Magna International Inc. ( MGA Quick Quote MGA - Free Report) and Fisker Inc. recently entered into an operational phase platform-sharing and initial manufacturing agreement aimed at defining and concluding crucial aspects of the original framework agreement announced on Oct 15. Per the agreement, the Fisker Ocean sport utility vehicle (SUV) will initially be produced solely by Magna in Europe, where it currently manufactures several premium quality vehicles on behalf of international brands. Fisker plans to roll out a production-intent prototype of the Ocean in the summer of 2021. Fisker is revamping the automotive industry by developing the most emotion-stirring and eco-friendly electric vehicles, and advanced mobility solutions. The California-based company is on a mission to become the leading e-mobility service provider by manufacturing green transportation solutions having zero carbon emission. Production of the Fisker Ocean SUV is scheduled to commence by the fourth quarter of 2022. The Ocean SUV will use a modified version of a Magna-developed electric vehicle (EV) platform, FM29, as the starting point. FM29 provides Fisker with the flexibility to shelter a large battery, along with third-row seating, support the trademark Fisker wide vehicle posture, as well as achieve purchasing-cost efficiencies with the aim of rolling out Ocean in the market at an initial price of less than $40,000. The huge battery format supported by FM29 is also capable of backing up an Ultra Long Range (ULR) option with a projected range of more than 350 miles. Fisker engineers are further enhancing the FM29 platform in order to develop a new IP that is distinct to Fisker. They are redesigning the front-end architecture and both lengthening and widening the platform, to cater to the requirements of the Ocean. Fisker plans to in-house develop an Electrics/Electronics (EE) architecture aimed at complementing the FM29 platform, encompassing features not incorporated in any other automotive applications before. Fisker’s powertrain team is actively involved in innovating the drive unit to provide the expected class-leading output for the battery pack. Moreover, as a digital car company, the team is developing improved techniques in digital and master data management (MDM) to ensure platform sharing across different vehicle models. This will aid the company to offer enhanced customer experience, as well as accelerate the globalization of its supply chain and manufacturing process. Furthermore, Magna’s platform will enable the EV start-up to launch the Ocean SUV for a fraction of the time and cost usually needed to produce a vehicle. Fisker and Magna completed the Preliminary Product Specification (PPS) engineering gateway in November 2020. Now, teams of both companies are working continuously to keep the development program on schedule. The Ocean SUV has a solid fan base, with more than 10,000 global paid reservations till date. Shares of Fisker soared in the market yesterday on news of the agreement, to close at $16.66 per share. The agreement marks Magna's entry into contract manufacturing for an EV start-up, allowing the latter to use its EV platform. In addition, the Canada-based company is a reliable builder for Fisker’s Ocean SUV. Magna has an impressive track record of being a company that major automakers can rely on when they need to boost manufacturing capacity or anchor design, engineering, and supply chain expertise. The latest agreement is a classic example of Magna’s strategy to extend its manufacturing arm for meeting future mobility needs by lending the firm’s vehicle engineering and manufacturing capabilities. In fact, the arrangement reinforces the ties between the two companies. It allows Fisker to share its operational risks with the giant auto-parts company and achieve economies of scale. It also helps Fisker overcome the industry-wide skepticism that a start-up cannot deliver an EV at a low cost. In exchange, Magna will acquire a 6% stake in Fisker. Magna's stake in Fisker would be realized per a timeline of achieving three production milestones over a span of 24 months. The first would include accomplishing engineering targets this year, with a supply-chain plan organized next year, and a start of production of the model in 2022 to follow. Before finalizing Magna, Fisker, which recently merged with Spartan, was negotiating to use Volkswagen’s ( VWAGY Quick Quote VWAGY - Free Report) MEB electric-vehicle platform for the Ocean. Magna, peers of which include Autoliv Inc ( ALV Quick Quote ALV - Free Report) and Lear Corporation ( LEA Quick Quote LEA - Free Report) , currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Shares of the company have appreciated 18.3% year to date, while the industry has witnessed a rise of 21.1%. 5 Stocks Set to Double
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