My 2019 Acura MDX often reminds me of a standard line from old Westerns.
In so many of those classic films, a hero would sum up the atmosphere right before a climactic gun battle by saying, “It’s quiet, too quiet.”
See, my hybrid comes equipped with three electric motors. Sometimes, when I’m at a traffic light or idling the car in the driveway, the MDX is so quiet that I will check to make sure the engine really is running.
Well, fasten your seat belts folks – cars across the board are about to become just as silent.
They’re also going to become much more fuel-efficient, as the center of gravity in the auto industry shifts from gas-powered units to hybrids and electrics, also known as EVs.
If you have any doubt that this is an unstoppable trend in the $1.7 trillion global auto sector, then consider the recent big racket made by Volkswagen AG (OTC:VWAGY).
The company just stepped up its commitment to EVs by saying it intends to produce 22 million of them in the next decade alone.
And I’ve uncovered a great supplier firm that is a play on the EV movement. It’s also like owning an exchange traded fund (ETF) on the future of auto technology…
The EV Catalyst
Now then, it’s not exactly accurate to say that VW is doubling down on electrics. But the new forecast is a 46% increase from its previous goal of putting 15 million EVs on the world’s highways.
Make no mistake. This will be a gig catalyst for the entire EV movement.
VW ranks as the world’s top-selling car firm, having outsold Toyota since 2016. It projects that 40% of all its cars will be electrics within in just a few years, and will be carbon neutral by 2050.
That puts VW at the forefront of a global car segment that Allied Market Research says is growing by more than 22% a year. The firm forecasts EV sales of $567 billion by 2025, up 380.5% from the base year of 2017.
Clearly, this is a target rich environment for a savvy auto supplier that knows how to make key EV components for the global car sector.
And that’s why savvy tech investors ought to take a good look under the hood at Magna International Inc. (NYSE:MGA).
An Unsung Hero
Few consumers know this firm by name. But it’s a hero to the auto industry. The firm develops gearboxes, power electronics and a lot more for the top tier of global auto makers.
Magna now has more than 300 manufacturing sites in place, staffed by more than 160,000 employees. The firm is running more than 100 separate R&D programs.
Those research centers have spent the past half-decade developing cutting-edge technologies. For example, Magna has become in a leader in car cameras and advanced vision systems.
And Magna E-Car Systems has become a turn-key platform for clients who want to bring full electric powertrains to market. This division already employs nearly 700 people around the world.
Magna boasts a stellar list of clients. It has been working with VW for years, and will surely play a major role in helping the automaker in its aim to dominate the soon-to-be-massive EV market.
Other clients such as BMW (OTC:BMWYY) rely on Magna to build entire cars. The new BMW Z4, for example, is fully outsourced and built at Magna’s Austrian plant.
It’s worth noting that BMW and Daimler AG’s (OTC:DDAIF) Mercedes-Benz division have recently said they will share all of their future tech platforms to save money and move faster to market. So Magna’s relationship with BMW is bound to be parlayed into a key role with Mercedes as well.
Magna is also helping Volvo to electrify all of that firm’s vehicles. And in China, the firm is helping a new automaker bring a premium electric SUV to market.
And take note of Magna’s deal with ride-sharing firm Lyft to jointly develop and build self-driving car systems. These systems will work with any existing car on the road.
As I said earlier, Magna is also playing a major role with the development of driverless cars and other advanced driver-assistance systems (ADAS).
The firm is part of a team, with BMW Group, Intel Corp. (Nasdaq:INTC) and Mobileye to develop a self-driving platform to be launched in 2021.
Magna is contributing expertise in domain controllers and sensor suites.
Now you can see why owning Magna is like owning an ETF on advanced auto tech, beyond EVs.
To be sure, shares of Magna could feel pressure in an auto downturn. But that would probably affect stocks across the board as a sign of a slowing global economy.
Instead, focus on the fact that this is a great stock for the long haul that you can buy on the dips as it moves your portfolio into high gear…
And while you’re at it, I suggest you take a deeper look at how the massive shift to 5G wireless technology is opening up a profit play on a $6 stock that’s in the perfect position to dominate this unstoppable new industry.
Think about the billions of sensors destined for smart devices that’ll be designed with 5G in mind, or the hundreds of millions of cellphones that’ll need upgraded to 5G capabilities… and the internet infrastructure that’ll need revamped and outfitted with 5G-capable gear.
The migration to 5G that’s already underway is expected generate a whole new $12 trillion market. This is the sort of moment when new millionaires will are just starting to be minted.
Cheers and good investing,
Michael A. Robinson