Aptiv PLC (APTV) Earnings Call Transcript & Summary

Okay. Great. Thank you, everybody, for joining us. My name is Mark Delaney, and I cover Aptiv at Goldman Sachs. I'm very pleased to be hosting Aptiv's CFO, Joe Massaro.

Hello.

As many of you know, Aptiv is a leading supplier of electronic components and advanced automotive safety systems. Aptiv is one of the fastest-growing companies in the auto industry, targeting 8 to 10 points of growth over automotive production, driven by its strong content as well as good market share in both EVs and ADAS applications.

I thought to kick things off, we could start on the operating and supply chain environment. It's been something that the whole industry has been dealing with for some time now. In your earnings call last week, Aptiv said it's raising prices and seeking recoveries and this aspect, coupled with some of the productivity measures that you're undertaking, is allowing the company to maintain its 2022 guidance despite higher raw materials and logistics costs. To better understand how far you are along in that process, I was hoping you could comment on roughly what percentage of the price increases that need to flow through have already been accepted by OEMs.

Yes, if you look at -- I'll sort of refer -- put it into 2 buckets. If you look at sort of what we have line of sight to, meaning we've had an inflation hit a particular program or a particular product and are in discussions with customers on that, and those discussions obviously take time and can vary a little bit customer to customer. I'd say that's well over 90%. So in terms of identifying what we need to do, where we need to go get it, what the plan is very far along. I'd say actually sort of inked type deals, agreements above 50%, I call it sort of that 60-plus percent at this point, which is really where we thought we would be. Q1 was sort of right on track with that. The conversations are obviously complicated for a couple of reasons. One, you want them to remain constructive. These are our customers, right? And we've got a fair amount of economics that have come through from an inflation perspective that we need to work through, and we need our customers help, either directly or indirectly, to work through them. I think most of our customers, some of them are slightly different on how they're approaching it. But I think, generally speaking, they're aware that that's just not Aptiv, but the supplier base as a whole is dealing with a fairly large inflation impact and need to work through. I think what our customers expect, which is a very reasonable expectation, is for us to have tried to make -- is for the supply base to try to offset before just coming from them asking for more price. So we've spent a lot of time on product redesigns, reengineering, identifying dual sources or alternative suppliers. And maybe we would switch or not, but at least you start to build up some leverage and some optionality. So that's one of the reasons those options or those discussions can take a long time is because you do have to work through all of that. And again, I think that's a reasonable expectation on the part of our customers.

That's helpful. One of the most difficult parts of supply chain has been semiconductors. Maybe you can talk more on your expectation for semi supply in the second half of this year. And is the potential improvement in semi supply in the second half being negatively impacted by the COVID-19 restrictions in China?

Supply chain around semi remains very tight. It's -- you hear a lot of times people say it's better. It is better relative to your comparison point. So clearly, Q3, Q4 last year was an incredibly constrained period for semiconductor chips, driven by just overall supply-demand imbalance as well as some of the COVID related impacts in Southeast Asia, where a lot of the packaging, test and finish work for global semiconductors occurred. So it's clearly better than that -- better than then. It's still very tight. There's still a lot of need to premium freight and sort of just in time, just in time, very tight delivery schedules. Hopefully, that continues to improve. We've been very clear with our semiconductor suppliers, as I think the industry has been around our needs and demand. So I would expect to see that tightness continue to improve, particularly if other end markets that maybe they're selling into slow down a bit. I would say at this point, China, as it relates to global supply chain, the risk is probably less semiconductors. There is a lot of semiconductor, obviously, out of Taiwan. There's a lot of -- from a wafer stock perspective, as I mentioned, there's a lot of test and final assembly in Southeast Asia, but not as much in China. I think from a supply chain perspective, what we've been mindful of, haven't seen disruptions yet, but we've been very mindful of more of the passive electronic disruption potentially out of China, whether that's the PCB boards themselves or some of the passive electronics that sits on PCBs. And again, managing through it at this point, but that would be more of a concern than maybe the semiconductor impact coming out of there.

Okay. And you mentioned on your earnings call last week as well as today working to find new suppliers and sources of supply. I think semiconductors is probably one of the bigger areas you've been working on that. Maybe you can give us a better sense of how much added flexibility you have with finding second sources. I mean, is it 10% to 15% of the time maybe you have a second source and historically, it was 5%. I mean those numbers I just made up, but any sort of sense of what it might be?

Yes, it's hard to sort of quantify like that. It's clearly not a problem for all semiconductors, right? There are some standard semiconductor components that have sort of ready replacements in the market. There have been cases over the past 1.5 years where there is an automotive grade chip that was designed, maybe it has some certain heat treatment, and you put it. It's designed for the engine compartment, but there's an industrial equivalent to that chip that could be used in the application if you could get the -- if you're not in a particularly hot part of the car, right? There's all kinds of that type of swapping. And we really worked through a lot of that with our customers in last year to deal with the original constraint issues. What we're starting to see now, I think, for the chips that are harder to swap out either because they're more complicated technology or in some cases, they're in a safety critical system, which requires a lot more additional testing. I think the elevated prices and [indiscernible], the higher pricing and the tightness in the market. We're starting to see some semiconductor -- some other semiconductor companies take a look at those automotive applications, and they may be more attractive to them than they were a couple of years ago. So seeing some semiconductor providers in China start to take an interest in certainly semiconductor chips for Chinese production, which we view is helpful because that could free up supply for the other regions as well as some smaller Western semiconductor companies that have maybe not been in automotive in the past, but just given the economics and some of the things that have happened over the past 1.5 years have started to take a look at that market.

Okay. That's helpful. We spoke a little bit about China already. It's been impacted in a number of ways on the auto industry with the COVID zero policies. Maybe we could start with Aptiv, but also hoping to understand the industry. But for Aptiv specifically, maybe can you talk about what the status is with your factories?

Yes. Most of our plants are up and running. We had 1 plant that I think this has picked up in the broader press over the past day or 2, where we did have some COVID cases come up, and it's gone into its 5-day quarantine period. So again, we're obviously following all the local rules. I would say much different than February or March of 2020 when China was shut down for COVID, right? There was nothing happening. The approach is clearly still obviously zero COVID, but there -- it's a constructive approach. It's done in zones. There are plants that are given permission to open. There's protocols around testing. They've got tremendous testing capabilities there in terms of being able to process large amount of tests in a single day. And they've built up protocols around that, that we are -- in the industry are following. So at this point, all but one plant is up and running. Capacity, they're not all running at full capacity. One of the challenges tends to be just given the zonal approach to enforcing the COVID rules. The plant could be in a particular zone that's been allowed to open up, but some of its employees may be in a zone that's not been opened. So it's hard for those employees, obviously, to come to work. But our expectation, as we talked about last week in the earnings call is that Q2 is heavily disrupted as a result of COVID lockdowns in China. Again, just not us. This is obviously an industry impact there. But the goal, and we're seeing this, obviously, from our customer schedules is that they start to put production back in the back half of May and start to slowly ramp through June. There's a view that, that's when things will start to open up. And for the most part, missed production in March, April from our customers' perspective has been rescheduled into the balance of the year. And I think fortunately, this is occurring early enough in the year that if they are able to hit that May, June sort of reopening time frame, there is enough time left in the year to make up for that production. And we have some customers that have been very vocal publicly about their intent to do that. And that's really what we've assumed in our guide at this point.

Super helpful. Maybe we could shift gears a little bit and talk about ADAS and autonomous vehicles and some of the efforts that Aptiv has going on there. Motional, which you have a joint venture investment in, is planning a commercial launch of robotaxis in 2023 in Las Vegas with Lyft. Can you talk about how the company is progressing towards that goal, including transporting passengers and the IONIQ 5 robotaxi in the second half of this year?

Yes. Yes. No, there's Motional. It's our -- we originally bought a company called nuTonomy in 2017 that's specialized in the robotaxi technology stack, the software stack. We had previously acquired a company called Ottomatika in 2015 that was the Carnegie Mellon equivalent of nuTonomy. nuTonomy came out of a group of MIT and Ottomatika out of Carnegie Mellon. We integrated those businesses. They continue to develop their automated driving software stack. They started a relationship with Lyft a couple of years ago, had provided well over 100,000 rides with Lyft in the original prototype. Now there was a safety engineer in the front seat of that vehicle, but the ride was effectively driverless. And so we've been on the Lyft network in Vegas for a few years now. And obviously, with the COVID had to shut that down. But have done over 100 -- about 120,000 rides with Lyft. So it's something we've been doing for a while. In March of 2020, we put that business into a joint venture with Hyundai, who we felt was a really good partner for the business to help with just obviously not the funding. Hyundai put about $1.6 billion of cash into the JV upon establishment and provided $400 million worth of engineering services to really help get the next generation of vehicle on the road, which is now out testing today. It's the IONIQ 5, as Mark mentioned, it's a fully battery electric vehicle. And we'll start commercial operations with Lyft, completely driverless early next year, first half of next year in Las Vegas providing driverless rides. Motional also has an agreement with Uber to provide Uber Eats food delivery -- driverless food delivery in the Santa Monica area of California. So commercial progress starting to be made. There's a lot more to do, obviously, on the commercial side, but that really speaks to the progress they've made on the technology side. So just by -- based on where we are with Uber and Lyft, they've clearly evaluated the technology and are very comfortable with those vehicles being on public roads and taking on that commercial activity.

[ EVs ] have been notoriously delayed for the whole industry. Anything that's changed with your technical progress in particular, that's giving you the confidence in those time frames?

No. I think, listen, I think we were -- for a number of years, we were talking about 2023, 2024 being commercial launch of robotaxis. I think there were some folks that maybe were a little bit ahead of that, and they have pushed back. But I think for the most part, we've generally been on track. We've talked about sort of that Level 4, Level 5 functionality, really not being available in consumer vehicles until the end of the decade, so call it 2028, '29, '30 type time frame. So that has always been our perspective. I think just given our history with the Ottomatika and nuTonomy group, we drove cross-country in 2015, 99% automated ride between San Francisco and Newark. So we had a good sense of what it took to do that ride and where it was really going to take the technology to evolve to the point where it could be used openly on public roads. And like I said, the team has done a great job of hitting those technology milestones.

Maybe we could look a little bit further down the road with Motional JV. When do you expect that to generate more material revenue? And related to that, how should we be thinking about the equity method line. Right now, it's negative. What might need to happen for that to get to breakeven?

A lot more commercial activity, which the team is very focused on. As I mentioned, I think they start to have -- start to generate revenues next year from those 2 agreements. The business is funded through 2024, so the cash that Hyundai put into the joint venture. We'd expect to see revenue grow really from, although we'll have initial revenues next year in 2024, we'd really expect to start to see revenue ramp between 2025 and 2028. And depending on that ramp, really view that as the breakeven period as well.

That's helpful. Maybe we can transition slightly to ADAS. It's been a key driver for Aptiv. And I think this past quarter, I believe you said your growth over market and active safety was 9%, which is very strong. You also talked about some good bookings momentum, which, of course, is critical to sustain that. So maybe talk a little bit more on where you're seeing that bookings activity. Do you think this year could be higher in active safety bookings than what you have last year?

Yes, I certainly think that's possible. I mean, bookings -- and this has always been the case for Aptiv, well before COVID or any disruptions. Bookings are very lumpy for us. And it's really an industry thing, right? Just large awards tend to come up, then you're working on those programs for a couple of years before launch and then they launch and their revenue for anywhere from 4, 5, 6, 7 years. So they tend to be lumpy and somewhat episodic. But we've done a really good job with $24 billion in bookings last year as total Aptiv driven by active safety in our high-voltage business. Off to a very strong start in Q1 with over $6 billion of bookings in Q1. The Q1 bookings was actually a little disproportionate. We're usually somewhat more balanced, but we only -- we had a little less than $1 billion of bookings in the Advanced Safety and User Experience business, which is low. But as Kevin mentioned -- our CEO mentioned on the earnings call, have a really big Q2 for that business. And again, just speaking is somewhat of the lumpiness and would expect to do about $3 billion in bookings for Advanced Safety and User Experience in Q2 and would certainly expect bookings to be in line, if not slightly ahead of last year's number, based on what we're currently seeing. And again, always a chance of something slipping just given the lumpiness, but the momentum in the business long term has been very strong. And when you think particularly about the active safety, and we've talked about this for the past couple of years now, we've really gotten ourselves into a very strong position, a leadership position around what I'll call the large Level 2 or Level 2+ active safety systems. And I think there is a competitive advantage. The more of those systems you do across the number of OEs, your ability to do those systems cost effectively and do them efficiently and hit the production milestones just improves over time. And we launched our first big Level 2 system in 2015 with Audi, a system at the time that was called zFAS that was really the largest Level 2+ system at the time. And our businesses continue to evolve since then, and we now have Level 2 content, active safety content, on vehicles with over 20 global OEs. So we've really reached a critical mass. And I think the competitive moat has widened to a point where we're very well positioned to win the work that we want to win. The large systems, the exciting systems to work on the systems where -- that are tied to platforms that we think have the best chance of the platforms, the cars hitting their numbers as well as opportunity for the OEs to increase take rates on that type of technology.

Yes. It's a super interesting technology and exciting to see it growing in adoption. A number of the OEs given the growth that's taking place in this area. I've talked about trying to do more of that engineering themselves, especially on the software side. So maybe you can talk about traditionally what does Aptiv provide for an L2 system in terms of integration and software and for an OE that wants to do more of that software, how many of that look for Aptiv going forward, what would your role be?

Sure. So yes, if you think on the software side, we don't really see any in-sourcing of the hardware side of things, right? So we don't have OEs that are looking to build their own domain controllers or their own connection or electrical architecture system. So the conversation that often comes up around in-sourcing is really around software. And it's -- as you would expect, it's a complicated area, so it's a bit of a nuanced explanation because we often hear what your customers say they're going to in-source and do all the software. There's an element of where the vehicles go and the amount of software that's going into the vehicle and truly by sort of 2030 having what -- so the industry refers to as a software-defined vehicle, where our customers have to do more on software. They have to have capabilities to understand the entire software package that's going into vehicles, right? Because at this point, they have someone like ourselves providing a robust software package on the active safety system or the infotainment system, maybe someone else is providing the battery management system or something. And at some point, all that software has to come together and work effectively in the vehicle, at the vehicle architecture level. And that's really up to the OE to do that. So it's not a surprise that they're investing in software capabilities. And we find the ones that invest in our strongest and software capabilities are actually the ones that are able to go the most quickly upon technology adoption and technology rollout. So it's a good thing. When it comes to the actual pieces of the software, the software development, we're obviously very focused on the product lines we've talked about. And if you're strong in active safety, we're very good with radar algorithms or what we call sensor fusion algorithms, which is the software programs that take the input from the radars, take the input from the cameras and put it into a -- bring it together so the car can make some decisions over what it's seeing and what it needs to do. We're also very good at policy or path planning, which is the decision-making tool behind once the car understands what it's seeing, what does the car want to do and how does the car control itself. So that's typically where we play on the application software side. We're also very good at integrating all of that software as well as other systems from other suppliers into the complete active safety system. And there are going to be times, and there are today, where our customers want to develop a part of that software that goes into the system. So now looking to develop the whole system, but a part of that software. And a really good example of that, and we've seen it a couple of times, particularly with what I call sort of performance brands as our customers are very interested in doing the highway pilot system themselves. The system that is going to control the highway -- going to control the vehicle on hands-free driving on the highway. And to some extent, they feel that's important to their brand, right, how the car performs at speed. It's something they believe they're the ones that are best capable of determining. At the same time, if that system has a traffic jam assist or a parking assist, that's something they're leaving with us or with other suppliers because they really don't feel that how a car drives in the traffic jam is necessarily important to the brand, right? It needs to do it safely, but it's going to be something that's fairly repetitive across vehicles. So that tends to be where we see it, how we see it splitting up. Our view of the software opportunity over the next decade in automotive, it goes from about a $30 billion market to over a $90 billion market. So plenty of opportunity for ourselves to increase our share in that software space, which is why we've acquired Wind River. But also there's some opportunity for the OEs there to take a piece of that and do it internally that doesn't necessarily result in sort of being crowded out or have that business taken away from you.

Yes. It dovetails nice in to my next question, which is on Wind River. Maybe you could just explain a little bit more around what Wind River brings to the equation for your customers and also what the synergies are with Aptiv?

Sure. So Wind River is -- it's a 40-year-old company. They've been around for a long time. They have not traditionally been in automotive. They are in aerospace and defense, a presence in telecom -- a growing presence in telecom and industrial automation. And they are an operating system company. They have the operating system company for what I'll call edge devices. So not an enterprise, not a sitting back at the corporate IT room, but really a device that sits out on the edge, an airplane, a car, a 5G cell phone installation that has to do a tremendous amount of processing on the edge, right? Can't rely on just sending questions back to the cloud and waiting for answers because the latency, the device itself really needs to think and do a lot of onboard computing. Exactly what we see with the vehicle. Wind River has created a DevOps environment called Wind River Studio, that allows for the development, deployment, life cycle management, gives digital twin capabilities of what a software stack for a particular edge device looks like. It also allows for containerization of the applications, right? So one of the challenges the automotive software industry has today is that because of our -- the decentralized nature of both the physical architecture, various computers within the car and the different software in those vehicles, it's hard for a vehicle manufacturer to update their software over the air, right? Unlike an iPhone where you can sort of do everything, right, whether it's an iOS update or downloading new apps or updating apps, everything can be done on the device through the cloud. The automotive software is not there yet. Some of those compute platforms are connected to the cloud, typically the infotainment or the navigation boxes. A lot of times, the safety critical systems are still airgap. They're still disconnected. And part of that is because without a single operating environment to both develop, deploy and manage the entire software suite within a vehicle, it's hard to update one piece of the car software and have 100% confidence you haven't disrupted another part, right, which is if you think about how that's done today, if there is a warranty issue or some need to update the software in a vehicle, the owner of the vehicle typically gets a letter in the mail. You're asked to go to the dealership. The dealer takes the car into the back, they plug it in. One thing they do is update or reflash whatever software needs to be reflashed, but they're also doing a check to make sure nothing else has been disrupted because it's not something that the existing software stack allows you to do easily. But in a Wind River developed environment, you can develop that software stack, use a bunch of the different partners or at least they can bring in their own software. We'll have our active safety or our infotainment software, put in as an application, containerized as an application in that stack. Wind River then provides full life cycle management. So if that software stack goes in 500,000 vehicles in one production year, that OE will be able to monitor that software over its life cycle from what Wind River refers to as a single pane of glass, somebody looking at 1 computer can manage those 500,000 instances of that software. So if a bug fix needs to go out, if an update needs to go out, they can do it through the cloud. And thinking further down the road, which I think is a very exciting opportunity for the industry as you get further out, the ability to enhance some of that software. You have a 3-year-old vehicle. It's changed hands. It has a new owner. The OE has the opportunity to offer some software enhancements to that new owner of the vehicle and actually have a commercial relationship with the second or third owner of the vehicle, which traditionally deal we haven't been able to do to offer the latest infotainment system or an upgrade to some element of the digital cockpit. So we really think it's the path the industry needs to be on, to really get to the point of realizing some of the benefits just not from a cost and warranty management perspective, but really down the road being able to offer enhancements. And we think Wind River, just given their experiences in other industries, is very well positioned to do that.

When you think about talking to your OE customers and trying to get them to use Wind River, I know there's a few that are listed on Wind River's website that are already using the product. But I think there's others that are not using Wind River today or at least not in the size that you may hope to. So what do you need to do to get the OEMs to sign up to use Wind River?

There's -- it's a need in the industry. So it's not as if we're knocking on a door for something they don't -- our customers don't need or don't know they need. So there's been a lot of focus on how to get there from a software perspective. I think Tesla's offered the industry a look at what could be. I think Tesla does a lot of what I described as the future state for the other OEs. So it's a conversation they're ready to have and interested in having. And I think once we'll close the deal in the middle of the year, hopefully, by the end of June or early July, just finalizing some of the regulatory processes. But it's really going to be a full push with Wind River and our Advanced Safety and User Experience commercial teams to go in and start to show them what we think is possible. And quite honestly, some of the outreach has already started from our customers coming in, coming to us and asking what this was all about, and what do we think we can do. So I think the commercial discussions and those opportunities will come pretty quickly after we close the deal.

Is there any potential to better integrate some of the software with the hardware products you're offering. You've got smart vehicle architecture. You've got a lot of your software products already. Maybe you can give us a couple of examples. If you have any OEMs, [indiscernible] come to you with some of those sorts of things.

Yes. I think the -- it's interesting. So smart vehicle architecture for us is we've been talking about it for a couple of years now. It's really the redesigning of how a vehicle is architected. It's signal, it's power, processing network, the number of compute platforms that are in the vehicle. As I mentioned earlier, it's an incredible balkanized architecture at the moment, right? There's can be upwards of 100 smaller compute platforms within a vehicle. Not all of them communicate well with each other. There's an ability, and we've been doing some of this within particular domains of taking those applications and bringing them into a more robust, larger compute platform and putting them all in the same software system. That provides, again, more functionality at better cost. Ultimately, our view on a smart vehicle architecture, that has to happen with the entire vehicle, just not domain by domain. So instead of a 100 compute platforms in a vehicle, you'll get to the point we think in the next -- certainly in the next 5 to 10 years, where you've got maybe 2 or 3 large compute platforms in a vehicle that are running the entire vehicle and providing redundancy for each other because you get into some of the self-driving or highway pilot-type features. You're going to want your systems to have redundancy, right? You can't rely on the driver if there's a systems problem. The path to hardware consolidation, we've talked about for a long time, is, while it by no means easy, it's somewhat easier to envision, right? You consolidate, you put in bigger boxes your network differently. There are what effectively would be viewed as routers within the vehicles, the zonal controllers that help the signal and power distribution throughout the vehicle, but the main processing is being done in the bigger boxes. Wind River brings the software consolidation to that hardware consolidation, right, because if you're going to run 2 or 3 big boxes that control the entire vehicle, you're going to need an open development system. You're going to need an operating system and a development environment, where you can bring in all of the various software programs that are currently in a vehicle. You can take them off of their individual controller. You then incorporate them into this broader system. So in the future, an individual chassis control goes away, but the software to control the chassis comes into this bigger domain controller. And Wind River really is the software stack where that ultimately will all get housed.

That's helpful. Maybe we could shift gears and talk about the EV part of the business and Signal and Power Solutions. It's been a fantastic growth story for the company. You've got more content on EVs. You have more share as well on high voltage. Maybe we could start on the market share side of it. Why does Aptiv have more share on high-voltage applications? What are you doing differently? And is it sustainable because I think other companies are seeing your success and wanting to play more in that area?

Sure. So within the Signal and Power Solutions segment of the business, we're very strong in electrical architecture. So historically, those systems, the more rudimentary systems would have been called wire harnesses. They've obviously evolved much beyond that. They're large complex systems, managing both the signal and power distribution. Historically, we've been a low voltage power because in an internal combustion engine vehicle you need a low-voltage electrical architecture system. In that part of the business, we have content on 1 out of every 3.5 vehicles manufactured globally. So we've got a very strong presence in the industry, a lot of scale, a lot of capabilities, a lot of engineering, delivery, supply chain capabilities. In a battery electric vehicle, you have that low-voltage system still, but you actually layer the high-voltage system on top of that. And that system is -- its primary function is taking power from the battery, distributing it through the power electronics, inverters, converters and ultimately to the electric motors that are moving the vehicle along, right? So it's added architecture. so we've got -- I think, to your question, how did we get off to a very good start. We estimate that over the next couple of years, we have content on about 50% of new electric vehicles being launched. Obviously, very good market share, to your point. I think 1 of the reasons we got off to such a good start is because of our capabilities and the size and scale of our low-voltage business as our customers were looking to ramp their BEV production quickly. We had the footprint, the engineering, the supply chain in place to really augment the low-voltage business with the high voltage business. And we were able to get off to a very quick start from that perspective. And look, I don't know if 50% is going to be sustainable. I do know we've got content on 1 out of every 3.5 vehicles on electrical architecture. I do think that's our natural right to play. I do think the strength and capabilities of that business as it relates to high voltage and what we've been able to deliver from customers puts us in a very good position to grow market share. But obviously, as battery electric vehicles grow and the denominator grows. It's -- I think it may be hard to maintain the 50%. But certainly, for the next couple of years, we're in a very strong position. And certainly I think our right to play in high voltage is at least equal, if not somewhat greater than our low-voltage business, which, as I mentioned, has very good share. That business is now $1 billion in revenue. It's grown about 50% per year for the past few years. It's accretive to segment margins at this point, and we expect that high-voltage business based on our bookings, which is our revenue in future periods, but also the take rates, which is our customers building more electric vehicles than they originally had planned to. Very strong growth, very strong growth over market in that business. We expect that product line to grow at about 40% per year for the next few years. So you're starting to now grow a -- what is a very large $1 billion product line by a fairly significant number for the next few years?

Maybe we could talk about your opportunities outside of automotive. Your goal has been to grow that to about 25% of revenue. Obviously, if automotive is growing as quickly as the high-voltage area, that's tough to grow mix of nonautomotive. But maybe talk about how you get there, I suppose, Wind River actually helps quite a bit on that front with this mix. But what else needs to happen to get to that mix over time?

Yes. Listen, we -- a couple of years ago, we talked about this at our prior Capital Markets Day. We've been very focused well before COVID, go back to 2016, 2017, really focused on Aptiv through cycle performance, right? We wanted to sort of get out of maybe the legacy automotive mindset that the company was in, around sort of riding a cycle up and then as it comes down and then you ride it back up again. And really, how do we prepare this business for strong through-cycle performance, be that outgrowth and revenue growth, the growth over market contributing to sustained revenue growth, even through lower cycles within automotive, but margin expansion and cash flow generation. At the time, we were close to 100% of our revenues were on drive from light vehicle -- light passenger vehicles. And just inherently, if you think strong through-cycle performance being that tied to any one cycle is not the best approach to get there. And so we made the decision then by 2025 to have 25% of our revenues come from nonautomotive applications. We had never planned on a sort of a big student body, right. We felt there were some adjacent markets around ruggedized electronics or connectors, engineered component -- engineered electrical components, where we had a natural right to play. We just had focused on all of our time and attention on automotive. And through some combination of organic and inorganic opportunities, we finished last year at about 15% of our revenues coming from non-automotive applications. So I think commercial vehicle, aerospace and defense, some ruggedized electronics in what I'll call the electric generation, particularly the green electric power generation. So some of our technology fits very well with windmill-type applications. Again, it's -- it's electronic components that are -- need to be operate effectively in a harsh environment, set outside, subject to vibration, subject to temperature changes. That's what we're very good at. Again, we've historically applied that to automotive. Over the next couple of years, that nonautomotive business is accretive to growth. It's accretive to margins on the -- from the automotive perspective. We like it. That business will grow organically to about 19 -- a little bit above 19% of revenues by 2025. So still maybe a little bit of work to do on the inorganic side there, and we think there's plenty of opportunities. To your point, Wind River will help a bit with that as well. But it's not something we're going to go off and do something sort of make dramatic shifts to hit that target. That was a long-term goal. We think we're making very good progress. And the business is stronger from a growth and a margin perspective because of it.

That's great. Well, unfortunately, we're out of time. So Joe, I appreciate you being here with us today.

No. Thanks, Mark. Appreciate everybody's time. Thank you.