2021 just exceeded 20 days, but news in the automotive industry has been flooded with "outsiders".
Following Huawei, the three major Internet giants Tencent, Alibaba and Baidu have launched "big moves" to enter the field of car manufacturing through cooperation with car companies. As the "emperor" of smartphone OEM, Foxconn also stepped on the accelerator pedal of "new energy vehicles".
htmlOn January 4, Foxconn announced that it had signed a strategic cooperation framework agreement with Byton and Nanjing Economic and Technological Development Zone to buy Byton at the lowest cost, trying to accumulate more manufacturing experience through it.
In addition, as Apple's former "monetary" OEM factory, after Apple broke the news of car manufacturing, there have been more and more speculations in the industry about Foxconn's OEM OEM.
Foxconn's "car fate"
intensive cooperation news has made the outside world see Foxconn's sense of urgency to enter the car manufacturing field, but about the automobile market, the "OEM giant" may have long had its own ideas.
In 2005, Foxconn bought Antai Electric, one of Taiwan’s four major automotive wiring harness factories for 370 million yuan, and successfully entered the automotive supplies market. Five years later, he obtained Tesla orders with his electronic OEM experience, and manufactured central control touch screens, connectors and lithium batteries for the latter. In 2013, Foxconn successfully entered the supply chain of luxury car brands such as Mercedes-Benz and BMW, providing automotive electronic equipment including in-car entertainment equipment and automotive electric machinery.
After 8 years of OEM career, Foxconn can be called the "manufacturer" of automotive electronic equipment. Therefore, in the era when even PPTs could be used in 2015, Terry Gou resolutely decided to build cars himself. In March of the same year, Foxconn, Tencent and Harmony Auto signed a relevant agreement to jointly establish "Harmony Futeng". However, due to the different car-making concepts of the three major shareholders, Foxconn, Tencent and Harmony Automobile withdrew their investments and left the market shortly after the company was founded. "Harmony Futeng" was also incubated into the current Byton Automobile under the leadership of Dai Lei and Bi Fukang, the automobile veterans recruited by the previously recruited automobile industry.
Since then, Foxconn has successively invested in new energy companies such as CATL and Xpeng Motors. In early 2020, its parent company Hon Hai even planned to form a joint venture with Fiat Chrysler Motors, with both parties holding 50% of the shares.
For a full 16 years, Foxconn's obsession with the automobile industry has never weakened. From fuel vehicles to electric vehicles, Foxconn has spanned two eras. From suppliers of parts to personal development, Foxconn's "car fate" may never be interrupted.
is the general trend and is forced to
At present, the development of the new energy vehicle industry can be said to be "prosperous". According to industry insiders' predictions, electric vehicles may become the dominant force in global electronic product shipments and sales in the next few years.
However, Foxconn, which has experienced 16 years of hardship, may have already faded its former dream of making cars. Faced with another trend in the new energy vehicle industry, in addition to the "general trend" of eager to seize the initiative, Foxconn spares no effort to transform may be more due to its operating pressure.
Foxconn's performance data has begun to enter a downward range since 2015. Except for the large growth rate brought by the first year of innovation in the mobile phone industry in 2017, its revenue and profits showed no signs of boosting in other years. In 2019, Foxconn's annual revenue growth suddenly dropped to 0.926%. The peak performance growth has forced companies to enter a diversified business model to strengthen their ability to resist market risks.
Not only that, the disadvantages of "low gross profit margin" under Foxconn's O-processing model are also constantly highlighted. As labor costs rise year by year, continuing to be a labor-intensive enterprise will have almost no profit to explore for Foxconn.
In addition, Foxconn's main business in the past focused on OEM production of smart devices such as Apple mobile phones. However, in order to prevent the OEM chain from being dominant, Apple "unethical" dispersed its orders to Luxshare Precision, Goertek and other companies, resulting in the market value of the two companies far exceeding that of Industrial Foxconn and Hon Hai Group in just a few years.
Nowadays, there may be only two choices before Foxconn: one is to transfer the OEM business to areas with lower labor costs such as Southeast Asia and India; the other is to seek to transform to higher profit industries.
In the past few years, a number of OEM companies, including Foxconn, have been trying to relocate some low-end OEM production lines to India and Southeast. However, although labor costs have been slightly reduced after leaving China's industrial chain, the hidden costs of both workers' overall quality and other fields will increase, and it can even be said to be more costly after comprehensive calculations.
After many attempts failed, option A can almost be considered completely passable. Therefore, due to its MIH platform and years of accumulated experience in ICT OEM field, Foxconn naturally tried its best to seize the high-profit industry of new energy vehicles.
The road to "working people" is not smooth sailing
Foxconn's entry time is not very good, but the OEM method it chooses can be said to be clever. As Internet companies rush into the car manufacturing industry like a scramble, Foxconn's smart choice continues to be a "worker" with a higher technical content.
As more and more "newcomers" join, the demand for automobile OEM may gradually increase. Previously, new car-making forces such as NIO and Xiaopeng all chose the OEM route in the early stages of development to solve the problems of early mass production and production qualifications.
At the same time, the complete vehicle OEM model has long been verified. Take Austrian auto OEM company Magna as an example. As a global auto parts giant, it also serves as the OEM manufacturing service for luxury cars such as Mercedes-Benz G-Class and BMW 5 Series. According to incomplete statistics, the total number of cars produced by Magna has exceeded 3 million.
has no shortage of demand and success, but this smart "path" may not be easy to walk.
Faced with the transformation of players in many professional fields, although Foxconn has been doing well in the field of ICT OEM in the past, it does not have much experience and qualifications in vehicle manufacturing and R&D. Even though recent cooperation has added more opportunities and possibilities to it, under the lessons of Xiaopeng and Haima, Foxconn's future development may not be clear.
At the same time, such a transformation may not allow Foxconn to escape the "siege" of low gross profit margins. OEM has always been a business with low profit margins and requires huge sales to support revenue. However, judging from the impact Foxconn has suffered under the changes in the mobile phone field before, entering the more fiercely competitive and increasingly saturated automobile market, Foxconn may encounter the same dilemma.
Although the OEM model in the automotive field can be called "promising future", for Foxconn, in addition to making good use of the "hand cards", it may be even more necessary to expand its own strength and find new growth points with potential.
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