reduction in shareholdings is not yet known, we have included the expected full year impact of Motional's losses in our current outlook: a non-cash equity loss of approximately $340 million or $1.20 of earnings per share. Moving to cash flow, we expect 2024 operating cash flow of $2.3 billion, driven by higher earnings. Capital expenditures are expected to be approximately 5% of revenues. Finally, although we are not providing quarterly guidance in 2024, we did want to provide some perspective on calendarization during the year as both revenue growth and earnings are weighted towards the second half. Our full year guidance assumes adjusted revenue growth in the first half of the year of 3% to 5%. Adjusted growth in the second half of the year accelerates to 9% to 10%, and is weighted towards the fourth quarter. With respect to earnings, consistent with the higher level of revenue growth and the previously noted cyclicality in the business, margins will expand throughout the year similar to 2023. On Slide 16, we provide a bridge of 2024 revenue and operating income guidance as compared to 2023. Starting with revenue, our growth over market combined with flat global vehicle production results in a net contribution of revenues of $1.2 billion. The full year benefit of material cost recoveries will effectively offset changes in commodity prices, and price downs, and FX is estimated at a positive $100 million. Turning to adjusted operating income, we expect margin expansion of 120 basis points in the midpoint of our guidance, driven by continued strong flow-through on incremental volumes, net price and commodities will offset, and we expect our strong operating performance in 2023 to continue into '24, as manufacturing and material performance as well as additional cost reduction actions are expected to offset incremental labor costs and non-material inflation. In summary, we remain focused on driving disciplined revenue growth while balancing investment in the business with increased levels of performance and expanding operating margins. Moving to Slide 17, we wanted to discuss our updated growth over market framework of 6% to 8%, down from our prior range of 8% to 10%. As we have discussed, our growth over market represents Aptiv's relative secular growth expectations above global vehicle production. During the second half of 2023, our growth over market was negatively impacted by several factors, including the UAW strike, stronger Japanese OEM production in North America, as well as a change in the Chinese customer mix as local Chinese OEMs grew faster than multinational customers in China. When combined with a direct UAW strike impact, the OEM and customer mix reduced our growth over market in 2023 by approximately 5 points on a full year basis. In addition, a slowdown in high voltage growth, driven by lower EV production, and the exiting of a relationship with a smaller North American EV-only producer accounted for a 2% decrease in growth over market. As we look out into 2024, we believe the impact of the UAW strike and the OEM production mix in North America effectively reverses. In addition, improved production schedules at our multinational Chinese OEM customers and our continued growth with local Chinese OEMs will contribute to higher growth over market in China. However, we are forecasting high voltage growth to slow to approximately 20% in 2024, consistent with the 2023 levels, but down from pre-2023 levels of approximately 30%. Our updated framework of 6% to 8% incorporates these changes as well as the continued contribution from our active safety, engineered components, and commercial vehicle product lines. Slide 18 provides an update on our multi-year margin expansion performance. As noted, we saw very strong margin expansion in 2023, exceeding the expectations we laid out last February. Operating income margin expanded 150 basis points over 2022, despite the strike impact of $80 million and foreign exchange headwinds of over $100 million. Strong flow-through on sales growth was partially offset by net price in commodities as a slight headwind, and we saw significant reductions in supply chain disruption costs, and the operating teams drove incremental material and manufacturing performance, more than offsetting the impact of higher labor and operating costs. The accomplishments of last year provide a strong jumping-off point for 2024, as we target 120 basis point margin expansion at the midpoint of our guidance. In addition to the ongoing performance initiatives during the second half of 2023, we also took several cost reduction actions to help bolster our overall performance and help ensure achievement of the 2024 margin expansion. These additional actions, as well as our continued focus on our overall cost structure and footprint, are necessary as we expect to see continued labor and operating cost pressures, particularly in our Mexico operations over the coming years. We are also forecasting the Peso to remain at a relatively strong level in 2024. Before handing the call back to Kevin, I'd like to touch upon our continued strong performance as it relates to cash flow generation and capital allocation. We generated a record $1.9 billion in operating cash flow, allowing us to continue to maintain a disciplined and accretive track record of capital deployment. In 2023, we continued to invest in the business, focusing on longer-term growth and innovation. In addition, we opportunistically de-levered by paying down our $300 million Term Loan A resulting in a full year earnings per share benefit of $0.05 in 2024. In addition, we purchased $400 million of stock, including $300 million in the fourth quarter. Looking at 2024, we expect operating cash flow to increase to $2.3 billion, and we will continue to maintain a well-balanced approach to capital allocation. In addition to both investing in organic and inorganic opportunities, we are forecasting additional share repurchases in 2024, targeting a total of $750 million in the year, while we will continue to maintain our current financial policy, as it relates to our balance sheet and leverage profile. As we have discussed in the past, our sustainable business model and relentless focus on operating performance enable us to convert more income to cash, allowing Aptiv to maintain a well-balanced approach to capital allocation that we believe helps drive shareholder value. And with that, I'd like to hand the call back to Kevin for his closing remarks.

Thanks, Joe. I'll wrap up on Slide 20 before opening the line up for questions. As the management team reflects on 2023, we expect the pace of innovation to continue to accelerate and drive ongoing transformation across industries. Aptiv is perfectly positioned to benefit from this change, having identified the safe, green and connected megatrends over a decade ago. We have purpose-built our portfolio to provide flexible, high-performance and cost-effective solutions that address our customers' greatest challenges, all on a global scale. At the same time, we remain committed to flawless execution and operational excellence, enabling us to unlock incremental profitability and deliver value to our shareholders. In closing, I am proud of what the Aptiv team accomplished during 2023, and I'm excited about what we will deliver in the years ahead. Operator, let's now open the line for questions.

Thank you. Our first question is going to come from Joseph Spak from UBS. Please go ahead.

Thanks. Good morning, everyone. I guess, just to start, appreciate the commentary on the long-term growth over market target. Back of the envelope, it would seem like the reduced growth would lower your longer-term margin goals by maybe 20 bps, 30 bps. Is that sort of reasonable? And can you sort of address any other factors that may impact the long-term margin goals?

Yeah, Joe. I'll start, and then Kevin can jump in. We'll see that come down a bit as high voltage slows. In Slide 18 of the deck, we outline the progress we've made in 2023 and 2024, which we feel is quite strong. Looking ahead to 2025 margins, we estimate around a 14% total margin for Aptiv in 2025, but we currently face a headwind of about 100 to 150 basis points due to lower growth compared to the market and the impact of a stronger peso. The peso changes from last year have integrated into our cost base. Additionally, for 2025, we're also seeing increased operating and labor costs in Mexico. Therefore, I would say those margin targets are likely pushed out by about a year, and we'll be working on that throughout this year and providing updates as needed. Kevin, do you want to add anything?

No, listen, I think you captured. I think, to the point Joe made, we'd say the bigger headwind quite frankly is labor inflation, especially in places like Mexico, relative to growth rate from high voltage electrification. Just to remind everybody, although it looks like adoption has slowed, the growth rate is still, on a relative basis, extremely high. So, just want to remind everybody that we are believers in the ongoing trend of the penetration of electrification in the automotive space.

Thank you for that. Regarding the buyback, I see it as a positive move for capital allocation. However, you currently have $1.6 billion in cash reserves, and your free cash flow guidance is around $1.2 billion. You've mentioned that your minimum cash requirement is between $600 million and $700 million. Therefore, the $750 million buyback seems to align with your cash usage strategy. How should we consider the total cash on hand? I realize you want to retain some funds for potential acquisitions, but it seems there is still a significant amount of cash available that could be utilized effectively.

Yeah, maybe I'll start. Listen, Joe, your observation is a good one. Listen, our primary focus is on continuing to invest in the business for profitable growth. We'll underscore that. We feel like we have a very strong competitive position. We feel like there are opportunities to further widen the competitive moat. So, those are opportunities that we will continue to evaluate. But to the extent those opportunities don't present themselves, we'll certainly look at returning incremental cash to shareholders. So, we'll strike that balance. But it's important that we have some level of flexibility to react when opportunities present themselves.

And our next question is going to come from Rod Lache with Wolfe Research. Please go ahead.

Thanks so much, team. Two questions. The first, Joe, I appreciate the help on the cadence, first half, second half. So, if it sounds something like the outgrowth, 4% first half, maybe 10% in the second half. Could you help us walk through the Chinese mix? I think everyone understands North America and the strike. But when we say domestic Chinese, it sort of means multiple different things. And I guess what people are trying to figure out is why that may improve over the course of the year. Is it specific Aptiv things or is it just a production schedule, the way it plays out for your customer base?

It's driven primarily by the production schedules of our customers, which include various launches. We are observing increased launch activity and schedules are ramping up from multinational companies in the latter half of the year. Additionally, what we're noticing aligns with IHS's insights about local OEM growth. The 30% increase noted in the second half of 2023 is starting to stabilize. Consequently, the growth rate we rely on for our market calculations is beginning to adjust due to the substantial growth seen in the latter part of 2023. Typically, we focus on the top 10 or 12 Chinese OEMs from a local viewpoint. We have their schedules, but we are also considering forecasts regarding production levels.

Sure, I'll add a few items regarding the evolution of our business, particularly in relation to China. For instance, in 2023, about 60% of our bookings in China were with local OEMs. We focus on companies like Geely, BYD, and Changan, which are leaders in the market. We are cautious about our overall exposure and aim to partner with players that have growth potential in China while also being interested in exporting, given the advantages we can provide. In terms of 2023 revenues, approximately 40% came from domestic OEMs, and nearly 60% from multinational companies. This is expected to shift to 50% in 2024 and continue to rise towards 60% to 70% in the following years. Therefore, the mix from our current list of successful partners is improving.

Yeah, that's perfect. That was my follow up. I mean, do you think sort of exiting '25 into '26, no, you don't have to get very specific with the timeline, that you start to become pretty agnostic, meaning that the targeted plan that you laid out, you should be pretty well adjusted, assuming the mix kind of normalizes as we get to '25, '26, but that domestic turnover happens around the '25 to '26, where we won't be talking about this mix issue as much?

Yeah, I think we were in a unique situation in 2023 where we saw a significant swing. Joe made the point. I think he's absolutely right. We, as a team, think we're absolutely right, that you're going to see that more balanced on a go-forward basis in terms of year-over-year change. What we're trying to do is just make sure we're balanced across multiple customers, but ensuring they're the right customers. And there are, for example, some of the global JVs that are better positioned than others. And there are certainly some very strong local Chinese OEMs who are doing extremely well in the China market but have come to us with a real focus on how do we assist them, how do we enhance our capabilities to take product outside of China into principally Europe at this point in time.

Good morning, everybody. Just, first of all, to clarify some of the discussion off of Chris' question. Obviously, we've seen some ongoing share shift away from the western OEMs over the past couple of years, and it sounds like the reason why you don't expect that to reoccur in 2024 is because of the big uptick in backlog that you have from BYD, Changan and some of the other Chinese OEMs. Is that essentially it?

I think there are a couple of things to note. Overall, you've experienced growth of more than 30% in quarters from local Chinese OEMs. We believe that will continue. Additionally, based on our scheduled outlook and some forecasting services monitoring that market, we expect growth to start leveling off as they catch up to some of their high comparisons. Meanwhile, there are new product launches coming from multinationals that have faced platform challenges in China over the last couple of years, and we anticipate these launches will increase their overall production and our content as well. This is how we’re viewing the situation as it starts to balance out, not to mention the mixed shift within our business that Kevin discussed.

So, Rod, at a high level, we expect share to continue to shift to the local OEMs. I think what Joe and I were talking about is the magnitude of the shift over a relatively short period of time. We expect that not to be the same in 2024 as it was in 2023.

Right. Okay. Understood. On high voltage, it looks like you're implicitly assuming a similar level of EV growth in 2024 versus what you saw in 2023. As you've observed, there's been some slowing late in the year in 2023. Maybe you can elaborate on the models or factors that you consider that lead you to conclude that the growth is pretty similar for EVs. And can you maybe also give us any color on the assumptions that you make behind those high voltage bookings? Do you have a penetration assumption? Or is there some color you can provide that helps you underwrite that level of revenue associated with the bookings?

We are currently analyzing customer schedules, including their launches. For 2024, we are seeing a growth rate around 20%, consistent with 2023. There are new program launches, but it's important to note that this segment is predominantly in China and Europe, and we are experiencing some weakness in North America, with schedules declining. This situation is well understood. The combination of new product launches, customer schedules, and our focus on China and Europe is significant. Historically, our penetration rates have been lower compared to others, and we haven't updated our long-term outlook since February, which suggests we might be below a 30% penetration. However, in the coming years, we expect to reach the range of 10% to 15%.

Hi, thanks for taking the questions. It's been a good call. How much of your CapEx and R&D is being spent to support full BEV architectures?

In terms of total advanced engineering, which is the closest development, which you know, Adam, which is roughly 25% of our total engineering spend, we would say somewhere between 5% and 10% would be BEV-related, electrification related, I should say.

No, there's no such requirements in the joint venture agreement, and we wouldn't expect to sign up for anything like that.

It's Kevin. Motional is progressing well on the tech roadmap that we've outlined, and I want to highlight that HMG has been an exceptional partner. They've exceeded our initial expectations both operationally and strategically. However, the commercialization of the technology, particularly the costs associated with hardware delivery, poses challenges in terms of adoption in the mobility on-demand market. Consequently, this delays the realization of revenue and earnings for the business, leading us to reconsider our investment decisions compared to other opportunities that promise profitable growth. While it was a difficult decision, given our current situation and the tangible benefits we've gained so far, particularly in advanced ADAS solutions, we will continue to collaborate with Motional in integrating their technology into our ADAS platform. However, the timeline for ongoing funding and adoption of this technology in the mobility on-demand market is too far into the future to be financially viable for us, especially considering the other opportunities available.

Yeah, as I said, we have to work through. Obviously, we have a JV construct. I won't comment for others involved in the joint venture. Aptiv's intention is to no longer participate in funding. And within the constructs of the joint venture agreement, we are looking at opportunities to reduce our holdings of the common stock, and that work is in process now. Just given the nature of transactions like this and the fact that we're working within a joint venture agreement, we felt it was prudent to put the full Motional impact into the guide versus trying to take an educated guess at when something may complete. But obviously working through that now, but the funding decision has been made.

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