Will Foxconn build your next EV?
(Photo by Nadkachna, Foxconn Pardubice factory Czech Republic)

Will Foxconn build your next EV?

The manufacturing process and model for EVs could differ materially from existing ICE-based vehicles.

Summary: They want to build EVs for others, targeting 5% market share by 2025, with a dream of over 40% market share. Yes, this sort of outsourcing might come one day, but this feels too soon. Most major OEMs are currently reluctant to let someone else build their cars for them, basically if they don’t what are they there for?

Why this is important: The manufacturing process and model for EVs could differ materially from existing ICE-based vehicles.

The big theme: There is a big debate around what will make a successful EV company. There will almost certainly be a place for the luxury brands and another for the small mass market runabout. But what happens in the middle market, a currently large market segment. Here brands are losing their impact and as EV’s start to dominate, engine design becomes less important. OEM’s need to cut costs - leading to questions about outsourcing, or even abandoning the segment altogether.

The details

Summary of a story from Cleantechnica:

Foxconn has made a nice business for itself by manufacturing products for other companies. It makes most of the iPhones Apple sells but is relatively unknown to consumers because its name doesn’t appear on many of the products it manufacturers. Chairman Liu Young-way said the company wants to leverage its manufacturing expertise to become a major manufacturer of electric cars.

“Based on our past records for the PC and cellphone markets — we’re at about 40–45% of the overall market share. So, ambitions-wise, hopefully we are able to achieve the same kind of achievement like in the information and communications technology industry, but we will start small, which is about 5% in 2025,” Liu said. “I hope one day we can do Tesla cars for Tesla.”

Why this is important

As we highlight in the “why is this theme important” section - mid market OEM’s will need to think hard about how they brand and manufacture cars in an age of EV’s. One option is to outsource to a specialist, someone who helps create scale and can work on engineering redesign. This is already happening in a small way, mainly for OEM’s who lack the scale to run a large assembly line.

Maybe one day, but we cannot see this happening soon. Apple is happy to be an R&D and design agency, we struggle to see say Renault doing the same. If they don’t make the battery and they don’t put the car together, what value do they add?

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