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Magna (MGA) Puts Efforts in Micromobility, Commercial Vehicles

Magna International MGA recently announced its $77-million investment in Yulu Bikes, India’s largest technology-driven electrified shared mobility provider. Magna’s investment marks its entry into the rapidly-growing micromobility market.

Magna will own a stake and hold a seat on the board of the India-based company. The two companies will establish a new battery-swapping entity. The new Battery-as-a-Service (BaaS) entity will be known as Yulu Energy. It will create a nationwide battery charging and swapping infrastructure, likely reducing the upfront cost of buying EVs and expediting the transition to electric mobility in India.

The entity will leverage Magna’s expertise in design, engineering and manufacturing, and Yulu’s market strength in India and its software know-how. Magna will function as the exclusive battery-swapping provider for Yulu’s customers and support the buildup of the infrastructure required for millions of swaps per week.

Yulu raised $82 million from the investment drive led by Magna. Another prominent investor, Bajaj Auto, also participated in the funding. The company plans to utilize the funds to strengthen its market position through product and technology innovation. Presently, the e-bike startup operates around 10,000 low-speed electric two-wheelers in India’s Bangalore, Delhi, and Mumbai. It targets an additional 15 cities in the next 18 months. The company intends to increase its EV fleet to more than 100,000 and over 500 battery-charging and swapping stations in the next 12 months.

The venture is expected to be a springboard of growth for Yulu in the mobility-as-a-service (MaaS) and battery-as-a-service (BaaS) businesses in the next three to four years. It aims to establish an agile supply chain to ramp up operations shortly.

Yulu, founded in 2017, offers last-mile connectivity to travelers via its electric bikes. Through its shareable, low-speed, electric two-wheelers it facilitates accessible, sustainable urban mobility in India. The startup also operates a network of EV charging and battery swapping network.

Magna sees it as a vital step in its contribution toward a sustainable e-mobility future.

To cater to the demand in last-mile delivery, Magna has also inked an agreement with the autonomous robotics company, Cartken. Per the deal, MGA will manufacture Cartken’s autonomous delivery, thus aiding in offering sustainable and cost-effective solutions for last-mile delivery challenges.

In another development, Magna will showcase its latest electrification transformation at the upcoming IAA Transportation 2022 event in Hanover, Germany, held from Sep 20 to Sep 25, 2022. IAA is the largest global trade fair for mobility, transport and logistics.

At the show, Magna will demonstrate a range of technologies concerned with the electrification of the commercial vehicle industry.

Magna’s electrification portfolio, which includes EtelligentEco, EtelligentForce and EtelligentReach, is aiding top-line growth. One of the major highlights of Magna’s show will be the first public display of its EtelligentForce technology in Europe. This advanced battery-electric vehicle (BEV) powertrain system features the full capabilities of light commercial vehicles without compromising payload or towing capacities. The system is great for European vans and light commercial vehicles with high payloads.

There will be scope for exploring additional sustainability innovations as well. These include energy storage systems with battery enclosures in steel, aluminum and multi-material configurations to fit different vehicle segments, thermoplastic, recyclable liftgate systems for mass reduction and its pre-series all-electric airport fire fighting vehicle Panther.

Magna’s initiatives in bolstering its capacity in the light commercial vehicle market, going beyond passenger vehicles, add to sustainable solutions and augur well for its long-term growth.

Shares of Magna have lost 27.8% in the past year compared with its industry’s decline of 37.9%.

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Zacks Rank & Key Picks

MGA carries a Zacks Rank #3 (Hold), currently.

Some better-ranked players in the auto space include Yamaha Motor Co. YAMHF, sporting a Zacks Rank #1 (Strong Buy), and BorgWarner BWA and Tesla Inc. TSLA, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Yamaha has an expected earnings growth rate of 1% for 2023. The Zacks Consensus Estimate for current-year earnings has been revised 11.6% upward in the past 30 days.

Yamaha’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. YAMHF pulled off a trailing four-quarter earnings surprise of 47.95%, on average. The stock has declined 26.7% over the past year.

BorgWarner has an expected earnings rate of 2.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 0.7% upward in the past 30 days.

BorgWarner’s earnings beat the Zacks growth Consensus Estimate in all the trailing four quarters. BWA pulled off a trailing four-quarter earnings surprise of 29.45%, on average. The stock has declined 11.7% in the past year.

Tesla has an expected earnings growth rate of 76.5% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1% upward in the past 30 days.

Tesla’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 32.17%, on average. The stock has increased 17.7% in the past year.

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