On the surface, auto parts specialist Magna International (MGA) appears to be an important but boring enterprise. According to its corporate profile, Magna manufactures and supplies complete automotive components. These include everything from exterior structures to powertrains to control modules and beyond. However, MGA stock has been an underperformer in the market, losing almost 17% on a year-to-date basis.
Fundamentally, one of the challenges that Magna faces is the industry’s transition to electrification. While the company’s high-voltage portfolio covers the entire product spectrum for electric vehicles – along with combustion-based hybrid vehicles – the transition involves an undesirable attribute, at least as far as original equipment manufacturers (OEMs) are concerned: EVs have far fewer moving parts than their combustion-powered counterparts.
