Shares of Magna International (NYSE:MGA), supplier to almost 60 automotive original equipment manufacturers (OEMs), jumped 9% today after announcing a joint venture for vehicle electrification. The company already has an agreement with electric-SUV maker Fisker, and now will join with LG Electronics for a new electric powertrain offering.
The companies said in a joint statement that the new venture -- to be called LG Magna e-Powertrain -- will manufacture electric motors and related components, as well as electric-drive systems "to support the growing global shift toward vehicle electrification."
Magna already has signed platform sharing and manufacturing agreements with Fisker for its Ocean electric SUV, which is expected to be in production beginning in the fourth quarter of 2022. LG has been involved with developing electric-vehicle (EV) components for General Motor's Chevrolet Bolt EV and the Jaguar I-PACE.
The new joint venture will offer EV makers a range from components to fully integrated electrified powertrains. Magna president and incoming CEO Swamy Kotagiri said in a statement that the agreement "fully aligns with our strategy of being at the forefront of electrification."
There are many moving parts on the path to vehicle electrification. Investors have been driving up shares in new companies that aren't even in production at this point. Those may be excellent speculative investments, but it shouldn't be lost that established manufacturers like Magna will also play a role in the transition to electric transportation.