Tenneco, Johnson Controls likely gainers in Obama emissions plan

BorgWarner Inc., Tenneco Inc. and Johnson Controls Inc. may boost sales because of President Barack Obama's move to let California set emissions rules that are stricter than U.S. standards.

Tighter regulations will "drive dramatic growth in advanced vehicle technology," Rod Lache, a New York-based analyst for Deutsche Bank AG, wrote in a note today.

That may help BorgWarner, a maker of turbochargers, and Johnson Controls, a supplier of batteries for hybrid autos, Lache wrote. Tenneco, a maker of exhaust systems, also may gain from Obama's move, Brett Hoselton, a KeyBanc Capital Markets Inc. analyst in Cleveland, wrote in a note yesterday.

Obama triggered the possible changes with his order yesterday for the Environmental Protection Agency to consider California's request for a state program aimed at cutting auto emissions tied to global warming by 30 percent by 2016. At least 17 states have said they would follow California's rules.

Turbochargers and gasoline-electric hybrid systems help automakers improve performance without adding to the output of so-called greenhouse gases. Lache has a "hold" rating on Milwaukee-based Johnson Controls and on BorgWarner, which is based in Auburn Hills, Michigan.

Tenneco's exhaust products help vehicles "achieve tighter emission standards," wrote Hoselton, who has a "hold" rating on the Lake Forest, Illinois-based company.

Increased demand for auto parts that enhance fuel economy would help BorgWarner, Johnson Controls and Tenneco weather slumping U.S. auto sales that may fall this year to the lowest since 1982.

The shares of all three companies have tumbled at least 60 percent in the past year on dwindling purchases by automakers.