(This story has been updated to correct the share of Fisker that Magna will take as part of their joint venture.)
There are dozens of automotive startups hoping to become the next Tesla, but designing and engineering an electric vehicle is the relatively easy part. The real challenge comes with setting up and running an assembly plant. That’s why California-based Fisker Inc. turned to the Canadian mega-supplier Magna for help.
When the Fisker Ocean goes into production late next year, it will roll out of a contract manufacturing plant the Magna-Steyr subsidiary runs in Graz, Austria, a factory that has produced vehicles for an array of manufacturers as diverse as Mercedes-Benz and Toyota. If anything, that approach is likely to become common going forward.
Magna-Steyr is already negotiating with other EV startups, its president, Frank Klein, revealed on Thursday, And with many potential clients based in the U.S., it will decide within “the next few months” whether to set up a new plant somewhere in North America to service some of those upstart automakers.
During a media webinar, Klein countered longstanding rumors, making it clear Magna does not want to become an automaker in its own right. “You will not see ‘Magna’ vehicles on the road. We have no strategy to do our own production,” he said.
But Magna-Steyr won’t really need to, if things fall together as planned.
Under the deal with Fisker, Magna will provide the underlying electric vehicle platform that will be used for the Ocean – which originally was expected to use a platform from Volkswagen. The final product will then be assembled by Magna-Steyr at either its Graz plant or a new factory going into Slovakia. A final decision on the production site will be made in the coming weeks, said Klein.
At the time the new alliance was announced last week, Fisker CEO Henrik Fisker indicated it could save his nascent electric vehicle company as much as $3 billion while also letting it avoid the sort of manufacturing headaches that led Tesla CEO Elon Musk to warn of “production hell” at the launch of the Model 3 sedan two years ago. In return, parent Magna will take an 6% stake in Fisker.
The EV company’s CEO also said he expected that other EV wannabes would partner up with Magna, both using the Canadian firm’s battery-car platform and its manufacturing facilities. Responding to a question from TheDetroitBureau.com, Klein confirmed that his company is, indeed, “in discussions with several companies,” though he declined to identify them by name.
Magna isn’t the only company hoping to benefit from this new automotive reality. Though some EV newbies, like Lucid and Lordstown Motors are setting up their own factories, others are clearly looking to avoid that step. Nikola Motors is negotiating a deal with General Motors that would have GM both supply the platform for the hydrogen/electric Nikola Badger and then build the pickup at one of its new electric vehicle plants. (GM also will provide two battery-electric vehicles for Honda.)
And Chinese electronics giant Foxconn, best known for producing the iPhone, wants to lift a page from the Magna playbook. It has developed its own EV platform and will set up a production plant for potential partners. There should be plenty of options with as many as 200 companies hoping to get into the EV market in China, according to Michael Dunne, the founder of Asian automotive consulting service ZoZo Go.
Magna has built a reputation for significant flexibility at the Graz plant, something it will build into its Slovakian facility and any other factory it might open.
With so many EV startups looking at the U.S. market, said Klein, “We have a clear strategy to offer our services in North America,” though he cautioned that Magna-Steyr would want to lock down firm contracts before committing to a new plant. He also said his company has not yet decided whether to erect a plant in the U.S., Canada or Mexico.
What seems likely is that with “a growing demand on the EV side,” he said, “it would more probably be a facility where we would build electric vehicles.”
That could include fuel-cell vehicles that replace battery packs with hydrogen fuel-cells, Klein noted, adding that he expects worldwide demand for FCVs to top 1 million by the end of the decade – a figure that is likely on the low side, he noted.
While there are some passenger vehicles coming to market with hydrogen powertrains, the big market potential, he added, is in the commercial vehicle sector, especially for large trucks, such as Class 8 semis like the ones Tesla and Nikola also plans to produce. But there is likely to be huge demand for medium-duty trucks, especially “last mile” delivery vans, said Klein. So, it is likely that any assembly plant Magna-Steyr sets up in North America would have the ability to produce light trucks as well as sedans and SUVs.