Magna expands EV battery enclosure business by supplying another GM model

Peng Chen, DIGITIMES Asia, Taipei 0

Magna plans to expand battery enclosure operation in Michigan. Credit: Magna

Automotive suppliers are shifting their business focus to adapt to the changing market. Magna International announced on Monday that it has secured new businesses from General Motors to make battery enclosures. The tier-1 supplier has been expanding its production site due to growing demand.

According to an announcement on February 13, Magna will produce the battery component at the Magna Electric Vehicle Structures facility in Michigan to supply GM's upcoming Chevrolet Silverado EV. Production is expected to start later this year.

While Magna did not disclose other details regarding the new business, it said it has been manufacturing battery enclosures for another GM vehicle, GMC HUMMER EV, at the same site.

According to the Canada-based company, battery enclosures house batteries, electrical components, sensors and connectors. They protect battery components from heat, water intrusion and other potential impacts to ensure the structural safety of an EV.

John O'Hara, president of Magna's body and chassis group, said the company sees strong potential in battery enclosures going forward. He added that automotive electrification opens up growth opportunities for Magna.

In response to the changing car market, Magna released a US$500 million plan last year to expand battery enclosures, powertrain and seating operations in Michigan. The company said it opened the facility in St. Clair in 2021 and has been adding a 740,000-square-foot additional space. Operations in the expansion are expected to begin in the fourth quarter of this year.

Magna will also open a new 200,000-square-foot facility focusing on the powertrain. It said the facility will supply EV makers with battery tray components.

Facing challenges brought by electrification and global economic conditions, Magna reported US$37.8 billion in sales last year, a 4% increase from 2021. However, the adjusted EBIT decreased more than 19% to US$1.66 billion in 2022.

The company said the earnings decline resulted from higher production input costs, including energy, commodity, labor and freight costs. The results were also impacted by factors like higher engineering costs related to the electrification and advanced driver assistance system businesses.

For 2023, Magna estimated total sales to stay between US$39.6 billion and US$41.2 billion. The adjusted EBIT margin is projected to be between 4.1% and 5.1%.

According to the financial results, Magna's sales for body exterior and structures increased by 11% in the fourth quarter of 2022. The adjusted EBIT also increased by US$30 million to US$198 million.

Magna said the increase in the segment sales benefited from higher global light vehicle production and the launch of new programs for the models of Rivian, Honda, Ford and other automakers.

Sales for the company's power and vision segment grew by 8% to US$3.02 billion in the fourth quarter last year, but the adjusted EBIT dropped over 36%. Magna said the decreases were mainly because of higher warranty, engineering and launch costs and lower equity income.