Author｜Yun Ge

“Apple car is just an iPhone on four wheels. Since we can make iPhones, why can’t we make electric cars?” Former Chairman and Founder of Foxconn, Terry Gou, spoke frankly at an internal meeting years ago.

It is evident that Foxconn has long had ambitions to enter the field of electric cars.

In May of this year, Liu Yangwei, the current chairman of Foxconn, proposed a development goal for electric cars. By 2025, Foxconn’s global market share for electric cars will reach 5%, with an annual shipment of 500,000 to 750,000 units.

On October 18th, at the third Hon Hai Technology Day, the Hon Hai Group officially released its new cars, Model B and Model V. In just one year, Foxconn’s automotive family has gathered five models, demonstrating their “ambitions” in car manufacturing. However, Foxconn’s car-naming collision with Tesla and styling collision with Volkswagen ID.3 have sparked some controversy within the industry.

On the road of automotive OEM, there are many strong competitors. For Foxconn, the greater challenge is whether it can find its true coordinates in the industry transformation.

The Road to Car Manufacturing

Foxconn’s “car-making dream” can be traced back to 2005. After 17 years of development, their role has changed from an auto parts supplier to a partner and then to an independent developer, proving Foxconn’s determination to enter the automotive field.

In 2005, Foxconn acquired An Tai Electrical Industry, a vehicle wiring harness enterprise, for 370 million yuan, officially entering the automotive industry. In 2010, Foxconn became a supplier of touch screen panels, connectors and covers for Tesla, and began to venture into the field of new energy vehicles. Later, Foxconn successfully entered the supplier directory of BMW, Mercedes-Benz and other automakers, expanding its circle of friends in the automotive industry.# English Version

In 2015, Foxconn teamed up with Tencent and Harmony Auto to establish the automobile brand “Harmony Futeng”. Foxconn was responsible for production and manufacturing, marking the first time Foxconn has expanded its business to the entire vehicle.

To enter the automotive industry, Foxconn has taken frequent actions: first by investing in the suspended state of Byton, and later announced the establishment of a joint venture with Geely. Foxconn, which has no car-making experience, did not progress smoothly in the cooperation stage, prompting Foxconn to directly start making cars in 2020.

On October 16, 2020, Foxconn’s parent company, Hon Hai Technology Group, held the first Hon Hai Technology Day, announcing its formal entry into the electric vehicle field. At the second Hon Hai Technology Day, Foxconn officially announced its pure electric vehicle brand Foxtron and brought three new models, including the mid-sized SUV Model C, the luxury flagship sedan Model E, and the electric bus Model T. At the third Hon Hai Technology Festival, the Hon Hai Group officially released the two-door sedan Model B and the electric pick-up truck Model V.

According to Foxconn, the production version of Model C will begin delivery in the second half of 2023. This model is positioned as a compact pure electric SUV, priced at about NT$1 million (about RMB 230,000), capable of achieving 3.8 seconds of acceleration from zero to one hundred meters, outputting 400 horsepower, and having a range of 700 kilometers.

It is obvious that the market increment of consumer electronics such as mobile phones and computers has reached the ceiling. Making cars is a trend and also an opportunity for Foxconn’s transformation.

Where does the confidence come from?

Perhaps to express Foxconn’s determination to enter the automotive industry, Foxconn fully demonstrated its technological layout in the automotive industry at each Hon Hai Technology Day.According to the content released at Hon Hai Technology Festival, Foxconn’s layout in the automotive field covers multiple areas such as power batteries, motors, operating platforms, semiconductors, and its reach has expanded to multiple countries around the world. Foxconn Automotive, with a layout across the entire supply chain, is poised to make a splash in the auto industry.

Foxconn Group Chairman Liu Young-way proclaimed that “the company aims to supply parts for 10% of the world’s electric vehicles by 2027.” Foxconn’s deep experience in manufacturing, solid industrial foundation, and strong production and processing capabilities are all the confidence they need to venture into the automotive industry.

In terms of key components, Foxconn demonstrated its self-developed “EPS Electric Power Steering System”. Compared to traditional 12V motors, this system can achieve up to 48V motor while reducing size by 20%, and is equipped with the ASIL D vehicle safety controller.

Regarding batteries, Foxconn showcased a range of technologies, including fast charging, low-temperature optimization, cloud-based battery management, high-energy-density batteries, solid-state batteries, etc. They plan to launch their first commercially available solid-state battery by 2024.

In terms of open platforms, the MIH platform, jointly created by Foxconn and Yulon Auto, will be open to the public in the future.

As for the ecosystem, Foxconn has introduced a “software-defined open ecosystem” called HHEV.OS. Through the HHEV.OS system, which complies with vehicle safety regulations and provides low-latency transmission, developers can significantly shorten their development time.

In the semiconductor field, Foxconn can already provide power chips for charging piles, inverters, on-board chargers, etc.

Regarding manufacturing, Foxconn announced that they will produce for the market in factories in Taiwan, Thailand, and the United States, and may also manufacture in Indonesia, India and other locations in the future. According to the plan, the annual production capacity of the US factory is expected to reach 500,000-600,000 vehicles, and the annual production capacity of the Thailand factory will reach 150,000-200,000 vehicles by 2024.

Mastering the technology and quickly improving production capacity is Foxconn’s advantages accumulated over many years of contract manufacturing.

Who is the car meant for?Unlike the new forces of car manufacturing in China, which directly target consumers, Foxconn does not intend to sell its own branded cars to consumers. Instead, it hopes to expand its success in consumer electronics to the automotive industry by providing contract design and manufacturing services (CDMS) for electric vehicles on behalf of its clients.

At this year’s Hon Hai Technology Festival, Liu Yangwei emphasized the CDMS business model, indicating that Foxconn, as a CDMS provider in the automobile industry, will not sell its own cars directly. In addition to continuing to engage in contract manufacturing, Foxconn also plans to participate more in the preliminary design and development stage of cars.

Contract manufacturing is not a new concept in the automotive industry. In the early stages of development, WEY worked with Jianghuai Automobile for contract manufacturing, XPeng Motors with Haima Motors, and NIO with Lifan Motors. In fact, many new carmakers lack manufacturing experience in the early stages of development and rely on contract manufacturing to quickly launch their products.

According to Foxconn’s recent statement, its contract manufacturing business has begun.

Foxconn has reached an agreement with the electric vehicle start-up company INDIEV to manufacture its first mass-produced prototype vehicle.

INDIEV was founded in 2017, with a focus on pure electric vehicles. Until October 2021, when it released its first model, INDIE ONE, INDIEV chose Foxconn as its contract manufacturer to compensate for its disadvantages in manufacturing and to make up ground on rivals. Similarly, Foxconn is also contract manufacturing for Lordstown Motors, an American electric truck company, which required Foxconn to provide financial support to reach an agreement.

Regarding the form of contract manufacturing, WM Motor Founder, Shen Hui, once mentioned that “manufacturers who can produce good cars are not willing to take outsourcing orders, while those with poor production capacity are willing to cooperate but cannot produce good cars.”

This may be an opportunity for Foxconn Automotive.Perhaps the new forces in the car-making industry will adopt an OEM production approach at the beginning, but later they will still build their own factories. Whether it is “NIO” or other car makers such as Xiaomi, they have all adopted a self-built factory to manufacture their products.

In addition, Foxconn’s success in consumer electronics OEM lies in its constant focus on leading enterprises, from HP and Dell’s OEM plants to Nokia, Apple, and Motorola’s OEM plants. It is only with the large-scale production efficiency of leading enterprises that there can be profit space for OEM factories. Liu Yangwei has repeatedly called out to Tesla during several Hon Hai Tech Days, “hoping to help Tesla build cars”, which also indicates that Foxconn is still targeting the leading enterprises in the car OEM market.

However, the two companies that have currently signed OEM agreements with Foxconn are far behind the leading companies in the car industry. It is still uncertain whether the business model of relying on OEM to obtain profits can be successful.

The OEM process of Foxconn still has a long way to go.

Ambition and Reality

Elon Musk once stated in the media, “Cars are much more complex than phones and smart watches. You can’t go to a supplier like Foxconn and say, make me a car.”

Now, Musk’s jest seems to be “slapped in the face”.

“Haixin’s vision has always been to provide complete solutions for global benchmark customers and become a provider of all-encompassing smart living.” In Liu Yangwei’s view, Foxconn’s DNA has always been vertical integration. For an industry like electric vehicles that requires high vertical integration, Foxconn can fully leverage its strengths, “We used to make PCs and mobile phones, and in the future, we will make EVs.”

Foxconn is not the first nor the last electronic products company to venture into car manufacturing.# The Era of Electric Vehicle Market Competition and Challenges
The electric vehicle market is at war as every new carmaker wants to make a splash and must boldly move forward. Even with its successful experiences in electronic consumer products, Foxconn still faces a lot of challenges.

In the realistic automobile industry, Geely Automotive has been striving to expand its OEM business on the mature vast platform, and yet it has not landed any business deals. In comparison, Geely surpasses Foxconn in its supply chain management and production experience in the electric vehicle industry, regardless of Geely’s speed of transformation. How can Foxconn win orders without even being able to with more accumulated knowledge and experience than Geely?

Magna, the most successful automobile OEM, has integrated its OEM and system suppliers. Starting with the simple structural parts, they gradually developed and expanded their technical content through the field of differentiation (ADAS, transmission, and ECUs, etc.), developed their own brands and scales, and connected with clients through their overall solution capabilities.

Furthermore, even Magna, the OEM giant, has begun to shift downward. Compared to Magna, Foxconn’s accumulation in the electric vehicle field is still weak. From the perspective of “Technology Day,” making a prototype car does not mean having the ability to produce in large quantities or possessing competitive capabilities in the three core systems.

So, how can the OEM giant, Foxconn, find its position and make a presence in the automobile manufacturing industry?

At present, a chance is that in recent years, traditional automobile companies have turned to electrification transformation. Foxconn has the opportunity to help these companies, given they have a prepared team, meet their lead interests.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.