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Magna Moves on Opel, Gears Up for Electric Car Bet

Just about a month after bidding for Opel began, with Italian automaker Fiat SpA, private equity investors and auto parts giant Magna International (s MGA) all vying to take a piece of General Motors’ (s GM) European subsidiary, the German government has tapped a Magna-led coalition as the winner. As we noted last month, the European version of GM’s Chevy Volt, the Opel Ampera, was not up for grabs in the deal — but Magna could still shift the green car landscape, and acquire some new muscle for its quest to become a major player in the plug-in car market.


Of course, Magna boasts quite a lot of heft to begin with, having 74,000 employees in 25 countries. But long term, Magna Chairman Frank Stronach aims to take Magna from its current role as a parts supplier to an expanded role as a global automaker that ranks “amongst the leaders in selling and building electric cars.”¬†As Stronach told reporters in Ottowa today:

About two and a half years ago we made a commitment to be in the electric car business in a very serious way.

The Toronto Star reports that Stronach wants $300 million in government loans in Canada in order to start making batteries and electric cars there for global distribution within three years. Two years from now, he said, the company might bring some Opel manufacturing to Canada as well.

After Magna buys control of Opel next week from GM, Opel’s technology, distribution and manufacturing capacity could eventually become one more tool for Magna to use in that effort — but the acquisition is not without risk. If Opel doesn’t become profitable as quickly as Stronach plans, it could drag down Magna’s efforts to reinvent itself with less revenue from Detroit’s shrinking “Big Three.”

As we wrote last month, when Ford (s F) announced plans to to invest $550 million to retool an SUV and truck factory for an electric version of the Focus (built with batteries, powertrains and other components from Magna), hurdles lie ahead for Magna’s transformation, but it can look to startups for a roadmap. With Opel, Magna could follow plug-in startups Tesla Motors and Fisker Automotive in trying to take advantage of EV-friendly policies in the EU, as well as the geography and shorter average distances that Europeans drive (compared with U.S. drivers). But at least initially, Stronach has his eye on the Russian market for rapid expansion.

At least one thing is certain for the new Opel: Its cars won’t be coming to the U.S. or China anytime soon, which are important markets on the road to an affordable EV. The company has an agreement with GM and the U.S. Treasury Department preventing it initially from selling Opel cars stateside or in China, where GM (not to mention BYD Auto and a host of Chinese startups) has relative strength.

Magna’s Mila EV platform concept image credit Magna International

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