Economic Development Minister Sandra Pupatello, who together with the company made the announcement Monday, said the province will contribute $48 million to help fund 19 R&D projects over the next six years.
The projects include developing concept electric cars, parts for hybrid vehicles, metallic components, alternative energy and ways to improve fuel efficiency.
The province said the plan will create 728 jobs and also help protect about 1,300 jobs at Magna's factories in Brampton, Aurora, Concord and St. Thomas, Ont.
"What powers our cars is changing, the pieces that go into making a vehicle are changing. The good news is that that change is happening here at Magna," Pupatello said.
The announcement Monday came as Ontario's political parties gear up for the Oct. 6 provincial election, in which the economic record of the governing Liberals will be under fire from the Progressive Conservatives and New Democrats.
Magna founder Frank Stronach, whose family long controlled the company, gave up that control last year in exchange for about $1 billion in cash and shares, as well as control over joint venture Magna E-Car Systems, which will develop components for electric vehicles.
Last year, Magna said its electric vehicle division was already working on several programs, including a joint venture to create an electric version of the Ford Focus.
Earlier this month, the Ontario and federal governments gave Toyota $141.6 million in grants as that company announced the electric version of its popular RAV4 sport utility vehicle would be manufactured in Woodstock, Ont.
Last week, Dana Holding Corp. said the province provided a $2-million grant for heat exchangers for batteries at a plant in Cambridge, Ont.
On the Toronto Stock Exchange Monday, Magna shares closed up $1.57, or more than four per cent, at $37.20.