American Axle Hints at Strategic Partnerships with Tech Companies
New filing language doesn’t make clear whether AXL is a beneficiary or victim of tech partnerships.
February 16, 2021
American Axle and Manufacturing (AXL), a manufacturer of driveline and metal forming products for the auto industry, generates two thirds of its revenue from traditional truck and utility vehicles. Though it’s currently a low volume business segment, American Axle is also a supplier of electric drivetrains to electric vehicle (EV) manufacturers like Jaguar.

In its 2020 10-K, American Axle mentions electrification 10 times— up from 4 the year prior— and makes its strongest statement yet about its ambitions:

“Electrification is a growing portion of our new and incremental business backlog, as well as our quoted and emerging new business opportunities, and is a significant element of our future growth strategy.”

It’s noteworthy— especially in the context of Apple allegedly looking for an EV partner— that in the prior year’s annual report, American Axle suggested technology companies were a risk:

“In addition to traditional competitors in the automotive sector, the trend towards advanced electronic integration and electrification has increased the level of new market entrants, including technology companies.”

In its 2020 annual, American Axle seems, in our view, a bit less threatened than it did a year ago:

“Further, some traditional automotive industry participants are developing strategic partnerships with technology companies as each party seeks to leverage the existing customer relationships and technical knowledge of the partner, and expedite the development and commercialization of new technology.”

While true that the year-over-year change in language seems to suggest American Axle feels less threatened by the entrance of technology companies in the space, the company maintains a good poker face. The tech partnership comment is stated matter-of-factly leaving investors to wonder whether American Axle will wind up with a tech date to the EV dance.
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