Aptiv (APTV) 10-K risk factor changes: FY2020 vs FY2019

In addition, automotive sales and production can be affected by labor relations issues, regulatory requirements, trade agreements, the availability of consumer financing and other [removed: factors.][added: factors, including global health crises, such as the COVID-19 pandemic.]

[removed: Due to overall global economic conditions in 2019, the] [added: The] automotive industry experienced decreased global customer sales and production [removed: schedules.][added: schedules in 2020, primarily due to the adverse impacts of the COVID-19 pandemic.]

Compared to [removed: 2018,] [added: 2019,] vehicle production in [removed: 2019] [added: 2020] decreased by [removed: 9%] [added: 22%] in [removed: China, 4%] [added: Europe, 21%] in North America, [removed: 4%] [added: 3%] in [removed: Europe] [added: China] and [removed: 4%] [added: 31%] in South America, our smallest region.

This industry is subject to rapid technological change, vigorous competition, short product life cycles and [removed: cyclical and] [added: cyclical,] reduced consumer demand [removed: patterns.][added: patterns and industry consolidation.]

As a result of changes impacting our customers, sales mix can shift which may have either favorable or unfavorable [removed: impact] [added: impacts] on [removed: revenue] [added: our revenues] and would include shifts in regional growth, shifts in OEM sales demand, as well as shifts in consumer demand related to vehicle segment purchases and content penetration.

The mix of vehicle offerings by our OEM [removed: customers] [added: customers, which can be affected by industry consolidation,] also impacts our sales.

[removed: A] [added: In addition, a] decrease in consumer demand for specific types of vehicles where we have traditionally provided significant content could have a significant effect on our business and [added: financial condition.]

[removed: financial] condition.

If we do not respond appropriately, the evolution of the automotive industry towards autonomous vehicles and [removed: MoD] [added: mobility on demand] services could adversely affect our business.

There has also been an increase in consumer preferences for [removed: MoD] [added: mobility on demand] services, such as car- and ride-sharing, as opposed to automobile ownership, which may result in a long-term reduction in the number of vehicles per capita.

We have identified the Asia Pacific region, and more specifically China, as a key geographic market, and have identified advanced driver assistance systems, autonomous driving [removed: technologies and] [added: technologies,] mobility solutions [removed: as a key product market.][added: and high voltage]

For example, the evolving sector of automated driver assistance and autonomous driving technologies has led to evolving guidance issued by the U.S. Department of Transportation (“DOT”) regarding best practices for the testing and deployment of automated driving systems, and outlining federal and state roles in the regulation of [added: these systems, including providing state legislatures with best practices on how to safely foster the development and introduction of automated driving technologies onto public roads.]

In particular, [removed: our] [added: the] recent [removed: agreement with Hyundai to form an] [added: formation of the Motional] autonomous driving joint venture [added: with Hyundai] is dependent on the success of our relationship with our joint venture partner.

[removed: If we or any of our collaborative partners terminate a collaborative arrangement, we may be required to devote additional] resources to product development and commercialization or may need to cancel certain development programs, which could adversely affect our business and operational results.

Our five largest customers accounted for approximately 39% of our total net sales for the year ended December 31, [removed: 2019.][added: 2020.]

[added: As the size of the Chinese market continues to increase over the] long-term, we anticipate that additional competitors, both international and domestic, will seek to enter the Chinese market and that existing market participants will act aggressively to increase their market share.

For example, automotive production in China decreased by [removed: 9%] [added: 3%] in [removed: 2019,] [added: 2020, primarily due to the adverse impacts of the COVID-19 pandemic and foreign trade uncertainties,] which follows a decrease of [removed: 4%] [added: 9%] in the region in [removed: 2018, primarily due to moderations in the level of economic growth and foreign trade uncertainties.][added: 2019.]

In most instances our OEM customers agree to purchase their requirements for specific products but are not required to purchase any minimum amount of [removed: products from us.]

Such disruptions could be caused by any one of a myriad of potential problems, such as closures of one of our or our suppliers’ plants or critical manufacturing lines due to strikes, mechanical breakdowns, electrical outages, fires, explosions or political upheaval, as well as logistical complications due to weather, global climate change, volcanic eruptions, or other natural or nuclear disasters, mechanical failures, delayed customs [removed: processing] [added: processing, the spread of an infectious disease, virus or other widespread illness] and more.

Similarly, a potential quality issue could force us to halt deliveries while we [removed: validate the products.]

Our primary funded non-U.S. plans are located in Mexico and the United Kingdom and were underfunded by [removed: $76] [added: $73] million as of December 31, [removed: 2019.][added: 2020.]

Obligations, net of plan assets, related to these non-U.S. defined benefit pension plans and statutorily required retirement obligations totaled [removed: $497] [added: $539] million at December 31, [removed: 2019,] [added: 2020,] of which [removed: $25] [added: $21] million is included in accrued liabilities, [removed: $474] [added: $519] million is included in long-term liabilities and [removed: $2] [added: $1] million is included in long-term assets in our consolidated balance sheets.

If the qualitative assessment is not [removed: met] [added: met,] the Company then performs a quantitative assessment by [removed: first] comparing the estimated fair value of each reporting unit to its carrying value, including goodwill.

If the fair value of the reporting unit is less than its carrying amount, [removed: we compare its implied fair value] [added: the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the amount] of goodwill [added: allocated] to [removed: its carrying amount.][added: the reporting unit.]

[removed: We cannot ensure] [added: It is possible] that we [removed: will not] [added: could] incur such charges in the future as changes in economic or operating conditions impacting the estimates and assumptions could result in additional impairment.

[removed: Significant] increases in labor costs as a result of the renegotiation of collective bargaining agreements could also adversely affect our business and harm our profitability.

Approximately [removed: 63%] [added: 66%] of our net revenue for the year ended December 31, [removed: 2019] [added: 2020] came from sales outside the U.S., which were primarily invoiced in currencies other than the U.S. dollar, and we expect net revenue from non-U.S. markets to continue to represent a significant portion of our net revenue.

We face risks associated with doing business in [removed: non-U.S.] [added: various national and local] jurisdictions.

For the year ended December 31, [removed: 2019,] [added: 2020,] approximately [removed: 63%] [added: 66%] of our net revenue came from sales outside the U.S. International operations are subject to certain risks inherent in doing business abroad, including:

[removed: | • |] [added: -] exposure to local economic, political and labor conditions; [removed: |]

[removed: | • |] [added: -] unexpected changes in laws, regulations, trade or monetary or fiscal policy, including interest rates, foreign currency exchange rates and changes in the rate of inflation in the U.S. and other foreign countries; [removed: |]

[removed: | • |] [added: -] tariffs, quotas, customs and other import or export restrictions and other trade barriers; [removed: |]

[removed: | • |] [added: -] expropriation and nationalization; [removed: |]

[removed: | • |] [added: -] difficulty of enforcing agreements, collecting receivables and protecting assets through non-U.S. legal systems; [removed: |]

[removed: | • |] [added: -] reduced technology, data or intellectual property protections; [removed: |]

[removed: | • |] [added: -] limitations on repatriation of earnings; [removed: |]

[removed: | • |] [added: -] withholding and other taxes on remittances and other payments by subsidiaries; [removed: |]

[removed: | • |] [added: -] investment restrictions or requirements; [removed: |]

[removed: | • |] [added: -] violence and civil unrest in local countries; and [removed: |]

[removed: | • |] [added: -] compliance with the requirements of an increasing body of applicable anti-bribery laws, including the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and similar laws of various other countries. [removed: |]

The extent to which the novel coronavirus (COVID-19) pandemic and measures taken in response thereto impact our business, financial condition, results of operations and cash flows will depend on future developments, which are highly uncertain and difficult to predict.

The global spread of the COVID-19 pandemic, which originated in late 2019 and was later declared a pandemic by the World Health Organization in March 2020, has negatively impacted the global economy, disrupted supply chains and created significant volatility in global financial markets.

During 2020 we took decisive actions to enhance our financial flexibility and minimize the impact on our business, such as the ramping down of certain production facilities in response to customer plant closures and changes in vehicle production schedules, imposing certain travel restrictions, suspending the Company’s ordinary share cash dividend, issuing $2.3 billion combined of preferred and ordinary shares, extending substantially all of our existing Credit Agreement’s maturity to August 2022 and actively managing costs, capital spending and working capital to further strengthen our liquidity.

Despite these proactive measures, the ultimate impact to our business continues to remain highly uncertain.

The extent to which the COVID-19 pandemic will impact our business will depend on a number of evolving factors, including the duration and spread of the pandemic, as well as the possibility of the pandemic reoccurring, actions taken by governmental authorities to restrict certain business operations, social activity and travel or other actions.

Our business may also be affected by the ultimate impacts of the pandemic on economic activity and whether recessionary conditions will persist or reoccur, consumer demand and vehicle production schedules, the ability of our supply chain to deliver in a timely and cost-effective manner, the ability of our employees, manufacturing and distribution facilities to operate efficiently and effectively, the continued viability and financial stability of our customers and suppliers and future access to capital, all of which remain uncertain.

The adverse impacts to Aptiv of the pandemic, which primarily affected us in the first half of 2020, included extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from temporary governmental “lock-down” orders for all non-essential activities, initially in the first quarter of 2020 in China and subsequently in Europe, North America and South America.

During the second half of 2020, many of these impacts abated, resulting in increased sales and profitability from the levels observed earlier in the year.

However, during the fourth quarter of 2020, certain European and North American countries began to initiate new governmental restrictions in response to renewed pandemic impacts and concerns, and many of these restrictions have continued into the first quarter of 2021.

As a result, due to the continuing uncertainties surrounding the impacts of the COVID-19 pandemic and resulting potential future governmental actions and economic impacts, it is possible that these adverse impacts could continue to reoccur, resulting in further adverse impacts on our future operating earnings and cash flows.

In addition, to the extent the factors indicated above adversely affect our business, financial condition, results of operations and cash flows, they may also have the effect of heightening many of the other risk factors in this section.

validate the products.

The adverse impacts of the COVID-19 pandemic led to a significant vehicle production slowdown in the first half of 2020, which was followed by increased consumer demand and vehicle production schedules in the second half of 2020, particularly in the fourth quarter.

This surge in demand led to a worldwide semiconductor supply shortage in early 2021, as semiconductor suppliers have been unable to rapidly reallocate production lines to serve the automotive industry.

We are currently assessing the potential supply chain impacts of this worldwide shortage, which may directly or indirectly impact various automotive suppliers, and correspondingly, OEM production.

We are working closely with our suppliers and customers to minimize any potential adverse impacts, and we continue to closely monitor the availability of semiconductor microchips and other component parts and raw materials, customer vehicle production schedules and any other supply chain inefficiencies that may arise, due to this or any other issue.

However, any direct or indirect supply chain disruptions may have a material adverse impact on our financial condition, results of operations or cash flows.

For example, in January 2021, FCA and PSA executed a merger agreement to form a new, combined company (“Stellantis”), which will represent the world’s fourth largest OEM.

The merger may result in the discontinuation of certain major vehicle brands previously marketed under the separate companies, which may have a material adverse impact on our financial condition, results of operations or cash flows.

electrification systems as key product markets.

If we or any of our collaborative partners terminate a collaborative arrangement, we may be required to devote additional

products from us.

Significant

For instance, the global spread of COVID-19, which originated in late 2019 and was later declared a pandemic by the World Health Organization in March 2020, caused certain governmental authorities worldwide to initiate “lock-down” orders for all non-essential activities, which at times, has included extended shutdowns of businesses in the impacted regions.

These or any further political or governmental developments or health concerns in Mexico, China or

The United Kingdom (“U.K.”) and Europe agreed to terms for the U.K.’s exit from the European Union (“E.U.”), commonly referred to as “Brexit,” on December 24, 2020 and became effective on December 31, 2020.

Under these terms, the U.K. and E.U. will continue to be able to trade on a tariff-free basis, though companies will be required to file customs and duty declarations for the cross border movement of goods, similar in nature to other border crossings.

These compliance requirements will be effective beginning in early 2021 and may take several months to complete.

During the implementation phase, our cross border shipments between the U.K. and E.U., and those of our customers and suppliers, may be subject to delays and restrictions which may adversely affect European and worldwide economic and market conditions.

Existing income tax laws, regulations and related international agreements provide guidance and direction on the allocations of income and applicable taxing rights among the countries in which we operate.

Changes in these guidelines are being contemplated at the local, national, regional (particularly in the E.U.), and global levels (through organizations like the G20 and the Organisation for Economic Co-operation and Development).

Any changes, especially if made inconsistently, could have a materially adverse impact on our financial results.

General Risk Factors

these systems, including providing state legislatures with best practices on how to safely foster the development and introduction of automated driving technologies onto public roads.

As the size of the Chinese market continues to increase over the

If the

carrying amount of goodwill exceeds its implied fair value, the reporting unit would recognize an impairment loss for that excess.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

In addition, the ongoing coronavirus outbreak emanating from China at the beginning of 2020 has resulted in increased travel restrictions and extended shutdown of certain businesses in the region.

There have also been periods of increased market volatility and currency exchange rate fluctuations, both globally and most specifically within the United Kingdom (“U.K.”) and Europe, as a result of the U.K.’s exit from the European Union (“E.U.”), commonly referred to as “Brexit,” the terms of which remain undetermined.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

The following management’s discussion and analysis of financial condition and results of operations (“MD&A”) is intended to help you understand the business operations and financial condition of the Company for the period ended December 31, [removed: 2019.][added: 2020.]

[removed: | • |] [added: -] Executive Overview [removed: |]

[removed: | • |] [added: -] Consolidated Results of Operations [removed: |]

[removed: | • |] [added: -] Results of Operations by Segment [removed: |]

[removed: | • |] [added: -] Liquidity and Capital Resources [removed: |]

[removed: | • |] [added: -] Off-Balance Sheet Arrangements and Other Matters [removed: |]

[removed: | • |] [added: -] Significant Accounting Policies and Critical Accounting Estimates [removed: |]

[removed: | • |] [added: -] Recently Issued Accounting Pronouncements [removed: |]

[removed: Discontinued Operations and] Held [removed: For] [added: for] Sale to the audited consolidated financial statements included herein.

We are one of the largest vehicle component manufacturers, and our customers include 23 of the 25 largest automotive [removed: original equipment manufacturers (“OEMs”)] [added: OEMs] in the world.

[added: We have successfully created a competitive cost structure while investing in research and] development to grow our product offerings, which are aligned with the high-growth industry mega-trends, and re-aligned our manufacturing footprint into an efficient, low-cost regional service model, focused on increasing our profit margins.

Our [added: financial and business] achievements in [removed: 2019] [added: 2020] include the following:

[removed: | • | Furthering] [added: ◦Furthering] our leadership position in automated driving through the [removed: agreement with Hyundai to form a new] [added: formation of the Motional autonomous driving] joint venture [added: with Hyundai, which is] focused on the design, development and commercialization of autonomous driving technologies; [removed: |][added: and]

[removed: | • | Maximizing] [added: ◦Maximizing] our operational flexibility and profitability at all points in the normal automotive business cycle, by having approximately [removed: 96%] [added: 97%] of our hourly workforce based in best cost [removed: countries] [added: countries,] and approximately [removed: 15%] [added: 20%] of our hourly workforce composed of temporary [removed: employees. |][added: employees; and]

In an effort to further our leadership position in the automated driving space, in [removed: September 2019] [added: March 2020] we [removed: entered into a definitive agreement] [added: completed the transaction] with Hyundai to form a new joint venture focused on the design, development and commercialization of autonomous driving technologies.

We expect this partnership to [removed: advance] [added: accelerate] the [added: path towards the] development of production-ready autonomous driving systems for commercialization [removed: by bringing together our innovative vehicle technologies] in the new mobility [removed: space with one of the world’s largest vehicle manufacturers.][added: space.]

The [added: Motional] joint venture [removed: anticipates it will begin] [added: began] testing fully driverless systems in 2020 and [added: anticipates it will] have a production-ready autonomous driving platform available for robotaxi providers, fleet operators and automotive manufacturers [added: to test at prototype scale] in [removed: 2022.][added: 2022, with higher volumes available for deployment in 2023.]

Collaboration with customers in our [removed: 15] [added: 12] major technical centers around the world helps us develop innovative product solutions designed to meet their needs.

We intend to continue to pursue selected transactions that leverage our technology capabilities and enhance and expand our commercialization of new mobility solutions, product offerings, customer base, geographic penetration and scale to complement our current [removed: businesses.][added: businesses, while continuing to enhance our product offerings and competitive position in growing market segments.]

Compared to [removed: 2018,] [added: 2019,] vehicle production in [removed: 2019] [added: 2020] decreased by [removed: 9%] [added: 22%] in [removed: China, 4%] [added: Europe, 21%] in North America, [removed: 4%] [added: 3%] in [removed: Europe] [added: China] and [removed: 4%] [added: 31%] in South America, our smallest region.

Refer to Note [removed: 23.][added: 15.]

Segment Reporting of the notes to the [added: audited] consolidated financial statements, included in Item 8.

In particular, changes to international trade agreements, such as the United States-Mexico-Canada Agreement [removed: and its predecessor agreement, the North American Free Trade Agreement,] or other political pressures could affect the operations of our OEM customers, resulting in reduced automotive production in certain regions or shifts in the mix of production to higher cost regions.

There have also been periods of increased market volatility and currency exchange rate fluctuations, both globally and most specifically within the [removed: United Kingdom (“U.K.”)] [added: U.K.] and Europe, as a result of the U.K.’s exit from the [removed: European Union (“E.U.”),] [added: E.U.,] commonly referred to as “Brexit,” the terms of which [removed: remain undetermined.][added: were determined on December 24, 2020 and became effective on December 31, 2020.]

[removed: The withdrawal has created significant uncertainty about the future relationship between the U.K. and the E.U. These developments, or the perception that any] [added: Potential adverse impacts] of [removed: them could occur,] [added: this phase] may [removed: adversely affect European and worldwide economic and market conditions, including] [added: include reduced] vehicle production, [removed: significantly reduce] [added: reduced] global market liquidity and [removed: restrict] [added: restrictions on] the ability of key market participants to operate in certain financial markets [removed: and] [added: which] could contribute to instability in global financial and foreign exchange markets, including increased volatility in interest rates and foreign exchange rates.

Although we do not have a material physical presence in the U.K., with less than 1% of our workforce located in the U.K. and approximately 2% of our annual net sales generated in the U.K., the potential impacts of Brexit could adversely impact other global economies, and in particular, the European economy, a region which accounted for approximately [removed: 33%] [added: 34%] of our total net sales for the year ended December 31, [removed: 2019.][added: 2020.]

We continue to actively monitor the ongoing potential impacts of Brexit and will seek to minimize [removed: its impact] [added: the impacts] on our business through review of our existing contractual arrangements and obligations, particularly in the European region.

There have been periods of increased market volatility and [removed: moderations] [added: moderation] in the level of economic growth in China, which resulted in periods of lower automotive production growth rates in China than those previously [removed: experienced, as evidenced by the reduction in volumes in the region during the year ended December 31, 2019.]

Despite [removed: the 2019] [added: these] vehicle production declines and the recent [removed: moderations] [added: moderation] in the level of economic growth in China, rising income levels in China and other key growth markets are expected to result in stronger growth rates in these markets over the long-term.

Our business in China remains sensitive to economic and market conditions that impact automotive sales volumes in China, and may be affected if the pace of growth slows as the Chinese market matures or if there are reductions in vehicle demand in [removed: China.][added: China, as have recently been experienced as a result of the COVID-19 pandemic.]

We are benefiting from the substantial increase in vehicle content, software and electrification that requires a complex and reliable electrical architecture and systems to operate, such as automated advanced driver assistance technologies, electrical vehicle monitoring, active safety systems, lane departure warning systems, integrated vehicle cockpit displays, navigation systems and technologies that enable connected [added: infotainment in vehicles.]

This regional model [removed: principally services] [added: is structured primarily to service] the North American market [removed: out of] [added: from] Mexico, the South American market [removed: out of] [added: from] Brazil, the European market [removed: out of] [added: from] Eastern Europe and North [removed: Africa] [added: Africa,] and the Asia Pacific market [removed: out of] [added: from] China, and we have continued to rotate our manufacturing footprint to best cost locations within these regions.

Our global operations are subject to certain risks inherent in doing business abroad, including unexpected changes in [removed: laws, regulations, trade] [added: laws] or [added: regulations governing trade, or other] monetary or tax fiscal [removed: policy,] [added: policy changes,] including tariffs, quotas, customs and other import or export restrictions [removed: and other] [added: or] trade barriers.

These or any further political or governmental developments in [removed: Mexico or other countries in which we operate] [added: response to the COVID-19 pandemic] could result in social, economic and labor instability.

In addition, existing free trade laws and regulations, such as the United States-Mexico-Canada [removed: Agreement and its predecessor agreement, the North American Free Trade] Agreement, provide certain beneficial duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements.

Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we manufacture products, such as China and Mexico, could have a material adverse [removed: affect] [added: effect] on our business and financial results.

Our innovative technologies and robust global engineering and development capabilities have [added: us] well positioned [removed: us] to meet the increasingly stringent vehicle manufacturer demands and consumer preferences for high-technology content in automobiles.

We have a team of approximately [removed: 20,200] [added: 18,200] scientists, engineers and technicians focused on developing leading product solutions for our key markets, located at [removed: 15] [added: 12] major technical centers in China, Germany, India, Mexico, Poland, Singapore and the United States.

Our total investment in research and development, including engineering, was approximately [removed: $1.5] [added: $1.3] billion, [removed: $1.4] [added: $1.5] billion and [removed: $1.1] [added: $1.4] billion for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively, which includes approximately [removed: $381] [added: $303] million, [removed: $288] [added: $381] million and [removed: $204] [added: $288] million of co-investment by customers and government agencies.

Our technology competencies are recognized by both customers and government agencies, who co-invested approximately [removed: $381] [added: $303] million in [removed: 2019] [added: 2020] to support new product development, accelerating the pace of innovation and reducing the risk associated with successful commercialization of technological breakthroughs.

COVID-19 affected nearly every facet of our operations.

In spite of these impacts, our 2020 performance reflects our team’s dedication and efforts to ensure the health and safety of our employees first, while positioning the Company for flawless execution for our customers as operations resumed.

Management’s actions preserved and enhanced Aptiv’s financial strength during the pandemic and generated strong returns following the restart of our global operations.

- Strengthening our balance sheet and liquidity position in order to continue to invest in value-enhancing opportunities, despite COVID-19

◦Leveraging opportunistic market pricing dynamics and strong market demand by issuing $1.15 billion of ordinary shares and $1.15 billion of 5.50% preferred shares; and

◦Extending the maturity of substantially all of our existing Credit Agreement to August 2022.

- Acting decisively in response to the global pandemic

◦Taking early and decisive actions to preserve our financial strength, including temporarily reducing executive pay, reducing capital expenditures, and suspending share repurchases and ordinary share dividends; and

◦Designing and successfully implementing our safe operations protocols, which enabled our facilities to restart safely and operate with zero production disruptions following the restart.

- Generating strong results despite the pandemic

◦Delivering sustained outperformance, with above-market sales growth of 10%, attributable to our portfolio of leading technologies aligned with secular growth drivers; and

◦Generating $2,118 million of operating income or $867 million of adjusted operating income and cash flow from operations of $1.4 billion, despite the pandemic’s negative impact on automotive production; and

◦Achieving 49.64% total shareholder return over the period 2018 through 2020, illustrating our investors’ belief in our long-term strategy and current financial performance.

- Continuing our relentless focus on cost structure and operational optimization

◦Recruiting and retaining top talent from various industries, including technology.

- Continuing to execute on our long-term Safe, Green and Connected strategy to enable a more sustainable future

◦Expanding our market relevant portfolio to address the industry’s top challenges, including high voltage electrification and active safety technologies; and

◦Significantly enhancing our commitment to corporate sustainability.

The joint venture operates globally under the Motional brand name, and brings together one of the industry’s most innovative vehicle technology providers with one of the world’s largest OEMs.

We believe that substantial strategic value will be created from our partnership with Hyundai through our commitment to a shared mission of making driverless vehicles a safe, reliable, and accessible reality.

Furthermore, we anticipate Motional’s presence in both North America and Asia, along with the global presence of both Aptiv and Hyundai, to generate economies of scale to support the development of a complete autonomous driving platform, as well as to facilitate mobility infrastructure advancements.

In addition, Motional is involved in collaborative

arrangements with mobility providers and with smart cities such as Boston and Singapore as solutions are developed for the evolving nature of the mobility industry.

In order to maintain our strong liquidity position in the midst of the uncertainty caused by the COVID-19 pandemic, we completed only one acquisition in 2020.

*COVID-19 pandemic.* The global spread of COVID-19, which originated in late 2019 and was later declared a pandemic by the World Health Organization in March 2020, has negatively impacted the global economy, disrupted supply chains and created significant volatility in global financial markets.

Most notably with respect to the automotive industry, we experienced extended work stoppages in China during the first quarter of 2020, where we have a major manufacturing base, and the subsequent suspension of vehicle production by our OEM customers in North America and Europe, which combined accounted for 69% of our net sales for the year ended December 31, 2020, as the pandemic spread to those regions and governmental authorities initiated “lock-down” orders for all non-essential activities.

The work stoppages began to abate in China in March, and North America and Europe OEM production restarted sporadically in the second quarter, however the risk of renewed government “lock-down” orders resulting in further work stoppages remains.

Although we have taken decisive actions to enhance our financial flexibility and minimize the impact on our business, such as the ramping down of certain production facilities in response to customer plant closures and changes in vehicle production schedules, imposing certain travel restrictions, suspending our ordinary share cash dividend, issuing $2.3 billion combined of preferred and ordinary shares,

extending substantially all of our existing Credit Agreement’s maturity to August 2022 and actively managing costs, capital spending and working capital to further strengthen our liquidity, the ultimate impact to our business continues to remain uncertain.

During the year ended December 31, 2020, our net sales were adversely impacted by volume decreases of approximately 7%, primarily due to the impacts resulting from the COVID-19 pandemic, which included extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other resultant adverse global economic impacts.

For example, the adverse impacts of the COVID-19 pandemic led to a significant vehicle production slowdown in the first half of 2020, which was followed by increased consumer demand and vehicle production schedules in the second half of 2020, particularly in the fourth quarter.

This surge in demand led to a worldwide semiconductor supply shortage in early 2021, as semiconductor suppliers have been unable to rapidly reallocate production lines to serve the automotive industry.

We are working closely with our suppliers and customers to minimize any potential adverse impacts, and we continue to closely monitor the availability of semiconductor microchips and other component parts and raw materials, customer vehicle production schedules and any other supply chain inefficiencies that may arise, due to this or any other issue.

However, any direct or indirect supply chain disruptions may have a material adverse impact on our financial condition, results of operations or cash flows.

We continue to actively monitor the potential supply chain impacts of this worldwide shortage and other ongoing potential impacts of COVID-19 and will seek to aggressively mitigate and minimize its impact on our business.

Global automotive vehicle production decreased 16% (19% on an Aptiv weighted market basis, which represents global vehicle production weighted to the geographic regions in which the Company generates its revenue, “AWM”) from 2019 to 2020, representing automotive vehicle production declines across all major regions during the year, primarily due to the adverse global economic impacts and uncertainty caused by the worldwide spread of the COVID-19 pandemic.

Under these terms, the U.K. and E.U. will continue to be able to trade on a tariff-free basis, though companies will be required to file customs and duty declarations for the cross border movement of goods, similar in nature to other border crossings.

These compliance requirements will be effective beginning in early 2021 and may take several months to complete.

During the implementation phase, our cross border shipments between the U.K. and E.U., and those of our customers and suppliers, may be subject to delays and restrictions which may adversely affect European and worldwide economic and market conditions.

experienced, as evidenced by the reduction in volumes in the region during the year ended December 31, 2020.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

Within the MD&A, “Aptiv,” the “Company,” “we,” “us” and “our” refer to Aptiv PLC, a public limited company formed under the laws of Jersey on May 19, 2011 as Delphi Automotive PLC, which, through its subsidiaries, acquired certain assets of the former Delphi Corporation (now known as DPH Holdings Corp. (“DPHH”)) and completed an initial public offering on November 22, 2011.

On December 4, 2017 (the “Distribution Date”), the Company completed the separation (the “Separation”) of its former Powertrain Systems segment by distributing to Aptiv shareholders on a pro rata basis all of the issued and outstanding ordinary shares of Delphi Technologies PLC (“Delphi Technologies”), a public limited company formed to hold the spun-off business.

To effect the Separation, the Company distributed to its shareholders one ordinary share of Delphi Technologies for every three Aptiv ordinary shares outstanding as of November 22, 2017, the record date for the distribution.

Following the Separation, the remaining company changed its name to Aptiv PLC and New York Stock Exchange (“NYSE”) symbol to “APTV.” Aptiv did not retain any equity interest in Delphi Technologies.

Delphi Technologies’ historical financial results through the Distribution Date are reflected in the Company’s consolidated financial statements as a discontinued operation, as more fully described in Note 25.

The completion of the Separation positioned Aptiv as a new mobility provider focused on solving the complex challenges associated with safer, greener and more connected transportation.

At the core of our capabilities is the software and vehicle architecture expertise that enables the advanced safety, automated driving, user experience, and connected services that are enabling the future of mobility.

As the disposal of the Powertrain Systems business represented a strategic shift that will have a major effect on the Company’s operations and financial results, the assets and liabilities, operating results, and operating and investing cash flows for the previously reported Powertrain Systems segment are presented as discontinued operations separate from the Company’s continuing operations for all periods presented.

This Management’s Discussion and Analysis reflects the results of continuing operations, unless otherwise noted.

We have successfully created a competitive cost structure while investing in research and

| | |

| --- | --- |

| | |

| --- | --- |

| • | Expanding our platforms for growth in key industrial markets and executing on our end-market diversification strategy through the acquisitions of gabo Systemtechnik GmbH and Falmat Inc.; |

| | |

| --- | --- |

| • | Leveraging our investment grade credit metrics to further refine our capital structure and increase our financial flexibility by successfully issuing $300 million of 10-year, 4.35% senior unsecured notes and $350 million of 30-year, 5.40% senior unsecured notes, utilizing the combined proceeds to redeem our $650 million, 3.15% senior notes; |

| | |

| --- | --- |

| • | Continuing to grow our revenues, excluding the impacts of foreign currency exchange and commodity costs, despite global automotive vehicle production declines of 6% during the year; |

| | |

| --- | --- |

| • | Returning $646 million to shareholders through share repurchases and dividends; |

| | |

| --- | --- |

During the year ended December 31, [removed: 2019,] [added: 2020,] the foreign currency translation adjustment [removed: loss] [added: gain] of [removed: $45] [added: $154] million was primarily due to the impact of a [removed: strengthening] [added: weakening] U.S. dollar, which [removed: increased] [added: decreased] approximately [removed: 2%] [added: 10% and 7%, respectively,] in relation to [removed: both] the Euro and the Chinese Yuan Renminbi from December 31, [removed: 2018.][added: 2019.]

Currently our most significant hedged currency exposures relate to the Mexican Peso, Chinese Yuan Renminbi, Polish [removed: Zloty, Euro] [added: Zloty] and [removed: Turkish Lira.][added: Euro.]

As of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] the net fair value liability of all financial instruments, including hedges and underlying transactions, with exposure to currency risk was approximately [removed: $1,199] [added: $767] million and [removed: $1,412 million, respectively.]

The potential loss [removed: or gain] in fair value for such financial instruments from a hypothetical 10% adverse [removed: or favorable] change in quoted currency exchange rates would be approximately [removed: $78] [added: $25] million and [removed: $131] [added: $78] million as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively.

The net fair value of our contracts was [added: an asset of $35 million and] a liability of less than $1 million [removed: and $22 million] as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively.

If the price of the commodities that are being hedged by our commodity swaps/average rate forward contracts changed adversely or favorably by 10%, the fair value of our commodity swaps/average rate forward contracts would decrease or increase by [removed: $21] [added: $22] million and [removed: $25] [added: $21] million as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively.

As of December 31, [removed: 2019,] [added: 2020,] we had approximately [removed: $450] [added: $321] million of floating rate debt, related to the Credit Agreement.

The [added: non-extended] Credit Agreement carries an interest rate, at our option, on Tranche A term loan borrowings of either (a) the ABR plus 0.25% per annum, or (b) LIBOR plus 1.25% per annum, and on Revolving Credit Facility borrowings of either (a) the ABR plus 0.10% per annum, or (b) LIBOR plus 1.10% per annum.

The applicable interest rates listed above for the Revolving Credit Facility and the Tranche A Term Loan may increase or decrease from time to time in increments of 0.10% to [removed: 0.25%,] [added: 0.50%,] up to a maximum of [removed: 0.50%] [added: 0.75%] based on changes to our corporate credit ratings.

The table below indicates interest rate sensitivity on interest expense to floating rate debt based on amounts outstanding as of December 31, [removed: 2019.][added: 2020.]

| | | [added: | | | |] Credit Agreement | [added: | |]

| Change in Rate | | [added: | | | |] (impact to annual [removed: interest expense,] [added: interest expense,] in millions) | [added: | |]

| 25 bps decrease | | [added: | | | |] \- $1 | [added: | |]

| 25 bps increase | | [added: | | | |] +$1 | [added: | |]

As described in Note 17.

$1,199 million, respectively.

The potential gain in fair value from a hypothetical 10% favorable change in quoted currency exchange rates would be approximately $31 million and $78 million as of December 31, 2020 and 2019, respectively.

The Credit Agreement was amended on May 1, 2020 and extended the maturity of $1,779 million in principal amount of the Revolving Credit Facility and $298 million in principal amount of the Tranche A Term Loan from August 17, 2021 to August 17, 2022.

The maturity date of the remaining portions of the Revolving Credit Facility and Tranche A Term Loan were not extended and will mature on August 17, 2021.

Refer to Note 11.

Debt to the audited consolidated financial statements included herein for additional information.

The extended Credit Agreement carries an interest rate, at our option, on Tranche A term loan borrowings of either (a) the ABR plus 0.75% per annum, or (b) LIBOR plus 1.75% per annum, and on Revolving Credit Facility borrowings of either (a) the ABR plus 0.40% per annum, or (b) LIBOR plus 1.40% per annum.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

As described in Note.

17.

| | | |

| --- | --- | --- |

| | | |

“Aptiv,” the “Company,” “we,” “us” and “our” refer to Aptiv PLC, a public limited company formed under the laws of Jersey on May 19, 2011 as Delphi Automotive PLC, [removed: which, through its subsidiaries, acquired certain assets of the former Delphi Corporation (now known as DPH Holdings Corp. (“DPHH”)) and] [added: which] completed an initial public offering on November 22, 2011.

On December 4, [removed: 2017 (the “Distribution Date”),] [added: 2017,] the Company completed the separation (the “Separation”) of its former Powertrain Systems segment by distributing to Aptiv shareholders on a pro rata basis all of the issued and outstanding ordinary shares of Delphi Technologies PLC (“Delphi Technologies”), a public limited company formed to hold the spun-off business.

Following the Separation, the remaining company changed its name to Aptiv PLC and New York Stock Exchange (“NYSE”) symbol to “APTV.” [added: Aptiv did not retain any equity interest in Delphi Technologies.]

We operate [removed: 126] [added: 124] major manufacturing facilities and [removed: 15] [added: 12] major technical centers utilizing a regional service model that enables us to efficiently and effectively serve our global customers from best cost countries.

We have a presence in 44 countries and have approximately [removed: 20,200] [added: 18,200] scientists, engineers and technicians focused on developing market relevant product solutions for our customers.

[removed: | • | Signal] [added: - Signal] and Power Solutions—This segment provides complete design, manufacture and assembly of the vehicle’s electrical architecture, including engineered component products, connectors, wiring assemblies and harnesses, cable management, electrical centers and hybrid high voltage and safety distribution systems. [removed: Our products provide the critical signal distribution and computing power backbone that supports increased vehicle content and electrification, reduced emissions and higher fuel economy. |]

[removed: | • | Advanced] [added: - Advanced] Safety and User Experience—This segment provides critical components, systems integration and advanced software development for vehicle safety, security, comfort and convenience, including sensing and perception systems, electronic control units, multi-domain controllers, vehicle connectivity systems, application [removed: |]

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note [removed: 23.][added: 22.]

Our customer base includes 23 of the 25 largest automotive OEMs in the world, and in [removed: 2019, 27%] [added: 2020, 30%] of our net sales came from the Asia Pacific region, which we have identified as a key market likely to experience substantial long-term growth.

Our ten largest platforms in [removed: 2019] [added: 2020] were with eight different OEMs.

In addition, in [removed: 2019] [added: 2020] our products were found in 19 of the 20 top-selling vehicle models in the United States (“U.S.”), in 19 of the 20 top-selling vehicle models in Europe and in [removed: 15] [added: 14] of the 20 top-selling vehicle models in China.

[removed: We have also entered into] [added: In addition, Motional is involved in] collaborative arrangements with mobility providers and with smart cities such as Boston and Singapore as [removed: we develop] solutions [added: are developed] for the evolving nature of the mobility industry.

In [removed: 2019,] [added: 2020,] the industry experienced decreased global customer sales and production [removed: schedules.][added: schedules, primarily due to the impacts of the COVID-19 pandemic.]

Compared to [removed: 2018,] [added: 2019,] vehicle production in [removed: 2019] [added: 2020] decreased by [removed: 4%] [added: 22%] in [removed: both] [added: Europe, 21% in] North [removed: America and Europe] [added: America, 3% in China] and [removed: also decreased by 4%] [added: 31%] in South America, our smallest region.

We believe that evolving entrants into the global transportation industry such as mobility [removed: providers] [added: providers, electric vehicle developers] and smart cities will provide additional markets for our advanced technologies.

[added: As a result, suppliers are focused on developing technologies aimed at protecting] vehicle occupants when a crash occurs, as well as advanced driver assistance systems that reduce driver distractions and automated safety features that proactively mitigate the risk of a crash occurring.

Green is a key mega-trend today because of the convergence of several issues: climate change, volatility in oil prices, an increasing number of vehicles in use worldwide and recent and pending regulation [removed: in] [added: outside] the U.S. [removed: and overseas] regarding fuel economy and greenhouse gas emissions.

On a worldwide basis, the relevant authorities in the European Union, the [removed: U.S.,] [added: United Kingdom,] China, India, Japan, Brazil, South Korea and Argentina have already instituted regulations requiring reductions in emissions and/or increased fuel [removed: economy.][added: economy, with the U.S. expected to introduce new regulations in the near future.]

In many cases, other authorities have initiated legislation or regulation that would further tighten the standards through [removed: 2020] [added: 2021] and beyond.

These standards will require meaningful innovation as OEMs and suppliers are [removed: forced] [added: challenged] to find ways to improve engine management, electrical power consumption, vehicle weight and integration of alternative technologies (e.g., electric/hybrid propulsion).

As a result, suppliers are developing innovations that result in significant improvements in fuel economy, emissions and performance from gasoline and diesel internal combustion [removed: engines, and permit engine downsizing without loss of performance.][added: engines.]

We are continuing to invest in the automated driving space, and have continued to develop market-leading automated driving platform solutions such as automated driving software, key active safety sensing technologies and our [removed: Multi-Domain][added: multi-domain controller, which fuses information from sensing systems as well as mapping and navigation data to make driving decisions.]

In an effort to further our leadership position in the automated driving space, in [removed: September 2019] [added: March 2020] we [removed: entered into a definitive agreement] [added: completed the transaction] with Hyundai Motor Group (“Hyundai”) to form a new joint venture focused on the design, development and commercialization of autonomous driving [removed: technologies, which is expected to close in the first quarter of 2020.][added: technologies.]

We expect this partnership to [removed: advance] [added: accelerate] the [added: path towards the] development of production-ready autonomous driving systems for commercialization [removed: by bringing together our innovative vehicle technologies] in the new mobility [removed: space with one of the world’s largest vehicle manufacturers.][added: space.]

The [added: Motional] joint venture [removed: anticipates it will begin] [added: began] testing fully driverless systems in 2020 and [added: anticipates it will] have a production-ready autonomous driving platform available for robotaxi providers, fleet operators and automotive manufacturers [added: to test at prototype scale] in [removed: 2022.][added: 2022, with higher volumes available for deployment in 2023.]

[removed: | • |] [added: -] High quality connectors are engineered primarily for use in the automotive and related markets, but also have applications in the aerospace, military and telematics sectors. [removed: |]

[removed: | • |] [added: -] Electrical centers provide centralized electrical power and signal distribution and all of the associated circuit protection and switching devices, thereby optimizing the overall vehicle electrical system. [removed: |]

[removed: | • |] [added: -] Distribution systems, including hybrid high voltage systems, are integrated into one optimized vehicle electrical system that can utilize smaller cable and gauge sizes and ultra-thin wall insulation (which product line makes up approximately 42%, [removed: 44%] [added: 42%] and [removed: 47%] [added: 44%] of our total revenue for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] respectively). [removed: |]

This segment provides critical components, systems integration and advanced software development for vehicle safety, security, comfort and convenience, including sensing and perception systems, [removed: electronic control units, multi-domain controllers, vehicle connectivity systems, application software and autonomous driving technologies.]

[removed: | • |] [added: -] Advanced safety primarily consists of solutions that enable active and passive safety features and vehicle automation, as well as vision, radar, LiDAR and other sensing technologies. [removed: |]

[removed: | • |] [added: -] The user experience portfolio primarily enables in-cabin solutions around infotainment, driver interface and interior sensing solutions. [removed: |]

[removed: | • |] [added: -] Connectivity and security products primarily consists of solutions that provide body control, security and unlock vehicle data. [removed: |]

| Segment | [added: | |] Competitors | [added: | |]

| Signal and Power Solutions | [added: | |] • Amphenol Corporation | [added: | |]

| • Draexlmaier Automotive | | [added: | | | |]

| • Lear Corporation | | [added: | | | |]

| • Leoni AG | | [added: | | | |]

| • Molex Inc. (a subsidiary of Koch Industries, Inc.) | | [added: | | | |]

| • Sumitomo Corporation | | [added: | | | |]

| • TE Connectivity, Ltd. | | [added: | | | |]

The completion of the Separation positioned Aptiv as a new mobility provider focused on solving the complex challenges associated with safer, greener and more connected transportation.

At the core of our capabilities is the software and vehicle architecture expertise that enables the advanced safety, automated driving, user experience, and connected services that are enabling the future of mobility.

The adverse impacts to Aptiv of the pandemic, which primarily affected us in the first half of 2020, included extended work stoppages and travel restrictions at our facilities and those of our customers and suppliers, decreases in consumer demand and vehicle production schedules, disruptions to our supply chain and other adverse global economic impacts, particularly those resulting from temporary governmental “lock-down” orders for all non-essential activities, initially in the first quarter in China and subsequently in Europe, North America and South America in the second quarter.

Adverse impacts of the COVID-19 pandemic from the first half of 2020 were partially offset by increased consumer demand and vehicle production schedules in the second half of 2020, particularly in the fourth quarter.

OEMs continue to focus on improving occupant and pedestrian safety in order to meet increasingly stringent regulatory requirements in various markets.

The joint venture operates globally under the Motional brand name, and brings together one of the industry’s most innovative vehicle technology providers with one of the world’s largest OEMs.

We believe that substantial strategic value will be created from our partnership with Hyundai through our commitment to a shared mission of making driverless vehicles a safe, reliable, and accessible reality.

Furthermore, we anticipate Motional’s presence in both North America and Asia, along with the global presence of both Aptiv and Hyundai, to generate economies of scale to support the development of a complete autonomous driving platform, as well as to facilitate mobility infrastructure advancements.

Our products provide the critical signal distribution and computing power backbone that supports increased vehicle content and electrification, reduced emissions and higher fuel economy.

electronic control units, multi-domain controllers, vehicle connectivity systems, application software and autonomous driving technologies.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| Tesla Inc. | | | 2% | | |

| Bayerische Motoren Werke AG (“BMW”) | | | 2% | | |

| | | | | | |

(1)On January 16, 2021, FCA and PSA executed a merger agreement to form a new, combined company (“Stellantis”).

On a combined basis, the formerly separate companies accounted for 12% of Aptiv’s net sales for the year ended December 31, 2020.

Human Capital Resources

Retention and Talent Development

Our employees are united across the globe in pursuit of our mission of developing safer, greener and more connected solutions enabling the future of mobility.

The retention of highly qualified and diverse talent is critical to this mission, Aptiv’s continued growth and effective succession planning.

As part of our focus on the retention of employees, we believe in being strategic and intentional in our efforts to provide talented and diverse individuals an opportunity to leverage their demonstrated performance and to gain sustainable leadership qualities aligned to our mission, culture and values.

We have developed robust succession plans for our top leadership.

These plans align with our development initiatives, such as advancing diversity candidates in leadership and in engineering and manufacturing functions.

Furthermore, we recognize the importance of mentorship and the part it plays in personal and professional growth.

Aptiv is committed to talent development and growing the next generation of leaders.

We have established a process of recurring talent reviews, focused on development and execution of specific development action plans.

In addition, we offer several development programs targeting various career development needs.

Our Leadership Development Program provides a holistic approach that develops business acumen and personal competencies, as well as the opportunity to learn and interact with peers from around the world.

Our Leadership Foundations program is designed to help newly hired or promoted managers understand the Aptiv way of leading people.

We also leverage Aptiv Academy, our online learning management system, across the enterprise using in-person, online and virtual reality learning opportunities.

Culture

Aptiv continually evaluates the culture, values and behaviors we believe are core to enabling a thriving environment for our employees.

To establish expectations and clarity regarding the culture we are shaping, as well as the behaviors we measure in our talent evaluation system, several thousand of our top leaders have participated in global culture workshops led by our chief executive officer (“CEO”) and chief human resources officer (“CHRO”).

Diversity and Inclusion

At Aptiv, we value each individual’s perspective and foster a strong culture of respect and inclusive collaboration.

Leveraging our employees’ diverse backgrounds and experiences allows us to make better decisions and supports stronger operating performance.

To effect the Separation, the Company distributed to its shareholders one ordinary share of Delphi Technologies for every three Aptiv ordinary shares outstanding as of November 22, 2017, the record date for the distribution.

| | |

| --- | --- |

| | |

| --- | --- |

We previously reported the results of our former Powertrain Systems business as a segment.

As described above, we completed the spin-off of the Powertrain Systems segment into a new, independent public company on December 4, 2017.

The assets and liabilities, operating results and operating and investing cash flows for the previously reported Powertrain Systems segment are presented as discontinued operations separate from the Company’s continuing operations for all periods presented, as further described in Note 25.

Discontinued Operations and Held For Sale to the audited consolidated financial statements included herein.

Our description and discussion of financial amounts within this Item 1.

Business reflect the results of continuing operations, unless otherwise noted.

Additionally, increased market volatility and economic uncertainty in China has resulted in decreased vehicle production of 9% in 2019, which follows a decrease of 4% in the region in 2018.

OEMs continue to focus on improving occupant and pedestrian safety in order to meet increasingly stringent regulatory requirements in various markets, such as a notice issued by the U.S. National Highway Traffic Safety Administration which updated its five-star rating system to include automatic emergency braking systems as a recommended safety technology, beginning with model year 2018.

As a result, suppliers are focused on developing technologies aimed at protecting

Controller, which fuses information from sensing systems as well as mapping and navigation data to make driving decisions.

Additionally, in 2017 we acquired nuTonomy, Inc. in order to further accelerate the commercialization of automated driving solutions.

The acquisition of nuTonomy is the latest in a series of investments we have made to expand our position in the new mobility space, including the 2015 acquisition of automated driving software developer Ottomatika.

There has also been increasing societal demand for mobility on demand (“MoD”) services, such as car- and ride-sharing, and an increasing number of traditional automotive companies have made investments in the MoD space.

We believe the increasing societal demand for MoD services will accelerate the development of autonomous driving technologies, strongly benefiting the MoD space.

In 2018, we announced a partnership with Lyft, Inc. (“Lyft”) by launching a fleet of autonomous vehicles in Las Vegas which operate on Aptiv’s fully-integrated autonomous driving platform and are available to the public on the Lyft network.

This partnership leverages our connected services capabilities and Lyft’s ride-hailing experience to provide valuable insights on self-driving fleet operations and management.

In addition, we have entered into agreements with the Singapore Land Transport Authority and with the city of Boston to develop fully-autonomous vehicles and associated infrastructure as part of automated MoD pilots.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| | |

| • Bosch Group | |

| | |

As of December 31, [removed: 2019,] [added: 2020,] the majority of claims asserted against [removed: Aptiv in Brazil relate to such litigation.]

As of December 31, [removed: 2019,] [added: 2020,] claims totaling approximately [removed: $140] [added: $105] million (using December 31, [removed: 2019] [added: 2020] foreign currency rates) have been asserted against Aptiv in Brazil.

As of December 31, [removed: 2019,] [added: 2020,] the Company maintains accruals for these asserted claims of [removed: $30] [added: $20] million (using December 31, [removed: 2019] [added: 2020] foreign currency rates).

The Company estimates the reasonably possible loss in excess of the amounts accrued related to these claims to be zero to [removed: $110] [added: $85] million.

Aptiv in Brazil relate to such litigation.

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| Jersey | | [added: | | | |] 98-1029562 | [added: | |]

| (State or other jurisdiction of | | [added: | | | |] (I.R.S. Employer | [added: | |]

| incorporation or organization) | | [added: | | | |] Identification No.) | [added: | |]

[removed: Dublin, D02 VY79, Ireland][added: Dublin, D02 VY79, Ireland]

[removed: 353\-1\-259-7013][added: 353-1-259-7013]

| Title of each class | | [added: | | | |] Trading symbol(s) | | [added: | | | |] Name of each exchange on which registered | [added: | |]

| Ordinary Shares. $0.01 par value per share | | [added: | | | |] APTV | | [added: | | | |] New York Stock Exchange | [added: | |]

| Large accelerated filer | [added: | |] ☒ | | | | [added: | | | | | | | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | | | | [added: | | | | | | | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | | | | [added: | | | | | | | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of the ordinary shares held by non-affiliates of the registrant as of June 30, [removed: 2019,] [added: 2020,] the last business day of the registrant’s most recently completed second fiscal quarter, was [removed: $20,638,801,929] [added: $20,958,040,169] (based on the closing sale price of the registrant’s ordinary shares on that date as reported on the New York Stock Exchange).

The number of the registrant’s ordinary shares outstanding, $0.01 par value per share as of January [removed: 24, 2020,] [added: 29, 2021,] was [removed: 255,288,240.][added: 270,025,374.]

Portions of the registrant’s definitive Proxy Statement related to the [removed: 2020] [added: 2021] Annual General Meeting of Shareholders to be filed subsequently are incorporated by reference into Part III of this Form 10-K.

| | | [added: | | | |] Page | [added: | |]

| | [added: | |] Part I | | [added: | | | |]

| Item 1. | [removed: [Business](#sD8AD3E0378CE59A8A09907C9F19D17F7)] | [removed: [4](#sD8AD3E0378CE59A8A09907C9F19D17F7)] | [added: [Business](#i8174ca128a674d78a499404cfe9cfa57_16) | | | [4](#i8174ca128a674d78a499404cfe9cfa57_16) | | |]

| Supplementary Item. | [added: | |] [Executive Officers of the [removed: Registrant](#sB95FDEDB37AD5C00B9F4ADC963AFC315)] [added: Registrant](#i8174ca128a674d78a499404cfe9cfa57_19)] | [removed: [11](#sB95FDEDB37AD5C00B9F4ADC963AFC315)] | [added: | [12](#i8174ca128a674d78a499404cfe9cfa57_19) | | |]

| Item 1A. | [added: | |] [Risk [removed: Factors](#s15EBD8A80DF3501893BE6880F4B08D95)] [added: Factors](#i8174ca128a674d78a499404cfe9cfa57_22)] | [removed: [13](#s15EBD8A80DF3501893BE6880F4B08D95)] | [added: | [14](#i8174ca128a674d78a499404cfe9cfa57_22) | | |]

| Item 1B. | [added: | |] [Unresolved Staff [removed: Comments](#sEC5D474D13B059E7A93C705E7D8B75DC)] [added: Comments](#i8174ca128a674d78a499404cfe9cfa57_25)] | [removed: [24](#sEC5D474D13B059E7A93C705E7D8B75DC)] | [added: | [26](#i8174ca128a674d78a499404cfe9cfa57_25) | | |]

| Item 2. | [removed: [Properties](#s97C56A8EAA09572196F076B02FC0353E)] | [removed: [24](#s97C56A8EAA09572196F076B02FC0353E)] | [added: [Properties](#i8174ca128a674d78a499404cfe9cfa57_28) | | | [26](#i8174ca128a674d78a499404cfe9cfa57_28) | | |]

| Item 3. | [added: | |] [Legal [removed: Proceedings](#s6B412CAAAFA15614926BB2F50CA49D87)] [added: Proceedings](#i8174ca128a674d78a499404cfe9cfa57_31)] | [removed: [25](#s6B412CAAAFA15614926BB2F50CA49D87)] | [added: | [26](#i8174ca128a674d78a499404cfe9cfa57_31) | | |]

| Item 4. | [added: | |] [Mine Safety [removed: Disclosures](#s1A2B1D5F1C835A3EB043EF99080F4C4D)] [added: Disclosures](#i8174ca128a674d78a499404cfe9cfa57_34)] | [removed: [25](#s1A2B1D5F1C835A3EB043EF99080F4C4D)] | [added: | [27](#i8174ca128a674d78a499404cfe9cfa57_34) | | |]

| | [added: | |] Part II | | [added: | | | |]

| Item 5. | [added: | |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sA07418FBD46C5195856ADAF2242F541E)] [added: Securities](#i8174ca128a674d78a499404cfe9cfa57_40)] | [removed: [26](#sA07418FBD46C5195856ADAF2242F541E)] | [added: | [28](#i8174ca128a674d78a499404cfe9cfa57_40) | | |]

| Item 6. | [added: | |] [Selected Financial [removed: Data](#sDA56CE69336E5F17B9D7B098E502FF91)] [added: Data](#i8174ca128a674d78a499404cfe9cfa57_43)] | [removed: [28](#sDA56CE69336E5F17B9D7B098E502FF91)] | [added: | [29](#i8174ca128a674d78a499404cfe9cfa57_43) | | |]

| Item 7. | [added: | |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s806963324C375C63B32004E6429DAA3A)] [added: Operations](#i8174ca128a674d78a499404cfe9cfa57_46)] | [removed: [30](#s806963324C375C63B32004E6429DAA3A)] | [added: | [32](#i8174ca128a674d78a499404cfe9cfa57_46) | | |]

| Item 7A. | [added: | |] [Quantitative and Qualitative Disclosures About Market [removed: Risk](#s95B9A5BC8F1952EA9B810F030DAB09E0)] [added: Risk](#i8174ca128a674d78a499404cfe9cfa57_70)] | [removed: [56](#s95B9A5BC8F1952EA9B810F030DAB09E0)] | [added: | [60](#i8174ca128a674d78a499404cfe9cfa57_70) | | |]

| Item 8. | [added: | |] [Financial Statements and Supplementary [removed: Data](#sFA1E4AEF59E05A4FB595519814CF4A45)] [added: Data](#i8174ca128a674d78a499404cfe9cfa57_73)] | [removed: [58](#sFA1E4AEF59E05A4FB595519814CF4A45)] | [added: | [62](#i8174ca128a674d78a499404cfe9cfa57_73) | | |]

| Item 9. | [added: | |] [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#sA0E3DB7757355D64908B2B13A5230156)] [added: Disclosure](#i8174ca128a674d78a499404cfe9cfa57_235)] | [removed: [135](#sA0E3DB7757355D64908B2B13A5230156)] | [added: | [129](#i8174ca128a674d78a499404cfe9cfa57_235) | | |]

| Item 9A. | [added: | |] [Controls and [removed: Procedures](#s1D1F8761C1AF5666B60069C506293FE5)] [added: Procedures](#i8174ca128a674d78a499404cfe9cfa57_238)] | [removed: [135](#s1D1F8761C1AF5666B60069C506293FE5)] | [added: | [129](#i8174ca128a674d78a499404cfe9cfa57_238) | | |]

| Item 9B. | [added: | |] [Other [removed: Information](#s207ADF9C565E55A3BB1726A82FDAE196)] [added: Information](#i8174ca128a674d78a499404cfe9cfa57_241)] | [removed: [136](#s207ADF9C565E55A3BB1726A82FDAE196)] | [added: | [130](#i8174ca128a674d78a499404cfe9cfa57_241) | | |]

| | [added: | |] Part III | | [added: | | | |]

| Item 10. | [added: | |] [Directors, Executive Officers and Corporate [removed: Governance](#sD089058E150251FF9D797E27D92007F2)] [added: Governance](#i8174ca128a674d78a499404cfe9cfa57_247)] | [removed: [137](#sD089058E150251FF9D797E27D92007F2)] | [added: | [131](#i8174ca128a674d78a499404cfe9cfa57_247) | | |]

| Item 11. | [added: | |] [Executive [removed: Compensation](#s4D18ED8F05925E9BA0ADE2AD7328FC52)] [added: Compensation](#i8174ca128a674d78a499404cfe9cfa57_250)] | [removed: [137](#s4D18ED8F05925E9BA0ADE2AD7328FC52)] | [added: | [131](#i8174ca128a674d78a499404cfe9cfa57_250) | | |]

| Item 12. | [added: | |] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sFA48769DCA6A59BC9DEA0A0CDFF18D29)] [added: Matters](#i8174ca128a674d78a499404cfe9cfa57_253)] | [removed: [137](#sFA48769DCA6A59BC9DEA0A0CDFF18D29)] | [added: | [131](#i8174ca128a674d78a499404cfe9cfa57_253) | | |]

| Item 13. | [added: | |] [Certain Relationships and Related Transactions and Director [removed: Independence](#sACC7DD131201580BB63668C9BCC1CE82)] [added: Independence](#i8174ca128a674d78a499404cfe9cfa57_256)] | [removed: [137](#sACC7DD131201580BB63668C9BCC1CE82)] | [added: | [131](#i8174ca128a674d78a499404cfe9cfa57_256) | | |]

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 5.50% Mandatory Convertible Preferred Shares, Series A, $0.01 par value per share | | | | | | APTV PRA | | | | | | New York Stock Exchange | | |

| 1.500% Senior Notes due 2025 | | | | | | APTV | | | | | | New York Stock Exchange | | |

| 4.250% Senior Notes due 2026 | | | | | | APTV | | | | | | New York Stock Exchange | | |

| 1.600% Senior Notes due 2028 | | | | | | APTV | | | | | | New York Stock Exchange | | |

| 4.350% Senior Notes due 2029 | | | | | | APTV | | | | | | New York Stock Exchange | | |

| 4.400% Senior Notes due 2046 | | | | | | APTV | | | | | | New York Stock Exchange | | |

| 5.400% Senior Notes due 2049 | | | | | | APTV | | | | | | New York Stock Exchange | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | | | | | | | | |

| | |

| --- | --- |

| | |

| | |

| --- | --- |

| | |

| | | |

| --- | --- | --- |

| | | |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | |

| --- | --- | --- |

| | | |

| | | |

| | | |

| | | |

As of December 31, [removed: 2019,] [added: 2020,] we owned or leased [removed: 126] [added: 124] major manufacturing sites and [removed: 15] [added: 12] major technical centers.

| | [added: | |] North America | | | [removed: Europe, Middle East &] [added: | | | Europe, Middle East &] Africa | | | [added: | | |] Asia Pacific | | | [added: | | |] South America | | | [added: | | |] Total | | [added: |]

| Signal and Power Solutions | [removed: 44] | | [added: 43] | [added: | | | | |] 34 | | | [removed: 32] | | | [added: 31 | | | | | |] 5 | | | [removed: 115] | | [added: | 113 | | |]

| Advanced Safety and User Experience | [added: | |] 2 | | | [added: | | |] 5 | | | [added: | | |] 4 | | | [added: | | |] — | | | [added: | | |] 11 | | [added: |]

In addition to these manufacturing sites, we had [removed: 15] [added: 12] major technical centers: [removed: eight] [added: five] in North America; two in Europe, Middle East and Africa; and five in Asia Pacific.

Of our [removed: 126] [added: 124] major manufacturing sites and [removed: 15] [added: 12] major technical centers, which include facilities owned or leased by our consolidated subsidiaries, [removed: 62] [added: 63] are primarily owned and [removed: 79] [added: 73] are primarily leased.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Total | | | 45 | | | | | | 39 | | | | | | 35 | | | | | | 5 | | | | | | 124 | | |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| Total | 46 | | | 39 | | | 36 | | | 5 | | | 126 | |

As of January [removed: 24, 2020,] [added: 29, 2021,] there were 2 shareholders of record of our ordinary shares.

The following graph reflects the comparative changes in the value from December 31, [removed: 2014] [added: 2015] through December 31, [removed: 2019,] [added: 2020,] assuming an initial investment of $100 and the reinvestment of dividends, if any in (1) our ordinary shares, (2) the S&P 500 index and (3) the Automotive Peer Group.

[removed: ][added: ]

* $100 invested on December 31, [removed: 2014] [added: 2015] in our stock or in the relevant index, including reinvestment of dividends.

Fiscal year ended December 31, [removed: 2019.][added: 2020.]

[removed: | (1) | Aptiv] [added: (1)Aptiv] PLC, adjusted for the distribution of Delphi Technologies on December 4, 2017 [removed: |]

[removed: | (2) | S&P] [added: (2)S&P] 500 – Standard & Poor’s 500 Total Return Index [removed: |]

[removed: | (3) | Automotive] [added: (3)Automotive] Peer Group – Adient Plc, American Axle & Manufacturing Holdings Inc, Aptiv PLC, Borgwarner Inc, Cooper Tire & Rubber Co, Cooper-standard Holdings Inc, Dana Inc, Dorman Products Inc, Ford Motor Co, General Motors Co, Gentex Corp, Gentherm Inc, Genuine Parts Co, Goodyear Tire & Rubber Co, Lear Corp, Lkq Corp, Meritor Inc, Motorcar Parts Of America Inc, Standard Motor Products Inc, Stoneridge Inc, Tenneco Inc, Tesla Inc, Visteon [removed: Corp, Wabco Holdings Inc |][added: Corp]

| Company Index | | [removed: December 31, 2014] | | | | [added: | | | | | |] December 31, 2015 | | | | [added: | |] December 31, 2016 | | | | [added: | |] December 31, 2017 | | | | [added: | |] December 31, 2018 | | | | [added: | |] December 31, 2019 | | | [added: | | | December 31, 2020 | | | | | |]

Share-Based Compensation to our [added: audited] consolidated financial statements.

| Plan Category | | [added: | | | |] Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | | | | [added: | | | | |] Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | | | | | [added: | | | |] Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (c) | | | [added: | | |]

| Equity compensation plans [added: not] approved by security holders | | [removed: 2,436,179] | | [removed: (1)] | | [removed: $] [added: —] | [added: | | | | | | | |] — | | [removed: (2)] | | [removed: 14,470,050] | | [removed: (3)] | [added: | | — | | | | | |]

| Equity compensation plans [removed: not] approved by security holders | | [removed: —] | | | | [removed: —] [added: 2,087,438] | | | [added: (1)] | | [added: | | | | $ |] — | | [added: (2)] | [added: | | | | | 13,745,696 | | | (3) | | |]

[removed: | (1) | Includes (a) 23,326 outstanding restricted stock units granted to our Board of Directors and (b) 2,412,853 outstanding time- and performance-based restricted stock units granted to our employees.] All grants were made under the Aptiv PLC Long Term Incentive Plan, as amended and restated effective April 23, 2015 (the “PLC LTIP”). [removed: Includes accrued dividend equivalents. |]

[removed: | (2) | The] [added: (2)The] restricted stock units have no exercise price. [removed: |]

[removed: | (3) | Remaining] [added: (3)Remaining] shares available under the PLC LTIP. [removed: |]

[removed: | (3) | In January 2019, the Board of Directors authorized a share repurchase program of up to $2.0 billion.] This program will commence following the completion of the previously announced share repurchase program of $1.5 billion, which was approved by the Board of Directors in April 2016. [removed: The timing of repurchases is dependent on price, market conditions and applicable regulatory requirements. |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Aptiv PLC (1) | | | | | | | | | | | | $ | 100.00 | | | | | $ | 79.94 | | | | | $ | 121.83 | | | | | $ | 89.29 | | | | | $ | 139.19 | | | | | $ | 191.42 | | | | |

| S&P 500 (2) | | | | | | | | | | | | 100.00 | | | | | | 111.96 | | | | | | 136.40 | | | | | | 130.42 | | | | | | 171.49 | | | | | | 203.04 | | | | | |

| Automotive Peer Group (3) | | | | | | | | | | | | 100.00 | | | | | | 99.50 | | | | | | 123.77 | | | | | | 98.95 | | | | | | 122.30 | | | | | | 393.86 | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total | | | | | | 2,087,438 | | | | | | | | | — | | | | | | | | | 13,745,696 | | | | | |

(1)Includes (a) 51,674 outstanding restricted stock units granted to our Board of Directors and (b) 2,035,764 outstanding time- and performance-based restricted stock units granted to our employees.

Includes accrued dividend equivalents.

There were no repurchases of equity securities during the quarter ended December 31, 2020.

In January 2019, the Board of Directors authorized a share repurchase program of up to $2.0 billion.

As of December 31, 2020, approximately $2,013 million remained available for repurchases pursuant to these programs.

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | |

| Aptiv PLC (1) | | $ | 100.00 | | | $ | 119.34 | | | $ | 95.40 | | | $ | 145.39 | | | $ | 106.56 | | | $ | 166.11 | |

| S&P 500 (2) | | 100.00 | | | | 101.38 | | | | 113.51 | | | | 138.29 | | | | 132.23 | | | | 173.86 | | |

| Automotive Peer Group (3) | | 100.00 | | | | 100.06 | | | | 99.66 | | | | 124.23 | | | | 99.15 | | | | 122.61 | | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| Total | | 2,436,179 | | | | — | | | | | 14,470,050 | | |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

A summary of our ordinary shares repurchased during the quarter ended December 31, 2019, is shown below:

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| Period | | Total Number of Shares Purchased (1) | | | Average Price Paid per Share (2) | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions) (3) | | |

| October 1, 2019 to October 31, 2019 | | 366,691 | | | $ | 82.17 | | | 366,691 | | | $ | 2,070 | |

| November 1, 2019 to November 30, 2019 | | — | | | — | | | | — | | | 2,070 | | |

| December 1, 2019 to December 31, 2019 | | — | | | — | | | | — | | | 2,070 | | |

| Total | | 366,691 | | | 82.17 | | | | 366,691 | | | | | |

| | |

| --- | --- |

| (1) | The total number of shares purchased under the Board authorized plans described below. |

| | |

| --- | --- |

| (2) | Excluding commissions. |

| | |

| --- | --- |

Management’s Discussion and Analysis of Financial Condition and Results of Operations and the [added: audited] consolidated financial statements and notes thereto included elsewhere in this Annual Report.

| | [added: | |] Year Ended December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015 (1)] [added: 2016] | | |

| | [added: | |] (dollars and shares in millions, except per share data) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Statements of operations data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Net sales | [added: | |] $ | [removed: 14,357] [added: 13,066] | | | [added: | |] $ | [removed: 14,435] [added: 14,357] | | | [added: | |] $ | [removed: 12,884] [added: 14,435] | | | [added: | |] $ | [removed: 12,274] [added: 12,884] | | | [added: | |] $ | [removed: 10,864] [added: 12,274] | |

| Depreciation and amortization [removed: (2)] [added: (1)] | [added: | | 764 | | | | | |] 717 | | | | [added: | |] 676 | | | | [removed: 546] | | [added: 546] | | [removed: 489] | | | | [removed: 344] [added: 489] | | |

| Operating income [added: (2)] | [added: | | 2,118 | | | | | |] 1,276 | | | | [added: | |] 1,473 | | | | [removed: 1,416] | | [added: 1,416] | | [removed: 1,539] | | | | [removed: 1,235] [added: 1,539] | | |

| Interest expense | [removed: (164] | | [removed: )] [added: (164)] | | [removed: (141] | | [removed: )] | | [removed: (140] [added: (164)] | | [removed: )] | | [removed: (155] | | [removed: )] [added: (141)] | | [removed: (124] | | [removed: )] | [added: | (140) | | | | | | (155) | | |]

| Income from continuing operations | [added: | | 1,822 | | | | | |] 1,009 | | | | [added: | |] 1,107 | | | | [removed: 1,063] | | [added: 1,063] | | [removed: 868] | | | | [removed: 852] [added: 868] | | |

| Income from discontinued operations, net of tax | [added: | |] — | | | | [added: | |] — | | | | [removed: 365] | | [added: —] | | [removed: 458] | | | | [removed: 683] [added: 365] | | | [added: | | | 458 | | |]

| Net income | [added: | | 1,822 | | | | | |] 1,009 | | | | [added: | |] 1,107 | | | | [removed: 1,428] | | [added: 1,428] | | [removed: 1,326] | | | | [removed: 1,535] [added: 1,326] | | |

| Net income attributable to noncontrolling interest | [added: | | 18 | | | | | |] 19 | | | | [added: | |] 40 | | | | [removed: 73] | | [added: 73] | | [removed: 69] | | | | [removed: 85] [added: 69] | | |

| Net income attributable to Aptiv | [added: | | 1,804 | | | | | |] 990 | | | | [added: | |] 1,067 | | | | [removed: 1,355] | | [added: 1,355] | | [removed: 1,257] | | | | [removed: 1,450] [added: 1,257] | | |

| Net income per share data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Basic net income per share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Continuing operations | [added: | |] $ | [removed: 3.85] [added: 6.72] | | | [added: | |] $ | [removed: 4.04] [added: 3.85] | | | [added: | |] $ | [removed: 3.82] [added: 4.04] | | | [added: | |] $ | [removed: 3.05] [added: 3.82] | | | [added: | |] $ | [removed: 2.85] [added: 3.05] | |

| Discontinued operations | [added: | |] — | | | | [added: | |] — | | | | [removed: 1.25] | | [added: —] | | [removed: 1.55] | | | | [removed: 2.23] [added: 1.25] | | | [added: | | | 1.55 | | |]

| Basic net income per share attributable to [removed: Aptiv] [added: ordinary shareholders] | [added: | |] $ | [removed: 3.85] [added: 6.72] | | | [added: | |] $ | [removed: 4.04] [added: 3.85] | | | [added: | |] $ | [removed: 5.07] [added: 4.04] | | | [added: | |] $ | [removed: 4.60] [added: 5.07] | | | [added: | |] $ | [removed: 5.08] [added: 4.60] | |

| Diluted net income per share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Continuing operations | [added: | |] $ | [removed: 3.85] [added: 6.66] | | | [added: | |] $ | [removed: 4.02] [added: 3.85] | | | [added: | |] $ | [removed: 3.81] [added: 4.02] | | | [added: | |] $ | [removed: 3.05] [added: 3.81] | | | [added: | |] $ | [removed: 2.84] [added: 3.05] | |

| Discontinued operations | [added: | |] — | | | | [added: | |] — | | | | [removed: 1.25] | | [added: —] | | [removed: 1.54] | | | | [removed: 2.22] [added: 1.25] | | | [added: | | | 1.54 | | |]

| Diluted net income per share attributable to [removed: Aptiv] [added: ordinary shareholders] | [added: | |] $ | [removed: 3.85] [added: 6.66] | | | [added: | |] $ | [removed: 4.02] [added: 3.85] | | | [added: | |] $ | [removed: 5.06] [added: 4.02] | | | [added: | |] $ | [removed: 4.59] [added: 5.06] | | | [added: | |] $ | [removed: 5.06] [added: 4.59] | |

| Weighted average shares outstanding | [added: | | 263 | | | | | |] 257 | | | | [added: | |] 264 | | | | [removed: 267] | | [added: 267] | | [removed: 273] | | | | [removed: 285] [added: 273] | | |

| Cash dividends declared and paid [added: per ordinary share] | [added: | |] $ | [removed: 0.88] [added: 0.22] | | | [added: | |] $ | 0.88 | | | [added: | |] $ | [removed: 1.16] [added: 0.88] | | | [added: | |] $ | 1.16 | | | [added: | |] $ | [removed: 1.00] [added: 1.16] | |

| Other financial data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Capital expenditures | [added: | |] $ | [removed: 781] [added: 584] | | | [added: | |] $ | [removed: 846] [added: 781] | | | [added: | |] $ | [removed: 698] [added: 846] | | | [added: | |] $ | [removed: 657] [added: 698] | | | [added: | |] $ | [removed: 503] [added: 657] | |

| Adjusted operating income (3) | [added: | | 867 | | | | | |] 1,548 | | | | [added: | |] 1,751 | | | | [removed: 1,594] | | [added: 1,594] | | [removed: 1,623] | | | | [removed: 1,360] [added: 1,623] | | |

| Adjusted operating income margin (4) | [removed: 10.8] | | [added: 6.6 | |] % | | [removed: 12.1] | | [added: 10.8 | |] % | | [removed: 12.4] | | [added: 12.1 | |] % | | [removed: 13.2] | | [added: 12.4 | |] % | | [removed: 12.5] | | [added: 13.2 | |] % |

| Net cash provided by operating activities (5) | [added: | |] $ | [removed: 1,624] [added: 1,413] | | | [added: | |] $ | [removed: 1,628] [added: 1,624] | | | [added: | |] $ | [removed: 1,468] [added: 1,628] | | | [added: | |] $ | [removed: 1,941] [added: 1,468] | | | [added: | |] $ | [removed: 1,703] [added: 1,941] | |

| Net cash used in investing activities (5) | [removed: (1,111] | | [removed: )] [added: (626)] | | [removed: (2,048] | | [removed: )] | | [removed: (1,252] [added: (1,111)] | | [removed: )] | | [removed: (578] | | [removed: )] [added: (2,048)] | | [removed: (1,699] | | [removed: )] | [added: | (1,252) | | | | | | (578) | | |]

| Net cash [removed: (used in)] provided by [added: (used in)] financing activities (5) | [removed: (649] | | [removed: )] [added: 1,613] | | [removed: (555] | | [removed: )] | | [removed: 456] [added: (649)] | | | | [removed: (1,081] | | [removed: )] [added: (555)] | | [removed: (284] | | [removed: )] | [added: | 456 | | | | | | (1,081) | | |]

| | [added: | |] As of December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| | [added: | |] (in millions, except employee data) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Balance sheet and employment data: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Cash and cash equivalents | [added: | |] $ | [removed: 412] [added: 2,821] | | | [added: | |] $ | [removed: 567] [added: 412] | | | [added: | |] $ | [removed: 1,596] [added: 567] | | | [added: | |] $ | [removed: 737] [added: 1,596] | | | [added: | |] $ | [removed: 427] [added: 737] | |

| Total assets (6) | [added: | |] $ | [removed: 13,459] [added: 17,522] | | | [added: | |] $ | [removed: 12,480] [added: 13,459] | | | [added: | |] $ | [removed: 12,169] [added: 12,480] | | | [added: | |] $ | [removed: 12,292] [added: 12,169] | | | [added: | |] $ | [removed: 11,973] [added: 12,292] | |

| Total debt | [added: | |] $ | [removed: 4,364] [added: 4,101] | | | [added: | |] $ | [removed: 4,344] [added: 4,364] | | | [added: | |] $ | [removed: 4,149] [added: 4,344] | | | [added: | |] $ | [removed: 3,963] [added: 4,149] | | | [added: | |] $ | [removed: 3,976] [added: 3,963] | |

| Working capital, as defined (7) | [added: | |] $ | [removed: 1,392] [added: 1,538] | | | [added: | |] $ | [removed: 1,430] [added: 1,392] | | | [added: | |] $ | [removed: 1,296] [added: 1,430] | | | [added: | |] $ | [removed: 1,169] [added: 1,296] | | | [added: | |] $ | [removed: 943] [added: 1,169] | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Mandatory Convertible Preferred Share dividends | | | (35) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |

| Net income attributable to ordinary shareholders | | | 1,769 | | | | | | 990 | | | | | | 1,067 | | | | | | 1,355 | | | | | | 1,257 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| (2) | | | The year ended December 31, 2020 includes a pre-tax gain of $1.4 billion for the completion of the Motional autonomous driving joint venture, as further discussed in Note 24. Held for Sale to the audited consolidated financial statements contained herein. | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

(b) On December 30, 2016, we completed the sale of our Mechatronics business.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

For further information regarding discontinued operations, see Note 25.

Discontinued Operations and Held For Sale to the audited consolidated financial statements included herein.

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

| | |

| (1) | On December 18, 2015, we completed the acquisition of HellermannTyton Group PLC, a leading global manufacturer of high-performance and innovative cable management solutions. Given the timing of the acquisition it is not fully reflected in our 2015 results and impacts comparability to 2016 results. |

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

We have audited the accompanying consolidated balance sheets of Aptiv PLC (the Company) as of December 31, [removed: 2019 and 2018,] [added: 2020] and [added: 2019,] the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February [removed: 3, 2020] [added: 8, 2021] expressed an unqualified opinion thereon.

| | [added: | |] Uncertain Tax Positions | [added: | |]

| *Description of the Matter* | [added: | |] As described in Notes 2 and 14, the Company establishes reserves for uncertain tax positions for positions that are taken on their income tax returns that might not be sustained upon examination by the taxing authorities. At December 31, [removed: 2019,] [added: 2020,] the Company has recorded approximately [removed: $217] [added: $231] million relating to uncertain tax positions. In determining whether an uncertain tax position exists, the Company determines, based solely on its technical merits, whether the tax position is more likely than not to be sustained upon examination, and if so, a tax benefit is measured on a cumulative probability basis that is more likely than not to be realized upon the ultimate settlement. The Company identifies its certain and uncertain tax positions and then evaluates the recognition and measurement steps to determine the amount that should be recognized. The Company then evaluates uncertain tax positions in subsequent periods for recognition, de-recognition or re-measurement if changes have occurred, or when effective settlement or expiration of the statute of limitations occurs. | [added: | |]

| | [added: | |] Auditing the uncertain tax positions is complex because of the judgmental nature of the tax accruals and various other tax return positions that might not be sustained upon review by taxing authorities. The Company files tax returns in multiple jurisdictions and is subject to examination by taxing authorities throughout the world due to its complex global footprint. Taxing jurisdictions significant to Aptiv include China, Barbados, Luxembourg, Germany, Mexico, the U.S., Ireland, South Korea and the U.K. | [added: | |]

| *How We Addressed the Matter in Our Audit* | [added: | |] We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls related to the recognition, measurement and the evaluation of changes in uncertain tax positions. This included testing controls over management’s review of the tax positions, their evaluation of whether they met the measurement threshold and then recalculating the amounts recognized based upon a cumulative probability assessment performed by management. Our audit procedures to test the Company’s uncertain tax positions included, among others, involvement of our [added: tax professionals, including] transfer pricing [removed: professionals to evaluate the] [added: professionals. This included evaluating tax opinions and] third-party transfer pricing studies obtained by the Company and assessing the Company’s correspondence with the relevant tax authorities. We analyzed the Company’s assumptions and data used to determine the amount of tax benefit to recognize and tested the accuracy of the calculations. Our testing also included the evaluation of the ongoing positions and consideration of changes, the recording of penalties and interest and the ultimate settlement and payment of certain tax matters. | [added: | |]

| | [added: | |] Revenue Recognition | [added: | |]

| *Description of the Matter* | [added: | |] As described in Notes 2 and [removed: 26,] [added: 25,] Aptiv occasionally enters into pricing agreements with its customers that provide for price reductions, some of which are conditional upon achieving certain joint cost saving targets. In addition, from time to time, Aptiv makes payments to customers in conjunction with ongoing business. Revenue is recognized based on the agreed-upon price at the time of shipment, and sales incentives, allowances and certain customer payments are recognized as a reduction to revenue at the time of the commitment to provide such incentives or make these payments. Certain other customer payments or upfront fees are considered to be a cost to obtain a contract as they are directly attributable to a contract, are incremental and management expects the payments to be recoverable. In these cases, the customer payment is capitalized and amortized to revenue based on the transfer of goods and services to the customer for which the upfront payment relates. As of December 31, [removed: 2019,] [added: 2020,] Aptiv has recorded [removed: $99] [added: $116] million related to these capitalized upfront payments. Auditing the accounting for and completeness of arrangements containing elements such as sales incentives, allowances and customer payments, including the appropriate timing and presentation of adjustments to revenue as well as costs to obtain a contract is judgmental due to the unique facts and circumstances involved in each revenue arrangement, as well as on-going commercial negotiations with customers. | [added: | |]

| *How We Addressed the Matter in Our Audit* | [added: | |] We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the review of customer contracts. This included testing controls over the Company’s process to identify and evaluate customer contracts that contain sales incentives, allowances and customer payments that impact revenue recognition. Our audit procedures to test the completeness of the Company’s identification of such contracts included, among others, interviewing sales representatives who are responsible for negotiations with customers and testing cash payments to customers. To test management’s assessment of customer contracts containing sales incentives, allowances and customer payments, our procedures included, among others, selecting a sample of customer agreements, obtaining and reviewing source documentation, including master agreements, and other documents that were part of the agreement, and evaluating the contract terms to determine the appropriateness of the accounting treatment. | [added: | |]

We have audited Aptiv PLC’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Aptiv PLC (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] and the related notes and financial statement schedule and our report dated February [removed: 3, 2020] [added: 8, 2021] expressed an unqualified opinion thereon.

| | [added: | | | | | | | |] Year Ended December 31, | | | | | | | | | | | [added: | | | | | | | | | |]

| | [removed: 2019] | | | | [removed: 2018] | | | | [removed: 2017] | | | [added: | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |]

| | [added: | | | | | | | | | | | | | |] (in millions, except per share amounts) | | | | | | | | | | | [added: | | | |]

| Net sales | [added: | | | | | | | | | | | | | |] $ | [removed: 14,357] [added: 13,066] | | | [added: | |] $ | [removed: 14,435] [added: 14,357] | | | [added: | |] $ | [removed: 12,884] [added: 14,435] | |