Magna Expects $2.5 Billion in Revenue from Electric Vehicle Battery Enclosures by 2027
Diversified supplier Magna International Inc. announced on Thursday its projection to generate $2.5 billion in annual revenue from electric vehicle battery enclosures by 2027, a significant increase from $100 million in 2022.
These enclosures, which house high-voltage batteries and other important components in electric vehicles (EVs), are viewed as a major growth area for North America’s largest parts supplier. Magna aims to position itself for success as automakers introduce new EV models. To support this, the company has invested approximately $700 million this year to expand battery enclosure production at two plants in Michigan and Ontario. These facilities will supply battery enclosures for the Chevrolet Silverado EV and the Ford F-150 Lightning electric pickup.
Magna’s $2.5 billion revenue estimate for 2027 battery enclosure sales is significantly higher than last year’s projection of $1.5 billion. The company expects sales between $400 million and $500 million this year, with the figure rising to $1.6 billion to $1.7 billion by 2025.
Magna CEO Swamy Kotagiri stated during a virtual presentation to investors that the battery enclosures business has exceeded initial expectations. He highlighted the establishment of a strong market presence in key regions and emphasized the strategy’s similarity to the successful truck frame business launched in North America during the late 1980s.
In addition to supplying enclosures for the Silverado EV and F-150 Lightning, Magna disclosed that it has secured contracts for seven other undisclosed models. These include two crossovers and a sedan from Asia-based automakers, two sedans and a crossover from European-based manufacturers, and a large SUV from a North American customer. Kotagiri expressed confidence in Magna’s broad and comprehensive perspective on the product compared to competitors.
Financial Outlook and Growth Expectations
Magna has adjusted its 2023 and 2025 financial outlooks to account for the acquisition of Veoneer Active Safety this year. The revised estimates predict sales between $41.9 billion and $43.5 billion for this year, an increase from the previous estimate of $40.2 billion to $41.8 billion. For 2025, Magna anticipates sales between $46.7 billion and $49.2 billion, up from the previous range of $44.7 billion to $47.2 billion.
The revision solely reflects the addition of business from Veoneer Active Safety, with all other assumptions remaining unchanged.
Magna expects the acquisition to boost growth in its overall active safety business, projecting sales to reach about $4.25 billion by 2027, compared to approximately $600 million in 2022.
The company also foresees a steady rise in electric powertrain sales, estimating an annual increase of about 35 percent. Magna predicts sales of electric powertrains to reach approximately $4 billion in 2027, up from around $800 million in 2022. However, the $4 billion estimate for 2027 is slightly lower than the $4.5 billion projected in 2022 due to foreign exchange fluctuations.
Magna expects to double sales at its unit manufacturing electric powertrains and parts for EVs this year, capitalizing on the growing demand for more affordable and environmentally friendly models.
The supplier also emphasized its intensified efforts to employ automation and other smart manufacturing techniques to mitigate costs arising from inflationary pressures.
Magna anticipates its joint venture with LG Electronics to become profitable this year. The joint venture, which supplies EV components to manufacturers, plans to open its fourth factory in Hungary by 2025.
Magna holds the No. 4 position on the Automotive News list of the top 100 global suppliers, with worldwide parts sales to automakers reaching $37.8 billion in 2022.
Reuters contributed to this report.
