Foxconn has entered the construction of cars, and the discontinued Byton car is about to be reborn?
On January 4, 2021, Foxconn Technology Group announced on its official Weibo that it signed a strategic cooperation framework agreement with Byton Automobile and Nanjing Economic and Technological Development Zone to promote the mass production and manufacturing of Byton Automobile's first model M-Byte, and plans to achieve mass production of Byton's first new energy vehicle M-Byte by the first quarter of 2022.
For Byton Auto, which has been in a discontinuation for half a year, it is rumored that Foxconn will invest as much as US$200 million in Byton Auto, which is tantamount to "life-saving straw", and for Foxconn, it is another attempt to build a car.
Affected by this news, Foxconn's stock price rose sharply in the Taiwan stock market in China for two consecutive days. On January 4, Foxconn (Taiwanese stocks are Hon Hai Precision) closed up more than 8%, and closed up more than 4% on January 5. Hongteng Precision's stock price rose 5.56% on January 5.
In fact, Foxconn and Byton have a deep connection. In March 2015, Foxconn jointly built cars with Tencent and Harmony Auto , jointly established the company "Harmony Futeng" (the predecessor of Byton Auto), and participated in the Pre-A round of financing in July of the same year. The investment ratio of Tencent Holdings, Foxconn and Harmony Auto was 3:3:4. However, more than a year later, Foxconn, Tencent and Harmony Automobile successively withdrew their investments and left the market. At that time, Foxconn told the media that the success rate of car manufacturing was low and no longer invested in vehicle complete vehicles projects.
After Foxconn withdraws its investment, Byton persists until 2020, but finally stopped production due to lack of money. Can a new turnaround be achieved when joining forces with Foxconn again?
. Byton
. Byton Auto was founded in 2016. The founding partner is former vice president of BMW Group Bi Fukang (resigned in April 2019). Another one is former general manager of Infiniti China Dai Lei . The management team also has former executives such as Mercedes-Benz and Tesla . There are many elites in the entrepreneurial team and are one of the earliest new forces to build cars.
In 2017, Byton settled in Nanjing Economic and Technological Development Zone. In early 2019, Nanjing issued the "Nanjing Action Plan to Create a New Energy Vehicle Industry Landmark", proposing to accelerate the construction of the new energy vehicle industry into the first, the top three in the country, and the global influential industrial landmark. Byton Smart Electric Vehicle Industrial Park is regarded as one of the representative projects of Nanjing's new energy vehicle
M-Byte. It is Byton's first and only model. It is famous for its 48-inch large screen. It was originally scheduled to be launched in 2020, but in the end, it burned all 8 billion yuan and still failed to build it.
In June 2020, Byton announced that the Chinese region will suspend production from July 1, with a time of 6 months. Some employees said pessimistically: "It's yellow, it's probably a permanent holiday."
How did Byton, who had a halo since he was born, fall into such a situation?
In the war of new car manufacturing forces, the most important thing is speed. If the money is burned to a certain level, if it has not been built, the financing environment will shrink and investors will run out of patience. The new car manufacturing forces that cannot obtain financing will fall.
Byton's products have been implemented too slowly. The research and development of China, the United States and Germany and the coordinated promotion of projects have slowed down the development progress. Most of the teams are traditional automakers, and many German engineers have repeatedly debugged the car machine and headlights, which has caused the delay in production.
Starting from 2019, the financing environment has been cold. When other new car-making forces are put into production and offline, Byton did not seize the last window period. By the time the epidemic came in 2020, it became the last straw that broke the camel's back.
On December 30, 2020, Byton sent an internal email called "Notice of Delaying Suspension in China", stating that all companies in China still do not meet the conditions for resumption of work and production. From January 1, 2021, the company will extend the suspension period by 6 months until June 30, 2021.
Nowadays, a large number of employees have been lost. Can Foxconn make Byton make a comeback?
mobile phones have reached their peak, and cars have become the next growth point
Although Foxconn is the world's largest consumer electronics belt assembly and an important partner of Apple , the growth rate of mobile phones has slowed down and the profit margin is not high.
In 2019, Foxconn's annual revenue increased by less than 1%, about NT$5.33 trillion (approximately RMB 1.2 trillion). Although revenue growth has been achieved for three consecutive years, the growth rate has slowed down.
Foxconn enters electric vehicles with higher added value in the hope of getting a share of the rapid development of the automotive industry towards electrification and intelligence.
In the incremental parts sector of electric smart cars, it is not difficult to predict that there will be demands similar to some new parts in the mobile phone industry. With the increase in penetration rate and single product value, there will be a long-term growth opportunity for automotive parts.
"Office giant" Foxconn has a long ambition for the electric vehicle business.
As early as 2013, Foxconn entered the field of car manufacturing. Founder Terry Gou held talks with Tesla CEO Elon Musk, and received an order for the interior panel of Tesla Model S, becoming a member of Tesla supply chain.
In 2015, after entering the travel field, Foxconn turned its attention to vehicle research and development and production projects, that is, signed the "Strategic Framework Agreement on "Smart Internet Electric Vehicles" with Harmony Automobile and Tencent. Harmony Futeng's total investment of RMB 1 billion, and Tencent Holdings, Foxconn and Harmony Automobile invested 3:3:4.
This is Byton's predecessor, but Foxconn then withdraws its investment, and Foxconn's car-making sport is hard to say in the first half.
Until early 2020, Foxconn once again entered electric vehicles and announced that it would establish a joint venture with Fiat Chrysler to jointly develop electric vehicles. The two companies plan to produce electric vehicles in China and sell them to the Chinese market.
At the Foxconn shareholders' meeting held in June 2020, the company's chairman Liu Yangwei said that in the next five years, it will plan its operating direction in 3+3, namely, layout three future industries such as electric vehicles, digital health, and robots, as well as three core technologies.
In October 2020, Liu Yangwei, chairman of Foxconn's parent company Hon Hai Precision Group, once told the media: Foxconn is expected to gain 10% of the electric vehicle market share from 2025 to 2027, and has negotiated with several auto manufacturers on future cooperation.
Compared with mobile phones, cars have richer parts. It is understood that Hongteng supplies Tesla components mainly include automotive connectors, charging interfaces, power chassis, electronic control modules, power management modules, and a wiring harness management module (changing a large number of traditional cables, but forming a hybrid system of cables and wireless). In terms of category, the richness has been significantly improved. In the latest Model Y, there are charging interface modules and power management modules supplied by Hongteng.
Looking forward to the second half of this year, the biggest expectation is the release of Apple 's Apple Car. According to reports, the long-rumored Apple electric car project is expected to be two years ahead of schedule, and the first Apple Car will be released in the third quarter of 2021.
It is reported that Apple has secretly tested dozens of prototype cars on the roads in California. According to the capabilities of the Apple car ecosystem, Apple Car may adopt Foxconn as the main partner to produce OEM, and Apple Car's OEM is likely to be the joint venture electric vehicle factory of Hon Hai, Hongteng and FCA.
As a player outside the automotive industry, Foxconn’s advantages are experience in manufacturing and supply chain management, automotive electronic components research and development and production capabilities, and abundant resources in the electronics industry. These capabilities can be converted into Foxconn’s strengths to enter the automotive industry and conduct OEM production for players inside and outside the industry.
