Foxconn has ambitious targets in Electric Vehicles
Foxconn, the world’s largest manufacturer of electronics, wants a 10 per cent market share of the global market for electric vehicles (EVs) by 2025 to 2027, when there will be 30 million on the road.
In 2022, the company unveiled two prototype EVs, in addition to the three it launched in 2021 – an SUV, a sedan and a bus. Its electric buses are already running in some cities in Taiwan.
Chairman Liu Young-way said: “Our heartfelt hope is that Taiwan can seize this once-in-a-hundred years, rare EV business opportunity.”
But it faces formidable challenges, not least in China, the world’s largest EV market, from its big cellphone makers, including Huawei and Xiaomi.
Founded in Taiwan in 1974, the Hon Hai Technology Group, also known as Foxconn, is active in digital health, robotics, AI, semiconductors and new-generation communications technology. Its core product pillars are smart consumer electronics, cloud and networking, computing products and components. Consolidated revenue in 2022 was a record US$215.84 billion, with its new EV software platform beginning to contribute to company revenue.
It has established R & D centres and manufacturing facilities around the world, including China, India, Japan, Vietnam, Malaysia, Czech Republic and the U.S. It owns more than 54,253 patents.
Historically, most of its business came from making smartphones, but profit margins are shrinking. The spread of electronics beyond gadgets like computers and smartphones into EVs is forcing the firm to diversify.
One of its strengths is its capacity to mass produce components cheaply at factories around the world. It wants to reproduce this in EVs and to influence the basic designs, so that there is not much variance from one brand to another.
It plans to follow the same business model as with computers and smart phones – not creating its own brand but working with other manufacturers. It has set up Foxtron, a joint venture with Yulon Motor Co, Taiwan’s largest automaker, and is talking to other manufacturers, including Fiat Chrysler.
Its EV made with Foxtron is called Luxgen n7. It received 15,000 pre-order in less than two days.
“We hope to apply our experience in supply chain management in the information and communications technology industry over the past 30 to 40 years to this new area,” said Liu. “I hope one day we can do Tesla cars for Tesla.”
Another partner is Monarch Tractor, a U.S. start-up that makes electric and autonomous tractors. The two firms will sell the tractors in the U.S. market to farmers, city governments and those with hobbies. One market is those who demand zero emissions, such as organic farmers and those who grow high-value crops.
While the initial price of an electric tractor is higher than that of one using diesel, the running costs are less than half, and maintenance is cheaper. None of the big tractor makers is manufacturing such a model, so Foxconn wants to be the first in the market.
“This partnership makes a lot of sense,” said industry analyst Alastair Hayfield. “The investment needed for a production facility is sizeable, particularly for a pre-revenue start-up like Monarch. Foxconn benefits from adding another electrical vehicle brand to its stable, giving it more scale and additional experience building electrified powertrains.”
Foxconn will face intense competition in China, the world’s largest EV market. Last year the country produced 6.88 million new energy vehicles, an increase of 93.4 per cent over 2021.
Among the rivals is Huawei, which delivered 39,433 EVs in the first eight months of 2022 through partnership, a record for a single month. In September, it unveiled its first all-electric sports utility vehicle, the Aito M5, in collaboration with Chinese automaker Seres. The new model will compete with Tesla’s Model Y and others.
Another competitor will be Xiaomi. In March 2021, it announced that it would invest US$10 billion in the EV business over the next 10 years. It launched a subsidiary called Xiaomi Automobile Technology with a registered capital of one billion yuan.
According to the Chinese media, it plans an EV plant in the Yizhuang district of Beijing, with annual capacity of 150,000 units in the first phase and 300,000 in the second phase.
The importance of the China market gives Foxconn a difficult decision – does it have to create two supply chains, one for production in China and one for the rest of the world?
The move into EVs will be one of the biggest challenges the company has ever faced.
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