Economic Development Minister Sandra Pupatello, who together with the company made the announcement on Monday, said the province will contribute $48 million to help fund 19 research and development 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 province has been moving forward with plans to ramp up the development and production of more environmentally friendly vehicles and has provided grants to companies in the automotive industry.
Earlier this month, Toyota announced that the hybrid 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.