Magna to invest more than US$790-million to build three new facilities for electric parts

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Magna International Inc. MG-T will spend more than US$790-million in Tennessee to build three factories that will make components for Ford Motor Co.’s F-N electric vehicles, in an industry that is seeing governments offer billions in subsidies to build factories.

Magna, based in Aurora, Ont., said the plants will produce battery enclosures, truck frames and seats for Ford’s electric F150 pickup by 2025, creating 1,300 jobs.

Magna’s frame, seat and battery-box factories will be the first suppliers in Ford’s new Blue Oval City campus, an electric-vehicle centre northeast of Memphis. The third factory, which will be located in Lawrenceburg, will also stamp frames.

“These opportunities not only strengthen our relationship with a valued customer, but also reflect the depth and breadth of our capabilities across the vehicle,” Eric Wilds, chief marketing officer at Magna, said in a statement. “We are thankful to the state of Tennessee for their support and partnership.”

Governments in the United States and Canada are spending billions for EV manufacturers to build factories and bolster their battered auto sectors ahead of laws mandating electric-vehicle sales ratios and tougher emissions rules.

Ford has said it will spend US$11-billion in Tennessee and Kentucky to build EV and battery plants. The Detroit-based automaker has received US$1.3-billion in subsidies for the new plants. That amount includes US$884-million in taxpayer subsidies from the state of Tennessee to build Blue Oval City, which Ford says will produce 500,000 trucks a year.

In June, Ford secured an agreement with the U.S. government for a US$9.2-billion loan to build the plants in Tennessee and Kentucky. The two states, which offer no or low personal income taxes, large subsidies and laws against mandatory union membership, have successfully built major auto sectors in recent years. Toyota Motor Co., General Motors and Martinrea International have plants in either or both of the states.

Jennifer McEachern, a spokeswoman for the Tennessee office of economic development, declined to say if Magna received incentives from the office, and referred questions to other levels of government.

Dave Niemiec, a Magna spokesman, said the company is “working closely” with the state on subsidies but declined to disclose details.

Waiting for the factory building boom in Canada

In February, Magna said it would spend US$470-million to expand its Ontario operations, including an EV battery enclosure plant in Brampton, Ont., that would outfit Ford’s electric F-150. Facilities in five other Ontario cities are also expanding to meet new automotive contracts. Magna said the expansion, backed by a US$23.6-million grant from Ontario taxpayers, will create 1,000 jobs.

Canada is phasing in the requirement that all cars and light trucks sold by 2035 be emissions-free. Manufacturers or importers that fail to meet the targets, aimed at reducing climate-changing emissions, could face penalties. U.S. President Joe Biden has issued a non-binding order that half of new vehicle sales be electric by 2030.

To encourage sales and ensure supply, governments are subsidizing charging stations and cars, as well as spending billions to lure manufacturers to set up factories and create jobs. Still, consumers can face long waits for some electric vehicles, high price tags and, in some areas, a scarcity of charging stations.

The governments of Ontario and Canada recently agreed to give as much as $15-billion in subsidies to save a battery plant in Windsor. Stellantis NV STLA-N and LG Energy Solution had halted the project, demanding that subsidies offered by Washington be matched. Volkswagen is receiving about $13-billion in government aid to build its battery plant in St. Thomas, Ont.

Magna has 341 factories and 88 other facilities around the world with 171,000 employees and US$37.8-billion in annual sales. Magna makes auto components or complete vehicles for most car brands; Ford is its fifth-biggest customer.