The electric vehicle (EV) market continues to evolve in 2023, as consumers increasingly adopt the “car of the future.” Although most Canadian EV stocks remain largely too small to attract global investor attention, Magna International (TSX:MG) is well placed to tap into global EV demand through innovation and wide partnerships. Lion Electric (TSX:LEV) could be one of the fastest-growing EV stocks on the TSX in the near term. However, Magna’s sheer portfolio size and multi-billion-dollar investments in the EV ecosystem will secure its place as the biggest Canadian EV stock by sales volume in 2025.
The EV market isn’t essentially a winner-take-all market, as seen by growing Chinese and European EV production rates, which may continue to eat deep into Tesla’s global EV market share. The electric truck and EV-bus market represents an expanding EV market that’s yet to reach full growth potential. For example, NFI Group (TSX:NFI) recently reported a total backlog of 9,803 bus units valued at a record US$6.7 billion, of which EV-buses backlog of 3,491 comprised 36% of the backlog, up from 20% a year ago. EV sales are expanding.
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Magna International: Canada’s largest EV stock by 2025
Canada-based Magna International is a $22.2 billion vehicle parts and production partner to large car manufacturers globally. It’s already one of the largest EV production companies in the Canadian stock market, and Magna stock could be the biggest EV stock on the TSX by 2025 as the company expands its EV offerings and expands market leadership in the “car of the future” market.
Magna International reported US$37.8 billion in consolidated revenue for 2022, and the company recently updated its sales outlook for 2023 from US$40.2-$41.8 billion to US$41.9-$43.5 billion following a strong performance during the first half of this year. Although pure EV-related revenues still form a small component of total annual sales, that could change.
The company won a contract to supply battery enclosures for Ford’s second-generation electric pick-up truck, the F-150 Lightning. It is increasing its production capacity to meet fast-growing demand for the hot-selling Ford EV. Magna will produce the truck’s frame, seats, and exteriors. Why is Magna’s Ford F-150 Lightning partnership significant? Well, Ford F-150 Lightning sales grew by 119% year over year during the second quarter of 2023.
Magna International’s modular systems for EVs will launch in multiple vehicles in a German-based premium vehicle manufacturer and increase driving range by up to 9%. The company’s long-term supply agreement with Onsemi, enables Magna to deliver better cooling performance, acceleration, and charging rates on its future EV powertrains. The company’s EV business’s growth is only getting started.
How big could Magna International’s EV-related revenue be in 2025?
Magna International does not release pure EV-related sales yet; however, the company includes EV-related sales in its “Megatrend Revenue” forecasts. Megatrend sales were about US$1 billion in 2022, and the company guided for sales to double in 2023 before reaching US$4 billion by 2025.
Examples of Megatrend product areas include powertrain electrification, advanced driver-assistance systems, and EV battery enclosures. Management may update its 2025 sales forecasts in an investor event in early September.
Other Canadian EV stocks to watch right now
A $623 million growth stock, Lion Electric reported US$112.7 million in sales for the first half of 2023, up 115.9% year over year. The EV-bus and electric truck manufacturer’s order book of 2,559 all-electric medium and heavy urban vehicles by the start of August 2023 represents about US$625 million in potential revenue. Deliveries should grow in the near future as its new Illinois production facility ramps up.
A $1.1 billion NFI Group reported US$660 million in second-quarter 2023 revenue from the sale and delivery of 931 units, 25% of which were zero-emission battery and fuel cell-electric buses (ZEBs). Second-quarter revenue growth was 66% year over year. Management notes that the public bid universe (potential demand for buses) was up 33% year over year to 10,054 units, and ZEBs represented 53% of the total.
Most noteworthy, NFI’s latest production backlog of 9,803 bus units represents a record US$6.7 billion in revenue, and its ZEB backlog of 3,491 units represents 36% of the total backlog, up from 20% a year ago. The EV bus market is growing, and NFI Group could tap into growing ZEB demand. NFI stock is up more than 20% so far this year.
