Magna E-Car Systems: A Hybrid-Electric Success Story

5/8/12Follow @XconomyDET

In late March, the Center for Automotive Research (CAR) announced that it had decided to cancel its 2012 Business of Plugging In (BPI) conference, one of the biggest annual confabs dedicated to electric vehicles in the nation. The first Business of Plugging In conference was held in 2009. According to its website, the 2010 conference drew 700 attendees, was covered by a plethora of media outlets including the New York Times and CNET, and its keynote speakers included the president of OnStar, a U.S. Senator, and top executives from Ford and GM. So, two short years later, what happened?

“The goal of BPI is to highlight the challenges and opportunities of creating a viable [electric vehicle] business model—a challenge that continues to create problems for many PEV start-ups and early products,” the cancellation press release stated. “CAR sees this challenge—and yes, even opportunity—continuing, and is actively researching the topic. However, many of the key stakeholders in BPI indicated they wished to instead focus efforts on technology development.” Ouch. (And something that shouldn’t have come as a surprise, perhaps.)

But while others in the electric-vehicle sector may be struggling with creating a viable business model, auto supplier Magna E-Car Systems—a partnership between Magna International, an Ontario-based company with American headquarters in Troy, MI, and the Stronach Group, a racetrack management company that spun out of Magna International—is thriving. It recently held the grand opening for its newest facility, a manufacturing operation in Grand Blanc, MI, that already employs 100 and is expected to grow.  “We continue to have an exciting market and the technology is hot,” says Kevin Pavlov, Magna E-Car Systems’ CEO.

The 66,000-square-foot facility, a vacant building the company began converting a year and a half ago with the help of an American Recovery and Reinvestment Act grant, will produce components  for the Ford Focus Electric, the Fisker Karma, and other global customers. Magna E-Car Systems now has 700 employees working at four facilities in North America and two in Europe making electric and hybrid vehicle parts for some of the world’s leading automakers.

Business is good, Pavlov says, because the auto industry is being compelled to find better solutions in light of new emissions requirements and Corporate Average Fuel Economy (CAFE) standards. And despite ominous signs like CAR canceling its biggest electric-vehicle conference and uncertainty over whether electric cars like the Chevy Volt will ever achieve mass adoption, Pavlov says consumers are also driving the growth of the hybrid-electric market, though not in ways you might immediately think.

For many years, Pavlov explains, people didn’t feel the need to connect with their combustion-engine drivetrains. Then, starting in the 1970s, consumers began to take an interest in fuel economy. They started paying more attention to their mileage, which led car manufacturers to create odometers with more bells and whistles. Now, consumers are interested in their powertrain engines. The powertrain talks quite a bit to the car, Pavlov says, and people want to be a part of that communication.

“Consumers are attached to their electronics,” he notes. “Because of smartphones and other devices, we want to know more about our stuff.” We expect to have a more intimate level of interaction with our machines now, he says, and that extends to our vehicles.  “Essentially, we want to be able to communicate with one of our biggest investments. As the infrastructure around electric vehicles develops, consumers are going to have a lot more fun with and feel more connected to electric cars.”

He credits the upper management at Magna International for seeing the opportunity in emerging tech and structuring the company accordingly. And as Magna E-Car Systems waits for Western consumers’ love affair with electric-hybrid automobiles to blossom, it’s pursuing perhaps the biggest emerging market of them all: China. Although there isn’t “a building on the ground” yet, Pavlov says the company is keeping close tabs on the way Chinese customers choose to manage transportation in their sprawling, heavily populated cities. “It’s really exciting,” he adds. “Are we connected to what’s happening in China? Oh, yes. We want to align what we offer with what their needs are. We’re staying very close to this market.”

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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