Around 12 years ago, at the start of the EV era, traditional automakers were concerned that they would essentially become assemblers of parts obtained from a variety of vendors, ranging from battery manufacturers to producers of motors and touchscreens. They anticipated a time when they would no longer be true manufacturers, as they were back in the day when each automaker produced its own transmissions and engine parts.
Twelve years later, Foxconn is on track to become an important subcontractor for the leading manufacturers of the globe. Most buyers don’t really care where their new automobiles were made; all they really want is for them to have dependable and safe transportation. In truth, there’s an entire industry that builds cars for well-known brands but is mostly unknown to the general public.
Outsourcing EV Production – A Serious Money Making Business
One is Magna International from Canada. It also produces a variety of other automobiles, including the Jaguar I-Pace. In addition, China’s Guangxi Automotive Group has begun producing electric vehicles under contract for Japan’s Sagawa Express Co. Geely has expressed interest in serving as a contract manufacturer. Even the VW Group is joining in by making its MEB electric car chassis available to other producers. According to Ford, it will soon provide its clients in Europe with a number of EVs built on that platform.
Goldman Sachs predicts that EV outsourcing will lead to the production of 800,000 EVs valued at $36 billion in 2025 and 3.2 million EVs valued at $144 billion in 2030. Many readers may assume that this is a small market. For those who can rise to the occasion and meet the demand, that spells some serious business.
Foxconn Is Seeking New Clients
The former Lordstown factory in Ohio, which can produce 330,000 automobiles annually when operating at full capacity, is currently owned by Foxconn (more with overtime). It presently produces a small number of Endurance electric trucks for Lordstown Motors and plans to also construct the Fisker Ocean there. However only a small portion of the factory’s capacity will be consumed by those two goods. Foxconn is looking for new business opportunities.
Ian Upton, director of production control at Foxconn Ohio, recently told Reuters that the company wants to construct about 300,000 electric vehicles at the facility. “We would love to identify a customer that is in the area of 250,000, and then we can fill out some of the additional stuff with specialty type items.”
“The outcomes of several of our relationships will be realised gradually over the course of 2023,” the business told Reuters in a statement. The industry is being disrupted by the desire for EVs as well-known traditional automakers change their focus to greener, more intelligent transportation solutions. The company’s simple pitch is to develop your next EV with us. Jun Seki, a former Nissan official, has been hired by the company to oversee its US manufacturing initiative. If all other requirements regarding the supply of battery materials and components are satisfied, vehicles built in Lordstown will qualify for government incentives offered by the Inflation Reduction Act.
Some businesses that don’t already have a US manufacturing facility may find that appealing. Constructing brand-new factories from the ground up is expensive and takes years before the first vehicles are produced.
Building an Ecosystem
The Mobility in Harmony EV platform, which Foxconn refers to as its “Android system for EVs,” is what the company is relying on. It is believed that if the basic systems required to make electric cars can be standardised, a broad variety of models for a broad spectrum of consumers may be built swiftly and affordably. This is comparable to Canoo’s scheme to create “skateboards” that have every component required for an ev and then place a finished body, which Canoo refers to as a “top hat,” on top of it.
“”We want to create that kind of ecosystem so that anyone can say, “I want to make a car,” “Foxconn Chief Product Officer Jerry Hsiao recently told Reuters during a tour of the Lordstown factory. Hsiao, who worked on Google’s first Android phone, believes that the commercial trajectory of EVs is currently at a similar crossroads.
The goals of Foxconn are bold. Early goals include 5% of the worldwide EV market and $33 billion in revenue from the production of EVs and componentry by 2025. Producing over half of the EVs in the world is its longer-term objective. 900,000 automobiles, or 5% of the market, would correspond to an EV adoption rate of 20% by 2025.
Foxconn already provides Tesla with parts and produces camera modules for suppliers and automakers. “They can certainly acquire goods cheaper than anyone on earth,” Raymond Tsang, a partner in Bain & Company, remarked.
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