Kevin Nowlan: Yes. That’s fair to say, Rod. I mean, what we’ve disclosed to date is that the biggest impact we see is really on the material cost inflation side and the net impact on our P&L on material costs from last year, the cost net of recoveries from customers was about $90 million of headwind. But obviously, we have other productivity issues that we’re managing through from a labor, freight and other things.
Operator: And our next question comes from John Murphy with Bank of America.
John Murphy: I just wanted to follow up on something you had in your other investment banks outside of the response you showed here. I mean, it shows like the content per vehicle opportunity all on EVs through 2025 and what you’ve developed through your acquisitions. But I’m just curious, as we’re looking at a big chunk of the business still being ICE. Just curious if you had a view of how you think about the content provision on an ICE vehicle developing through 2025 and 2030 in million similar ways as you showed the EV content per vehicle?
Frederic Lissalde: Yes. I would say if you look at 23, the ICE products, whether in pure combustion powertrain or in hybrid powertrain or our positive contributor to the outgrowth. So we see still a lot of pull from the market for our energy-efficient ICE types of products.
John Murphy: Okay. And also, I mean it looks like in the slides, you’re kind of indicating the breakeven on an operating basis and EV’s occurring sometime between ’23 and ’24, roughly just in the slide that you showed. When do you think that the returns on that business start to become — return on invested capital starts to become sort of adequate? is it looks like it’s ’24, ’25, ’26 that you kind of highlighting the margins might get closer to “normal”. I mean when do you think the return on invested capital is sort of an adequate level for you?
Frederic Lissalde: So John, maybe I start and turn it over to Kevin. The EV products that we are booking announcing are going through the same ROIC threshold at appropriation request processes than any other products. And so the ROIC program by program use there. There’s no doubt about that. Not from a timing standpoint, I’d turn it over to Kevin
Kevin Nowlan: No. I think that’s the key point. We price all of these programs so that on a stand-alone basis, they’re profitable, as we’ve mentioned in the past, that what makes the e-business a little bit different than some of our other businesses, our foundational businesses today is that to drive the revenue growth in these product categories, we have to invest a lot in upfront, eProducts-related R&D. And so that provides an overhang to the in-year margins any given year. And you see that this year, even in our ’23 guide. We have good levels of conversion that we’re pretty happy with. But we’re continuing to invest another $60 million to $70 million to support new business wins 3, 4 and 5 years out. And so as long as we continue to see the prospects for growth in this business, we’re going to continue to invest in the eProducts related to R&D to make sure that we have long-term viable business here.
And again, as long as those programs are all individually meeting our ROIC targets on a stand-alone basis, we’re very happy to continue to invest in that R&D.
