Does Magna International's Self-Driving System Have a Chance?

Markets Motley Fool

Magna International (NYSE: MGA), the giant auto-industry supplier, said that is has developed a new technology platform that will allow automakers to build self-driving capabilities into their vehicles.

Continue Reading Below

Magna joins an already-long list of companies inside and outside of the traditional auto industry that have announced plans to supply parts or systems for self-driving vehicles.

Does it stand a chance of getting traction in this increasingly crowded market?

What Magna said about its new product

In a statement, Magna described its new MAX4 system as a "a fully integrated, customizable and scalable autonomous driving sensing and compute platform that can enable up to Level 4 autonomous driving capabilities in both urban and highway environments." (You can learn more about the "levels" of self-driving technology here.) 

Its sensor suite is similar to those under development by rivals, incorporating cameras, radar, lidar units, and ultrasonic sensors. Those sensors feed signals to a dedicated computing platform.

Continue Reading Below

The MAX4 platform is designed in such a way that it can be easily integrated into major automakers' own systems. Magna's chief technology officer, Swamy Kotagiri, emphasized that the system won't take up significant space in the vehicle's interior or cargo compartment and won't require automakers to compromise their designs:

At the heart of this development is a desire to show the market Magna's breadth of capabilities and an autonomous driving enabling platform with subsystems that do not compromise the interior and exterior of a vehicle. Our focus is on developing production-ready solutions that offer flexibility to integrate and the framework to enable Level 4 technology for when the market is ready.

Magna said the MAX4 system offers automakers the option of using a simple control interface, similar to that of a traditional cruise-control system. A lighted display indicates that the vehicle is in self-driving mode, and drivers can disengage it by pressing a button or touching the brake pedal.

Magna plans to share more details and will demonstrate the MAX4 system at the International Motor Show in Frankfurt, Germany, next month.

How will Magna fare in this crowded market?

A lot of companies are gearing up to sell full or partial self-driving systems to automakers. Magna's entry may have to compete with efforts from, among others: 

At least when it comes to selling systems to traditional automakers, Magna has substantial advantages over the tech-sector entrants: It knows how to create a system that can be integrated into mass-produced vehicles and will pass automakers' strict "validation" testing; it has existing relationships with most of the global automakers; those automakers will take Magna's offering seriously.

The upshot: The devil will be in the details

Of course, other big auto suppliers like Delphi and Continental have the same advantages. Whether Magna's entry will shine over theirs will depend on many factors, some of which we can't judge yet. (For starters, how does its software compare?)

But while Magna is hardly a tech-investor darling, it's a serious, credible player in the auto industry -- and it's a sure bet that automakers will give its system a serious look. Stay tuned.

10 stocks we like better than Magna International
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Magna International wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 1, 2017

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Rosevear owns shares of Apple and Ford. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Baidu, and Ford. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.