Long ago, at the dawn of the EV era (about 12 years ago), traditional automakers worried that in the brave new world of electric cars, they would become mere assemblers of components sourced from a myriad of suppliers – from battery manufacturers to manufacturers. of motors and touchscreens. They could foresee a time when they were no longer true manufacturers, like the good old days when each car company made its own engines and transmissions.
Fast forward a decade and Foxconn set course for become a key mechanic for the world’s largest manufacturers. Most customers don’t care much about where their new cars are built; they just want them to get them to their destination reliably and safely. In fact, there is an entire industry largely unknown to the public that assembles cars for brand names.
Magna International from Canada is one of them. It makes the Jaguar I-Pace as well as a number of other vehicles. Geely has expressed interest in becoming a contract manufacturer, and China’s Guangxi Automobile Group has begun making EVs under contract for Japan’s Sagawa Express Co. Even Volkswagen Group is joining in and offering its MEB chassis for electric cars to other manufacturers. Ford says it will soon offer several EVs based on that platform to its customers in Europe.
Many readers may assume this is a niche market, but Goldman Sachs estimates that EV outsourcing will result in the production of 800,000 EVs worth $36 billion by 2025 and 3.2 million EVs worth $144 billion by 2025. 2030. That means serious business for those who can step up to meet demand.
Foxconn on the hunt for customers
Foxconn now owns GM’s former Lordstown plant in Ohio, a plant capable of producing 330,000 vehicles a year at full capacity (more with overtime). It currently makes a trickle of electric Endurance trucks for Lordstown Motors and expects to build the Fisker Ocean there as well. But those two products will only use a small fraction of that plant’s capacity. Foxconn is on the hunt for other cases. Foxconn would like to build about 300,000 EVs at the factory, Ian Upton, director of production control at Foxconn Ohio, told Reuters recently. “We’d like to find a customer that’s in the range of about 250,000 and then we can fill some of the other stuff with niche type stuff.”
“The results of many of our collaborations will be realized one after the other in 2023,” the company said in a statement to Reuters. “The demand for EVs is disrupting the industry where prominent traditional car manufacturers have and are pivoting to find mobility solutions that are cleaner and smarter.” The company’s proposal is simple: let us build your next EV. It has hired a former Nissan executive, Jun Seki, to lead its US production program. Vehicles assembled in Lordstown are eligible for federal incentives provided by the Inflation Reduction Act, provided all other provisions regarding the source of battery materials and components are met.
That could be attractive to some companies that currently don’t have their own manufacturing facility in the US. Building new factories from scratch is expensive and it takes years before the first cars roll off the assembly line.
The Foxconn Mobility In Harmony Platform
Foxconn is counting on its Mobility in Harmony EV platform, which it calls its “Android system for EVs.” The idea is that if it is able to standardize the primary systems needed to produce electric cars, it will be able to adapt them quickly and cheaply to produce a wide range of models for a variety of customers. build. This is similar to Canoo’s plan to create “skateboards” that contain all the components needed for an electric vehicle and then plop a finished body—which Canoo calls a “top hat”—on top.
“We want to create such an ecosystem so that anyone — United Airlines, for example — can say, ‘I want to make a car,’” said Jerry Hsiao, Foxconn’s chief product officer. Reuters recently on a tour of the factory in Lordstown. Hsiao worked on the first Android phone for Google and now sees EVs at a similar commercial inflection point.
Foxconn’s ambitions are aggressive. Initially, it targets five percent of the global EV market and the equivalent of $33 billion in revenue from EV and component production by 2025. The longer-term goal is to have nearly half of all EVs in the world to make. Five percent of the market, assuming a 20% electric vehicle adoption rate by 2025, would consist of about 900,000 vehicles.
Foxconn already supplies parts to Tesla and makes camera modules for car manufacturers and suppliers. “They can probably buy things cheaper than anyone else on Earth,” said Raymond Tsang, a partner at Bain & Company.
The takeaway meals
No one can accuse Foxconn of having low expectations. 50% of the global EV market? That is certainly a big question. It might remind some readers of the massive touchscreen factory in Wisconsin promoted by Foxconn, Donald Trump, Wisconsin Governor Scott Walker, and former Speaker of the House Paul Ryan. The 20 million square foot plant was expected to provide jobs for 13,000 American workers. Wisconsin promised more than $4 billion in tax credits to Foxconn, cleared land by evicting people from their homes, and diverted water from Lake Michigan to support the plant. But it turned out that while Foxconn put on a great show, no LCD factory was actually built, though Foxconn kept saying it was happening, according to The edge.
Can we infer from this that the Lordstown plan is just another boondoggle designed to fill Foxconn’s coffers with taxpayers’ money? No, it’s too early in the game to have such dark thoughts, but the old expression “Once burned, twice shy” does come to mind.
Perhaps the electric cars of the future will be made by contract manufacturers such as Foxconn, with so-called car manufacturers simply sticking their company logos on the trunk lids/doors before sending them to dealers. The most anyone can say today is that the auto industry is changing and there will be winners and losers. Which category Foxconn falls into remains to be seen.
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