DETROIT – If electric pickup trucks from the Detroit automakers take off, auto supplier Magna International is in a unique position to benefit from producing a crucial part of the vehicles. Canadian manufacturer Magna International produces enclosures to house lithium-ion battery packs for Ford F-150 Lightning pickup trucks and Hummer E-Vickers. These parts are extremely engineered and essential to the vehicle, as well as protecting the batteries from damage in case of an accident. Magna anticipates that its enclosure business will grow from virtually nothing in 2017 to $600million by 2024, and then to $1.5 million by 2027. Magna’s CEO Swamy Khotagiri believes Magna will expand its fleet with several more vehicles. The beauty in all this is that every electric car will have one. He stated this during an investor briefing. So that’s what we’re excited about, it’s such a large product line. These products were made specifically for pickups. The Ford product is made of aluminum and can be fitted into the frame. GM uses steel for its frame. This new business is just one of the reasons that the 65-year old auto supplier is optimistic about electric vehicle future prospects. Magna’s forecasted value for its EV business has been increased to $4.5 billion by 2027. This is 12.5% more than the $4 billion figure last year. The company’s total 2021 sales were $36 billion, which makes it the world’s largest supplier of auto parts. Joseph Spak, RBC Capital Markets analyst said Magna is “better positioned” for the future due to its increased exposure in EVs as well as other emerging segments. This supports the expectation of accelerated growth over the second half of this decade. Spak posted Tuesday’s investor note that he believes there has been an increase in confidence regarding the long-term electrification targets. Spak stated, “The strong pipeline of booked as well as unbooked business should prove that the accelerated capital delivery strategy to high growth areas is paying off.” Magna does not have any EV business until 2031. However, Kotagiri stated that the company is very cautious about adding new capacity to existing operations. We are cautious about adding any new capacity to it. “We’ll only do it on a programme basis to support it,” said he during a CNBC interview. “Not like electrification, where we’re putting in investments for R & D, product roadmaps and the future.” Magna claimed it will provide “significant content”, on approximately a dozen electric vehicles. The projects also include pickups and the Rivian R1S as well as the BMW iX (BMW ID Buzz), Nio ES7 (Nio ES7). Magna has also signed a deal to construct its Ocean crossover later in the year with Fisker. Henrik Fisker (CEO of the EV startup) told Phil LeBeau of CNBC earlier this month that they now intend to triple the production of Ocean vehicles from 50,000 in 2023, to 150,000 per year by 2024. Magna shares have fallen more than 25% from the beginning of 2022.
The former Detroit-Hamtramck plant is set for production, just two years after GM made the huge $2.2 billion investment in the renovation of the facility. This will allow the company to produce a range of electric trucks and SUVs.
Jeffrey Sauger Photography for General Motors
DETROIT – If electric pickup trucks from the Detroit automakers take off, auto supplier Magna InternationalThis is a rare opportunity to profit from the production of a critical part of vehicles.
