Category: In the News

Commentary by Peter Ciani

If you’re not familiar with the term ‘white label’, Oxford Learner’s Dictionary defines it simply as, “a product that is made by one company but sold by another company using their own name.”

White label products can be found in most food and retail stores, typically with products like generic food items or electronics. For example, a TV sold at Walmart may be the same as a TV that’s sold on Amazon, just under a different brand name. Basically, it’s the same TV on the inside, but on the outside vendors may add their own menus or finishing touches.

This concept has never really made it into the automobile manufacturing world, but collaborations are quite common – a recent example being the Toyota Supra and the BMW Z4. Here are two companies, each wanting to build their own halo sports car. However, sports cars aren’t exactly high-volume sales leaders, so in this case, Toyota and BMW came together to share development costs, thus creating two different variants on the same platform.

Without collaboration, these models would never have made it to production because, as you might expect, creating a car is hard; packaging and certifying a powertrain is even harder. That’s probably the reason why there haven’t been any new automakers over the last 80-years or so – no successful ones anyway – other than Tesla.

But, more and more we’re seeing new EV (electric vehicle) startup companies coming out of the blue to show off prototypes or, quite often, digital renders of prototypes. These prototypes range from 3-wheel city cars to heavy-duty pick-up trucks and even motorcycles. Unfortunately, without piles of cash to engineer a car from the ground up, it’s not going to be easy for these new automakers to get any traction.

Given the flexibility of modern electric powertrains, is there a way, as we usher in this new age of the electric vehicle, to mitigate one of the major cost barriers that automotive startups face when attempting to enter the market?

Enter the skateboard – an electric vehicle platform originally imagined by GM’s Hy-Wire concept in 2002, but first brought to market by Tesla starting with the Model S and carrying over to other Tesla products including the Model X, Model 3, and Model Y.

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Since the Model S made its debut almost ten years ago, other EV start-up companies like Rivian Motors, Atlis Motor Vehicles, and Lucid Motors have adopted the skateboard concept.

Technically speaking the skateboard isn’t exactly a new thing, if you go back to earlier days of the automobile, Volkswagen built their entire empire from the Beetle and its simplistic platform chassis, or pan as it is commonly known.

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This allowed VW to inexpensively spawn off all sorts of variants, from the Transporter bus to the Karman Ghia and although technologically speaking it is light years away from the old VW pans, Tesla’s skateboard has shown that this type of arrangement is ideal for modern electric drivetrains. New startups have certainly learned from Tesla’s experience in this space.

But, new startups aren’t the only ones looking to prosper in the EV market. You may not be familiar with the name Magna International, but there’s a good chance you own a vehicle that was built by them.

Magna Steyr, a division of the Canadian-based automotive supplier Magna International, has been engineering and building cars for various manufacturers for decades. From the European version of the Jeep Grand Cherokee to the iconic Mercedes G-Class and new Toyota Supra / BMW Z4 platform mates, Magna Steyr was key to getting these vehicles built.

Now it seems this cornerstone in the automotive world, a company with roots going back to the 1800s, is looking toward the future with its own EV production.

Of course, Magna is no stranger to the electric vehicle. Among its numerous endeavors, the company has provided powertrain development for the Ford Focus Electric and showcased their own MILA (Magna Innovation Lightweight Auto) plugin hybrid powertrain platform at the 2009 Geneva Motor Show

Magna’s MILA powertrain platform was designed to be configured as either all-electric, hydrogen fuel cell, natural gas, or plugin hybrid utilizing a system similar to the one used in the current Mitsubishi Outlander PHEV.

The 2009 MILA and subsequent MILA concepts don’t appear to have made it into production, but the company has always made clear its intention to design and build a platform that can be used by various automakers as a “shortcut” to EV production.

In 2018, Magna announced a joint plan with the BAIC Group in China to co-develop a “smart electric vehicle architecture”, and as a contracted manufacturer the company has started building BAIC Group’s ARCFOX a-T BEV crossover at Magna’s Zhenjiang joint venture contract manufacturing facility. The plant is the company’s first ‘complete’ vehicle manufacturing facility outside of Europe.

Since 2018 Magna has also produced Jaguar’s I-Pace electric vehicle at their main production facility in Graz, Austria.

While you might not be familiar with Magna, there’s a good chance that you have heard of Sony. Sure, Sony is known for producing a wide variety of electronic devices, but they are not a car company, nor have they ever hinted about the idea of building and selling a car. Yet, Sony surprised everyone at the 2020 Consumer Electronic Show (CES) in Las Vegas with the debut of the Sony Vision-S concept car.

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Sony was (and still is) a bit vague about the possibility of the Vision-S becoming a reality, but what stands out is that they’re working on the vehicle with Magna.

Considering that Magna also builds concept cars, one could imagine that the Vision-S is just another attention-getting show car and that would be the end of it. But, a few weeks later Sony released a video called ‘Back At The Engineering Facility In Graz’.

In the video, the Vision-S arrives back at the Magna facility being cheered on by employees and is shown taking a few laps around the area. The description reads: “After CES 2020, the prototype model was transported from Las Vegas to the development center in Graz, Austria, where joint development efforts are underway together with partner companies such as Magna Steyr to prepare the prototype for test drives on public roads during FY2020.”

Which brings up the question: Why would Sony go through the trouble of engineering a vehicle for “testing on public roads” if they have no intention of building it? This certainly is curious.

Meanwhile, also at CES, Fisker, Inc. (another nascent electric vehicle manufacturer) unveiled their upcoming all-electric Fisker Ocean crossover.

You might remember the name Fisker from the ill-fated Fisker Automotive company started by renowned automotive designer Henrik Fisker. Fisker Automotive hit the rocks when their battery supplier A123 filed for bankruptcy, leaving their sole vehicle, the Fisker Karma without a battery supplier.

This led to Fisker Automotive’s bankruptcy in late 2013 and most of the company assets were eventually sold off to the Chinese company Wanxiang. Wanxiang renamed the company Karma and relaunched the Fisker Karma as the Karma Revero. Henrik Fisker however retained the name Fisker for his latest endeavor.

Like Sony’s Vision-S, the Fisker Ocean rides on a chassis built with Magna. But unlike Sony, Fisker and Magna have actually confirmed that the Ocean will be heading into production.

This brings us back to white labeling. Can the idea work in automotive production?

Here we have two companies, Fisker a new electric vehicle startup with no production facilities of their own, and Sony is a billion-dollar, multi-industrial company that builds lots of things, just not cars.

Two vehicles from two different companies, both potentially sharing an assembly line, parts, and basic chassis engineering. This would be the ideal situation for a company like Magna Steyr, not only could they charge for engineering services, but they’d also bring in revenue from production as well as supplying parts.

On the surface, who would know if the Sony Vision-S is the same car underneath as the Fisker Ocean (or any other Magna engineered EV model that comes along), and who would care?

Like the aforementioned Toyota Supra and BMW Z4, both cars have their own charms, purpose, and fanbase, but both are engineered and built together on a single assembly line at Magna Steyr.

Perhaps the concept is more of a cross between white labeling and collaboration. Whatever you call it, the idea remains the same, many different companies buying the same platform from Magna. This simplification could make it much cheaper and easier for new companies to engineer and introduce a vehicle in a relatively short amount of time.

That’s probably not something Ford, Chevrolet, or any of the other legacy companies want to hear. Looking back, they unfortunately underestimated Tesla and the future of EVs. Now they are racing to catch up and capture some of the ever-growing EV market share. But, what happens if they suddenly have a dozen or so ‘Teslas’ nipping at their heels? It’s probably not going to work out well for them.

That’s not a far fetched idea. Wards Auto recently reported that Magna Steyr president Frank Klein announced that they are currently looking for a manufacturing site in North America. Klein went on to say that the facility will be leaning toward battery-electric vehicles and would need contracts to build BEVs with at least two different companies. He also said they are in “serious talks” with potential customers.

“Magna Steyr wants to be the one-stop-shop for BEVs, contracted by automakers to assemble them in high volume or low volume.” ~ Wards Auto

With the Fisker Ocean set to begin production at the Magna Steyr plant in Graz, Austria in late 2022, it’s unclear whether the Ocean eventually will be built in North America, too, although it would certainly make sense.

So the question remains, what companies are they in serious talks with? Sony? Perhaps another EV startup? Or maybe, a legacy automaker looking to cut costs on development and production?

In any case, it’s going to be interesting to see if this white-label / consolidation approach to auto manufacturing catches on. And why not? It will save companies a lot of engineering costs and maybe bring down future electric vehicle prices, besides, does the average car buyer really care about what platform lies under the carpet? I doubt it.

Tesla fans like to talk about how Tesla will destroy the legacy auto industry. Well, there may be a hint of truth in that. After all, without Tesla would there even be such a push by startup and legacy manufacturers to build EVs? At the very least, it’s safe to assume that without Tesla there would be no legacy auto companies with 200+ mile-range EVs on the market.

However, if the electric vehicle revolution does manage to kill off the mainstream automakers, perhaps the decline of the ‘old guard’ will not come from Tesla entirely. Maybe it also comes at the hands of a company that has supplied the very same manufacturers since the 1920s – Magna.