Fueled by the global climate crisis, major nations around the world are actively shifting to the usage of electric vehicles. Several companies have been entering this sunrise sector to take advantage of the increasing demand. Among them, Canada-based Magna International (TSX:MG) has been attracting the eyes of investors.
This company is a global original equipment manufacturer for vehicles and light trucks. It operates through four segments: Seating Systems, Power and Vision, Body Exteriors, and Structures and Complete Vehicles. Magna’s headquarters are in Aurora, Ontario, and has been operational since 1957.
Check out the reasons why Magna International may drive the future of electric vehicles.
Increasing full-year earnings forecast
According to reports on May 5, 2023, Magna International has changed its full-year earnings forecast. With supply chain constraints easing up, production of cars and light vehicles in Europe and North America can appreciate in the upcoming months, resulting in increased company sales.
It is also to be noted that in the first quarter (Q1) of 2023, the company’s sales increased to US$10.67 billion from last year’s US$9.64 billion. This sales growth is a result of a 3% rise in international light vehicle production. It also includes a 7% growth of the same in Europe and 8% in North America.
Magna enters a partnership with a European-based OEM company
Additionally, in early May, Magna International secured a high-volume contract from a European Global Premium original equipment manufacturer (OEM) . It involves the supply of its new eDrive system (eDS Mid), which is specially designed for SUVs and sedans. Production of these parts is to begin by 2026, while the tentative delivery date is in 2027.
Magna’s president Diba Ilunga stated that this deal will mark a milestone in their business. The company will continue to innovate and keep on providing scalable technology solutions as per their client’s needs.
Production milestone with Mercedes-Benz
Another notable milestone was hit in late April, when Magna announced the company had completed the production of 500,000 Mercedes G-Class vehicles from its Graz facility. It is a reflection of the organization’s long-term partnership with the luxury auto manufacturer and its consistency as a leading contract manufacturer.
Magna started building this particular vehicle for Mercedes-Benz in 1979 and this milestone indicates 44 years of continuous service.
Bottom line
There are plenty of catalysts to consider, when it comes to companies benefiting from the electric vehicle revolution. In many respects, Magna is one of many players in this space. And with so many companies going in-house for their production, many investors may wonder why this company is worth considering.
That said, Magna’s build quality and its historical track record speak for itself. For investors looking at creative ways of playing the high-growth electric vehicle market, Magna is certainly a compelling pick.
