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June 04, 2022 08:35 AM

Magna makes transition to EVs — carefully

EVs are the future in research but gasoline still powering powertrain business 

David Kennedy
Automotive News Canada
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    Magna Battery_Enclosure_Ford_Lightning.jpg
    Magna

    Among the new components that Magna will supply for EVs is a new aluminum battery enclosure for Ford’s F-150 pickup.

    Magna International Inc. is homing in its research and development efforts on electric- and hybrid-vehicle projects as it works to balance light but growing volumes of EV parts for next-generation vehicles with demand for its “traditional” lineup of products.  

    About 70 percent of the engineering projects under way at North America's largest auto supplier are now geared toward EVs or hybrids, and the company’s powertrain division is no exception, the unit’s president Tom Rucker, told Automotive News Canada. It is a considerable mismatch when compared with the 15 percent of Magna’s production currently devoted to electrified-vehicle programs.

    But the company’s research pipeline sends a clear message about what will be driving growth at the company through the 2020s. Once slow to materialize, EV demand is picking up at a rapid pace, Rucker said.  

    “Many or most of our customers are shifting their focus away from traditional ICE [internal-combustion engine] powertrains into full battery electric vehicles.” 

    Magna expects between 30 percent and 40 percent of its business to come from EVs or hybrids by 2030, with the segment taking over as its biggest category not too long after. In the interim, the challenge is operating in both the old and new worlds.  

    “It’s incredibly important to maintain our ability to supply what we call our traditional, more established products, because they still make [up] the vast majority of what our customers need, at least for the next 10 to 12 years,” Rucker said.

    PHOTO SUPPLIED

    Magna International says its latest electric drive system, EtelligentReach, increases range up to 30 percent. It will debut on two EVs near the end of this year.

    Finding a balance

    Magna is reorienting its production footprint and employing modular manufacturing systems to find a balance, carving out growing space on shop floors for EV components. As volumes for EVs and hybrids gain ground, the company will be able to add further “building blocks” to boost output as needed, Rucker said. 

    “We can start, you know, with 20,000 to 40,000 units a year and then scale up to 100,000, 200,000, 300,000 relatively easily,” he said.  

    Not all components the company currently builds for ICEs will be needed in EVs, Rucker acknowledged, but many manufacturing “competences” will transfer over. He pointed to Magna’s expertise in gear and shaft manufacturing as one skill set that will carry forward.  

    “That capability … is going to become even more important because when you’re driving a battery electric vehicle,” Rucker said, “there’s no noise, so your gear suddenly needs to be extremely quiet.” 

    As Magna adjusts to the new product mix, some plant closures or overhauls are a certainty, Rucker said. But the company is forecasting expansion of its manufacturing network as drivers embrace EVs and hybrids. 

    Wider growth

    Building products for a wider swath of the market is the reason that Magna expects growth and has been gearing all of its divisions, including exterior plastic body panels, lighting and electronics, toward future production.

    One example is the company’s transmission business. Currently, Magna targets only about 40 percent of the market with the dual-clutch and manual transmissions it builds. In the years ahead, its electric drive systems will target every EV on the road.    

    Entirely new components required by EVs will play a role as well. Last fall, for instance, Magna announced it would be building aluminum battery enclosures for Ford Motor Co.’s electric F-150 pickup. The lightweight enclosures will be needed on all EVs to protect batteries and electronic components from the elements.  

    Meantime, the powertrain division’s researcj pipeline has also begun to bear fruit.  

    Magna’s latest e-drive system, known as EtelligentReach, will premiere on a pair of EVs toward the end of 2022. EtelligentReach – what Rucker describes as a “complete system” — includes a pair of electric motors, inverters, gearboxes and specialized software to boost range and performance. Stacked up against production BEVs in the same class, the new e-drive system increases range up to 30 per cent, Rucker said.  

    The new powertrain will be turning the wheels of an EV launching in North America this year, as well as powering a vehicle for one of Magna’s existing clients in Europe. Both are SUVs and expected to be relatively low volume in the short term, Rucker said. 

    Shares in Magna fell 3.5 percent to close at $63.95 on Friday.

    Magna, based near Toronto, Canada, ranks No. 1 on the 2021 Automotive News list of the top 100 North American suppliers with $15.7 billion in revenue generated from automakers on the continent in 2020. It was No. 41 in Plastics News' 2021 ranking of North American injection molders with an estimated $220 million in sales.

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