Foxconn, the Taiwanese contract manufacturer, is aiming to replicate its success in the smartphone industry in the electric vehicle (EV) market. However, to establish itself as a significant player in this sector, the company needs to secure a major contract to prove its ability to ride the wave of disruption. While Foxconn has many strengths to offer the mostly loss-making EV industry, it faces stiff competition in the market for creating white-label EVs that can be customized for different clients, including major car makers, delivery providers, and other companies. To achieve this goal, the company is developing a specialized supply chain, including chips and batteries, and has acquired a former General Motors plant in Ohio. Additionally, it has hired Jun Seki, a former Nissan executive, to lead its EV efforts.
Foxconn will provide an update on its EV manufacturing business when it reports its results on March 15. The company has stated that many of its collaborations will be realized in 2023, adding that the demand for EVs is driving industry disruption as prominent traditional automakers pivot towards finding cleaner and smarter mobility solutions. To win customers, Foxconn is relying on its Mobility in Harmony EV platform (MIH), which it calls the “Android system” for EVs, and is soliciting partners to standardize technologies so that model variants can be developed quickly and cheaply.
Failure to secure a major EV contract could force Foxconn to compete with lower-tier Chinese car manufacturers that may switch to EV contract manufacturing and compete on cost. For instance, Canada’s Magna International and China’s Geely have expressed interest in building EVs for others. Meanwhile, China’s Guangxi Automobile Group has already started making EVs on contract for Japanese delivery company Sagawa Express Co.
In Ohio, Foxconn can offer customers access to US federal incentives under the Inflation Reduction Act, a selling point as traditional car makers balance building petrol-powered vehicles with plans to build their own EV capacity. Analysts warn that if Foxconn does not secure a significant EV contract this year, it may find it more challenging to do so next year.
