Terry Gou, founder and chairman of Foxconn.
Foxconn, world’s largest electronics contract manufacturer, entered its newest deal this week to co-develop electric vehicles in pursuit of a strong competitive position as the global EV market grows.
The company, founded and led by Taiwanese billionaire Terry Gou, said on Wednesday that it had signed a memorandum of understanding with Los Angeles-based electric vehicle startup Fisker Inc. The two companies will jointly develop and sell a new series of EVs. Foxconn said in a statement the two would build as many as 250,000 units to be sold in China, Europe, India and North America.
Foxconn has already agreed to work on electric cars with Fiat Chrysler and Geely, among others. Deals such as these confirm a space for Foxconn in the fast-growing, but increasingly crowded, EV space, where the company can handily use its existing assembly technology to compete, analysts believe. Foxconn traditionally makes handsets such as iPhones and other mass market consumer electronics.
“The company likely views the EV space as a significant opportunity, given electric vehicles still make up a small fraction of total vehicle sales,” says Chris Robinson, Boston-based senior analyst with the market analysis firm Lux Research. “The company already manages complex supply chains as an assembler of many of the world’s consumer electronics. It is also likely taking note many of those companies are forming strategies in the automotive space.”
Release of newer models, pent-up demand and supportive government policies should raise EV sales this year onward after a 2020 drop caused by Covid-19 containment measures, analysis firm ResearchAndMarkets.com said in July.
Gou founded Foxconn, also known as Hon Hai Precision, 47 years ago and the company now sees $172.8 billion in annual sales. It has sought over the past decade to diversify product lines and the geographic reach of its factories.
In the EV space, “Foxconn isn’t just a typical partner… they are the largest manufacturer in the world,” Morgan Stanley equity analyst Adam Jonas says in a research note. “It has long been our view that Foxconn may eventually emerge as one of the largest EV makers in the world, if not the largest.”
Young Liu, chairman of Hon Hai Precision Industry Co., attends the company’s annual general meeting … [+]
Crucial parts for EV development include the electric motor, electric control module and battery, Foxconn Chairman Young Liu said in an emailed statement on Wednesday.
“We have two major advantages in this regard, with an exceptional vertically integrated global supply chain and the best supply chain management team in our industry,” Liu said.
The Fisker-Foxconn vehicle could go into production as early as the fourth quarter of 2023. The Foxconn collaboration, dubbed Project PEAR, will halve an EV’s traditional R&D-to-production development cycle to 24 months, Liu said.
As a news reporter I have covered some of everything since 1988, from my alma mater U.C. Berkeley to the Great Hall of the People in Beijing where I followed Communist