Magna International is going electric. Although we are still years away from an auto industry dominated by electric vehicles (EV), Magna is already restructuring its operations to take advantage of the rapid growth in EV sales.
In 2021, the Canadian automotive giant was forecasting $4 billion in EV-related product and component sales by 2025. In June, Magna CEO Swamy Kotagiri revealed his company had raised that estimate to $4.5 billion.
This is in response to surging demand for electric vehicles that has led the world’s auto manufacturers to ramp up EV production while many Western governments are mandating the prohibition of internal combustion engine-power cars and trucks by the next decade.
With its revenues buoyed by the electrification of the automotive industry, Aurora, Ont.-based Magna International is positioning itself to be a major world player in the rapidly evolving sector.
This year, it will begin production of the Fisker Ocean SUV in November, its first entire vehicle assembly. Magna also announced the construction of two new parts factories: a battery enclosure plant in Chatham-Kent, Ont., and a powertrain systems factory in Ramos Arizpe, Mexico as part of its partnership with South Korean heavyweight LG Electronics.
“Our joint venture with LG – which enables us to accelerate our position in powertrain electrification, and our collaboration with Fisker, are two key highlights (of successful deals concluded in 2021),” said Kotagiri in an interview with Just-Auto.com in December.
“The shift towards electrification is progressing very fast, and, Magna is embracing this challenge with its best-in-class hybrid and electric powertrain portfolio.”
The world’s third-largest automotive supplier, Magna currently manufactures automotive components and entire vehicles in plants across North America and the world. Its leading automaker clients include Ford Motor Co., BMW, Jaguar Land Rover and two highly promising electric car startups: Fisker Inc., and Israel’s REE Automotive Ltd.
Commitment to electrification
The company’s strategic commitment to vehicle electrification was first laid out in April of 2021 by Kotagiri, who believes the rapidly growing EV sector will be a principal driver of earnings growth in the years to come.
“Our complete vehicle system approach, combining . . . capital efficiency, launch reliability and speed to market . . . is what sets Magna apart in the industry,” Kotagiri declared in an investor call. “(This) positions us to support the evolving mobility landscape like no other supplier can.”
Magna is expanding heavily into EVs as part of the accelerating transition to electric mobility — for both battery and hydrogen vehicles. Accordingly, the company has been increasing its factory capacity for the manufacture of EV parts, most recently with this year’s announcement that Magna’s Formet Industries subsidiary will be constructing a new $50-million plant in Chatham-Kent.
The project will involve repurposing the building formerly used by Crown Metal Packaging Canada to manufacture cans, until it was shut down in 2015.
Have you driven an (electric) Ford lately?
The new Chatham facility is part of Magna’s partnership with U.S. automaker Ford Motor Co. that will see the 170,000 square foot factory produce ultra lightweight aluminum battery enclosures for Ford’s new F-150 Lightning electric pick-up truck.
In a March press release, Formet Industries’ general manager Mark Johnson said the “game changing” aluminum casings are part of “an exciting new technology that offers a lot of growth potential” and will be the largest EV casings ever built.
The casings are built to accommodate larger batteries, giving the electric F-150 a range of 515 kms.
It is difficult to overstate the magnitude of Magna’s Ford deal.
The F- series trucks, most notably the F-150, have been a mainstay of the Detroit automaker’s product line for nearly half a century. In 2021, the F-series, led by the F-150, was the best-selling vehicle (car or truck) in the U.S.; the 45th year in a row that it has earned that distinction.
Advance non-binding orders for the 2022 electric F-150 have already reached 200,000, causing Ford to stop accepting reservations until 2023. Magna’s Chatham-Kent plant will likely be running multiple shifts to keep up with demand for the battery enclosures for the foreseeable future.
Fisker Ocean SUV
Extending its outlook beyond that of a supplier and contract assembler, Magna is now emerging as a new player in the manufacture of EVs themselves.
In December 2020, the company entered into a platform and manufacturing deal with Fisker, the EV start-up owned by Henrik Fisker, the man who designed the BMW Z8 Roadster, the Aston Martin V8, and is generally credited for the design of the Tesla Model S.
In November of this year, Magna will begin production of the Fisker Ocean SUV at its Magna Steyr plant in Graz, Austria, where it manufactures BMW’s 5 series sedan and the Mercedes-Benz G Class SUV.
Magna’s contract with Fisker calls for it to produce 50,000 units in 2023, which will barely meet demand for the ultra-sleek electric SUV. It has already received over 40,000 reservations – a figure expected to double by year end, according to Fisker.
He further expects Magna’s Austrian plant to ramp up production to 150,000 vehicles in 2024 to cope with the expected surge in worldwide demand for EVs that consistently exceeds analysts’ expectations.
One major advantage Magna brings to Fisker, which most EV car makers do not enjoy, is that the Canadian supplier is relatively immune to supply chain shortages because it also makes the vast majority of its components.
Magna partners with LG to supply General Motors
Magna and LG Electronics are constructing a factory in Ramos Arizpe that will supply EV components to General Motors, starting in 2023, for assembly into its new line of EVs.
The project is a result of the December 2020 joint venture agreement that called for the global giants to partner in the manufacture of e-motors, inverters, on-board chargers and electric powertrain systems to support the growing global shift toward vehicle electrification.
Another interesting addition to the Magna EV portfolio is its deal with REE Automotive, announced in 2021.
Magna will jointly design, engineer and build the EVs with REE using the latter’s innovative skateboard-like modular base chassis base which can be used as a structural platform to build different types of EVs according to the needs of new players in the increasingly competitive market.
Is Magna the leading contender to build the Apple Car?
There have been persistent rumours regarding Magna as a likely candidate to build the long-gestating Apple Car. The projected EV has been in the works since the launch of its “Project Titan” in 2015.
Intended as a rival to Tesla, the Apple Car is expected to become a historic addition to the Apple product line on the level of the iPhone. The Apple-mobile is said to be an autonomous, self-driving EV that will revolutionize the industry with state-of-the-art, in-house tech.
Following the powertrain deal between Magna and LG, the joint venture entity immediately became the likely contender to build the Apple Car. Industry insiders believe Apple will announce a partnership to build its signature EV sometime before the end of 2022.
Should Magna (together with LG) be handed the project, it would possibly exceed even the wildest dreams of Frank Stronach, the Austrian-Canadian who founded Magna in 1957 and built it into a global giant.