Magna acquires Veoneer to boost its ADAS business

According to its press release, Magna International Inc. will acquire Veoneer.

The acquisition improves Magna’s strengths and positions the company’s advanced driver assistance systems (“ADAS”) business. It also expands Magna’s ADAS business with major customers and provides access to new customers and regions, including in Asia.

Magna expects to operate Veoneer’s Arriver™ sensor perception and drive policy software platform as an independent business unit. In addition, Magna will acquire Veoneer’s leading global position in restraint control systems. Swamy Kotagiri, CEO of Magna mentioned in the following way:

“Veoneer’s complementary technology offerings, customer base, and geographic footprint make it an excellent fit with our ADAS business. The acquisition strengthens our global engineering and software development talent base. We expect the combined entity to be an industry leader in active safety solutions, to enhance its position in complete ADAS systems. The acquisition is also consistent with our go-forward strategy to accelerate investment in high-growth areas.”

Who is Magna?

Based on the same release, Magna is more than one of the world’s largest suppliers in the automotive sector. The company is a mobility technology company with a global, entrepreneurial-minded team of 158,000 employees. In fact, it designs an organizational structure like a startup to realize innovation.

Thanks to more than 60 years of expertise and a systems, Magna can support advancing mobility in the transforming industry. What’s more, the company has 347 manufacturing operations and 84 product development, engineering and sales centers spanning 28 countries.

Who is Veoneer?

Veoneer, Inc. is a worldwide leader in automotive technology. Its purpose is to create trust in mobility. The company can design, develop, and manufacture state-of-the-art software, hardware and systems for occupant protection and advanced driving assistance system. Furthermore, it collaborates and automate driving to OEMs globally.

Its head office is Stockholm, Sweden, and Veoneer has 7,500 employees in 11 countries. In 2020, its sales was $1.37 billion. The Company is building on a heritage of nearly 70 years of automotive safety development.

Horizontal Integration

Electrification is one of the biggest innovations to transform the industry. In fact, many experts mention that the diesel or gasoline vehicles need more than 30K components for each, on one hand. On the other hand, electric vehicles need only 10K components. This difference is huge and horizontal integration in the industry is going as a result.

When horizontal integration in the industry is proceeding, what will it happen? The two ends of its value chain, which are conception and marketing or after service, become more important. In this context, Magna’s announcement does make sense. This is because ADAS business is one end of the value chain and it will be more profitable and crucial.

At the same time, Magna and LG establish their joint venture (JV). JV is planning to manufacture e-motors, inverters and on board chargers and, for certain automakers. It means that Magna tries to strengthen another core business as an automotive supplier. Therefore, the company wants to cover entire value chain of EVs to make its business more profitable and sustainable.