Magna Expands China EV Drivetrain Capacity With New Wuhu Facility

What happened

Magna announced it is deepening its China footprint by building a new facility in the Jiujiang Economic Development Zone in Wuhu to produce electric drive systems, initially for Chery and with the intent to serve additional automakers. This move directly aligns with Magna’s strategic pivot toward higher-value electrified powertrain content and complements its existing eDrive pipeline, which includes 800V programs scheduled to launch from 2026–2027. By expanding local capacity in the world’s largest EV market, Magna is positioning itself to capture incremental volume and diversify away from its heavier reliance on softer NA/EU production and the cyclical Complete Vehicles business. The decision also reflects confidence in medium-term EV demand in China despite global concerns about near-term EV adoption volatility. However, the new plant adds execution and geopolitical risk around China operations, and investors should monitor capex, ramp efficiency, and contract visibility beyond Chery to gauge its ultimate earnings contribution.

Implication

For investors, Magna’s new Wuhu electric drive facility is a strategically consistent step that reinforces the company’s push into electrified powertrain content, a key pillar of the existing BUY thesis. Localized production for Chery in China provides a tangible proof point that Magna can win and industrialize eDrive programs with regional OEMs, potentially broadening its customer base beyond global Western automakers. If successfully ramped, the added Chinese capacity should improve the company’s medium-term revenue growth and mix toward higher-margin power electronics, partly offsetting cyclicality in its Complete Vehicles segment and softer NA/EU volumes. That said, the initiative also increases the company’s exposure to China-specific risks, including domestic price competition, regulatory shifts, and potential trade or technology transfer constraints, which could affect returns on invested capital. Overall, the announcement is a modest positive for long-term earnings power and diversification, but investors should look for follow-through in the form of additional program awards, utilization rates at the new plant, and clear disclosure of capex and margin impact before assigning a higher multiple.

Thesis delta

The news incrementally strengthens the pro-eDrive, pro-electrification component of the Magna BUY thesis by adding visible China-based capacity and a named local OEM customer (Chery) to the company’s future revenue runway. While it slightly increases exposure to China execution and policy risk, the move is strategically aligned with prior assumptions about Magna’s need to deepen its presence in key EV markets, and thus does not alter the overall risk/reward balance. Net effect: conviction modestly improves on the medium-term eDrive growth outlook, with no change to the BUY rating but a bit more emphasis on China as a growth vector to monitor.