Please help me answer 2 questions from this case study in detail, please.

SGMT5800: ECONOMIC AND POLICY FOUNDATIONS FOR STRATEGIC ANALYSIS (from a business strategy class)

Individual Case Analysis

March, 2018

Magna, a mobility technology company and one of the world's largest automotive suppliers, and

Lyft, North America's fastest growing rideshare company, announced a multi-year collaboration

in which the companies will jointly fund, develop, and manufacture self-driving systems. In

addition, Magna will invest $200 million in Lyft equity.

This partnership positions Magna and Lyft to enable the development and manufacturing of

self-driving systems at scale. In addition to self-driving vehicles that will be deployed on Lyft's

own ridesharing network in the coming years, Magna has the ability to deploy the technologies

across a wide-range of use cases to benefit the entire global mobility ecosystem.

Partnership details include:

Lyft will lead the co-development of the self-driving system at its Palo Alto-based selfdriving

engineering center

Magna will lead manufacturing and join Lyft's development team onsite, contributing

their vehicle systems knowledge, safety and Advanced Driver Assist System (ADAS)

expertise, and manufacturing capabilities

Lyft and Magna will share jointly created IP and utilize Lyft data to improve systems

Lyft will utilize Magna's vast automotive experience for its fleet's self-driving systems

This scalable technology is expected to be market-ready over the next few years and can

be deployed across the industry through Magna.

"There is a new mobility landscape emerging and partnerships like this put us at the forefront of

this change," said Swamy Kotagiri, Magna Chief Technology Officer. "Lyft's leadership in

ridesharing and Magna's automotive expertise makes this strategic partnership ideal to effect a

positive change as a new transportation ecosystem unfolds."

"Together with Magna, we will accelerate the introduction of self-driving vehicles by sharing our

technology with automotive OEMs worldwide," said Lyft CEO Logan Green. "This is an entirely

new approach that will democratize access to this transformative technology."

Partnerships involving autonomous technology have been commonplace for both companies in

recent years, as they have poured hundreds of millions of dollars into research and development.

Magna, for instance, is part of a consortium that includes BMW, Fiat Chrysler, Intel and

Mobileye to develop an autonomous platform for use by 2021.

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Such partnerships offer cost savings and exposure to the expertise of researchers and engineers in

areas previously outside the scope of automakers.

Autonomous driving is a complicated topic, and its going to take some time in getting on the

road in terms of volume, said Boris Shulkin, vice-president of research and development for

Magna, and the head of its project with Lyft.

Its going to take more than one [company] to really tackle the problem, so thats why you see

some of these consortiums.

As part of the Lyft partnership, Magna will produce kits to make Lyfts fleet of vehicles selfdriving,

though it will not manufacture vehicles for the company as it does for Mercedes-Benz,

BMW and Jaguar in Europe. The kits for Lyft will include cameras, lidar and other technologies

necessary for any autonomous platform, Shulkin said.

At the same time, Lyft will develop software for the system out of its new research-anddevelopment

centre in Palo Alto, Calif., where the project is based. Any intellectual property

developed as part of the multi-year partnership will be jointly owned, according to Magna.

Shulkin said Magna sees the partnership as a way to help the company get closer to developing

Level 5 (fully autonomous) technology, though he does not foresee such technology being

available on a mass scale beyond small, geofenced areas in certain markets.

Its difficult to imagine that one day well wake up and there are full fleets of autonomous

vehicles on the streets, Shulkin said.

Still, he said Magnas technology for Lyft can be ported to vehicles with lower levels of

autonomy, still requiring some driver involvement.

Magna CFO Vince Galifi told financial analysts on a call in March that revenues from the Lyft

deal are not expected to be material in the short term, but that theres significant potential for

revenues in the long term, according to Reuters.

The Lyft deal came just several months after Magna joined the consortium with BMW, Intel and

Mobileye in October. As with Lyft, Magna will provide the consortiums autonomous-driving

platform with the various sensors it needs. The companies have said they plan to allow all

companies, not just those within it, to use its flexible platform on their own autonomous

vehicles.

Tech companies, carmakers and suppliers are racing to configure a range of different deals to

prepare for a future when car ownership disappears however far away that might be. Waymo

has said it plans to buy thousands of Fiat Chrysler minivans. Uber has struck deals with

carmakers Volvo and Toyota, and AI chipmaker Nvidia. Last month, its Chinese rival Didi

Chuxing demonstrated a self-driving car for the first time.

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June 2018

Ride-sharing giant Uber Technologies Inc. halted its autonomous vehicle operations in Toronto,

Pittsburgh, Phoenix and San Francisco after a woman was killed by one of the companys selfdriving

cars in Arizona.

According to a statement from the Tempe Police Department, a woman was walking outside of a

crosswalk on Sunday evening when she was struck by the Uber vehicle. The car was in

autonomous mode at the time of the incident, with a person behind the wheel. The woman was

transported to hospital where she later died of her injuries.

The incident is believed to the first pedestrian death as a result of a self-driving vehicle and has

reignited debate over the safety of the technology.

Uber and Magna are among seven organizations currently participating in an Ontario

government pilot program, launched in 2016, that allows automated vehicle testing on provincial

roads. The University of Waterloo, Erqin Hymer Group, QNX, Continental, and X-Matik Inc.

are the other participants in the autonomous vehicle testing pilot program.

January 2020

Magna announced that it is scaling back its partnership with Lyft Inc. to co-develop self-driving

technology as it focuses research and development spending on more near-term prospects.

Magna now sees fully self-driving systems as a longer-term, expensive prospect and will shift

focus to driver-assist systems with more reasonable timelines, said company CEO Don Walker.

I do think that the market has become more realistic about how fast the various technologies

will penetrate, said Walker on a conference call.

He said the industry and society are still in the early stages of what will be unprecedented

changes in mobility.

Swamy Kotagiri, who was promoted to company president Thursday, said Magna would

continue to work with Lyft on some aspects of software and hardware, but that it has many

capabilities in-house.

There is a renewed focus both in the market and the industry as well as from our side in terms

of the take rates for the assisted driving portion of it. And we have significant programs, and we

see a possible ability to address a lot of that market.

Kotagiri will also continue to oversee Magnas power and vision business, as well as its

corporate research and development programs and related investments.

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He said the sensor requirements for the higher levels of autonomy, which dont require the driver

to always be at least ready to take the wheel, are significantly different to the lower levels that

its focused on.

Magna said it will focus more on near-term programs like its front and rear cameras and some

surround view systems, as well as advanced radar systems.

The company said that overall, it would also continue to work on lightweighting and

electrification programs as emission regulations, especially in Europe, push automakers to sell

more fuel-efficient vehicles.

Magna said in its outlook that it expects 2020 sales to come in between US$38 billion and

US$40 billion this year. It said it expects sales to be negatively impacted by a stronger U.S.

dollar, the sale of its fluid pressure and controls business and lower expected light vehicle

production in Europe

Sources:

Magna International Inc.

Financial Times

The Toronto Star

Automotive News

The Globe and Mail

Questions

You are assuming the role of consultant for Magna International.

1) Determine the major stakeholders in this case. Which of these stakeholders do you think

Magna should pay particular attention to and why?

2) Analyze the perspective(s) being held by Magnas top management. How has this

perspective evolved over time?