For over 65 years now, Magna claims to have been “operating like a startup” and “innovating like a tech company”. One of the largest automotive suppliers in the world with sales in excess of $37.8 billion as on December 31, 2022, Magna has remained steadfast in its approach towards innovating for the future.
Swamy Kotagiri, Chief Executive Officer, says categorically in the company’s 2022 annual report that it continues to “operate from a position of strength” and is “pushing the boundaries of innovation, and winning business in the new era of electrification, autonomy and new mobility”.
Magna’s newest innovation hub, a centre it inaugurated in Bengaluru on June 7, has been built on these very priority areas. The company has invested close to $120 million in the 239,000 sq ft campus, which will be the centre of its R&D activities in Asia and support various global projects.
The core focus at the innovation campus – Magna’s 89th globally, and 5th in India – will be on end-to-end software and system engineering and product solutions addressing future market trends such as driver assistance, electric vehicles, and vehicle systems architectures. With software at the core, it was only natural for Magna to zero in on Bengaluru as the base for this centre.
India A Key Hub
“We were looking for specific talents in the software area, and this is the place that has well-educated and very good engineers,” said Anton Mayer, Chief Technology Officer, Magna in an interaction ahead of the inauguration in Bengaluru.
Overall, India covers roundabout 20% of Magna’s global engineers today. It’s a significant number, says Mayer, with most of them engaged in global programmes and a few others working for the local market, local OEMs and Magna’s local joint ventures.
Of the 171,000 employees globally, Magna’s engineering strength is close to 17,000 engineers, of which India will house more than 2,000 working in areas of vehicle electrification, powertrain, safety (with Veoneer), ADAS as well as overall software and software-based middleware.
It was in December last year when Magna announced an agreement to acquire the Veoneer Active Safety business from SSW Partners for $1.525 billion in cash. The combined business is projected to generate approximately $3 billion in sales in 2024, positioning Magna’s ADAS business as a global leader.
Beyond these, the Bengaluru centre will also undertake work on autonomous driving for the global market. Mayer says the company sees the market of autonomous and ADAS “a little bit split”. What he essentially means is that passenger cars and transportation of people will witness “very high” opportunities in the level 2+ ADAS market until 2030. Goods or material movement, meanwhile, will see autonomous transportation taking over faster.
In fact, in areas with specific boundary conditions and at lower speeds, self-driving vehicles is already a reality. In September 2022, Magna itself piloted a demonstration of an autonomous delivery robot – built by Cartken that can navigate sidewalks and travel indoors and out – to deliver pizzas in the Birmingham area of Detroit.
Future Of Mobility
The vehicle of the future will be system-defined, says Mayer, and the key ingredient to make that possible is software. Of course, the buzzword is software-defined vehicles, but Mayer adds another dimension to it where the system is looked into end-to-end.
Magna is the only supplier that engineers and manufactures complete vehicles, has high level systems across its broad portfolio with deep expertise of technologies and products. That, Mayer reiterates, is the core element. “The vehicle of the future will be system and software-defined,” he says.
From an electronic architecture perspective, vehicles a few years back had a lot of distributed systems with 150 to 180 different ECUs. This led to a significant increase in complexity and was challenging for most OEMs and suppliers, “particularly with new technologies like over-the-air (OTA) updates having to communicate with 150 ECUs”.
Domain-controlled architecture that followed distributed systems was better but was “still not good enough”. The next step will be more centralisation, says Mayer, an architecture that Tesla adopts with high performance computing and amplifier ports.
Magna at this moment is investigating eight different scenarios, breaking it down to what it calls ‘building blocks’. Mayer explains, “We’re doing building blocks for an electronic hardware, but also for base middleware and applications. With these building blocks, we should be able to serve most of the eight different architecture types in a good way, because we will not define the architecture. This will be done at the OEM level, but we need to support them in a good way.”
The other aspect is “significant” cost pressure due to electrification. Despite popular belief, battery technology is not the sole cost factor of concern. There is much more on the vehicle system optimisation that leads to high integrated systems, explains Mayer. With these systems, it is possible to reduce complexity, weight and cost. “And you can easily add new functions and features as well,” the Graz, Austria-based Mayer says.
Addressing Challenges
From the standpoint of vehicle and vehicle technology development, he identifies three areas as “extremely complex”.
The first is the increasing functional complexity in vehicles – ADAS, connectivity, electrification of the powertrain, interlink to charging stations and traffic & road conditions et al. This increase in functional complexity gives rise to the second area – substantial cost pressure, particularly with battery technology.
Some time back, Magna made an overview of a model by a German OEM starting from 1974 up to 2020. The same model, 46 years apart, had a cost increase measured to just 1% per year, including inflation and tax changes. The same size of vehicle was then shifted to electric, which resulted in a 75% cost increase in one year.
Sharing this example, Mayer says cost has to come down in EVs to become more accessible to the common man.
Thirdly, product updates have to come much faster. Although the hardware would remain the same, function and feature updates will have to be released faster to offer “newness” in the vehicle.
“Magna always wants to grow faster than the market. So, if the wheel is turning faster, we have to speed up too,” Mayer says. To that effect, the company is using “a lot of AI and machine learning tools to improve our engineering processes”.
Advance Sustainable Urban Mobility In India
On September 11, 2022, Magna announced an investment of $77 million in Yulu to partner and enter the fast-growing micro-mobility and battery-swapping sectors. With Yulu, India’s largest shared electric micro-mobility company, Magna formed a JV and named it Yuma Energy. This JV endeavours to help redefine urban mobility in emerging markets and contribute to a more sustainable future.
During that time, Matteo Del Sorbo, Executive Vice President, Magna International and Global Lead for Magna New Mobility, had called it “an incredibly exciting time for Magna to contribute to a sustainable future in urban mobility through this investment in Yulu”.
The company recognises that micro-mobility presents a great opportunity for additional growth in the fast expanding space, and significant need of sustainable mobility in India.
In this rather young journey, the results have been staggering. The number of swaps per day has increased by a factor of five, says Mayer. “As a peak value, we achieved last month 20,000 swaps per day. At the end of the day, that means one million km driven purely electrically per day. And this I think, is a really, really significant number,” he says.
The company intends to grow this business by a factor of 20 over the next three to four years, and if the first eight months are any indication, that goal should be easily achievable. Mayer is mindful of the possibility, but is quick to hold back, saying the JV will try to stay close to its business plan. This is because scaling the battery swapping infrastructure required to help accelerate electrification of India’s two-wheeler fleet would also require large investments.
In Conclusion
Magna’s Mobility-as-a-Service (MaaS) and Battery-as-a-Service (BaaS) businesses are primarily focused on India at this stage. These require a systems approach and significant discussions with local governments, energy providers as well as academia.
“It’s always about managing shortfalls in the system. If you have a shortfall in one of the elements, the system is not really optimised,” explains Mayer, adding this type of complexity management is what Magna can provide to the Indian ecosystem.
The seeds have been sown in this very promising ecosystem, and Magna – along with its partners – are early movers who look set to reap the benefits in the long term.
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