Author: Jeff
About 7 years ago, Tesla CEO O Elon Musk once joked about Foxconn : "Compared with mobile phones or smart watch , cars are very complicated. You can't find suppliers like Foxconn and say, 'Build a car for me'."
Now, Foxconn responds to Musk's joke back then!
On October 18, Foxconn's parent company Hon Hai Group released the latest two electric vehicles , Model B crossover SUV and Model V pickup electric vehicles.
that day was the birthday of Foxconn founder Terry Gou . After the press conference began, 72-year-old Terry Gou personally drove a new Model B car into the scene. He laughed and said that he wanted to drive electric vehicles home now, and emphasized that automobiles are an important industry for industrial transformation and upgrading in addition to the semiconductor industry. By laying out electric vehicles, he transformed from "manufacturing Hon Hai " to "technology".
If we add the Model E, Model T and Model C released last year, Foxconn has released 5 cars in two years. This rhythm not only makes traditional car companies ashamed, but also makes new car-making forces out of reach. Perhaps this is the strength of "the world's largest iPhone OEM". At the
press conference, Foxconn also showed its "original craftsmanship". Chairman and CEO Liu Yangwei emphasized that the real purpose of Foxconn's car manufacturing is not to build its own brand and compete with auto manufacturers, but to attract cooperation from major auto manufacturers and help them produce OEM. It also emphasized that one day Tesla will become a Foxconn customer. It is a response to Musk's joke about Foxconn's OEM manufacturing car manufacturing back then.
Foxconn car manufacturing aims to manufacture
Foxconn CEO Liu Yangwei's implication is very clear. He must carry out OEM to the end, transfer from mobile phones to cars, call , Apple and then own Tesla. Since the ultimate goal is OEM, why has Foxconn been promoting car manufacturing in recent years?
In response to this, Zhang Xiang, an automotive industry analyst and visiting professor of , , of the Department of Engineering, Yellow River Science and Technology, said: "Foxconn is currently testing, and it has not decided whether to do OEM or build cars by itself. Up to now, Foxconn has neither built its own production line nor its own automobile R&D team, nor has it mass-produced cars come out, but is just cooperating with some small car companies to build cars."
From a time perspective, it is not too late to enter the field of automobile manufacturing. In 2005, it acquired 100% equity of Antai Electric and began to engage in automotive electronic products such as battery cables and reversing radars. Around 2013, it became a supplier of Tesla, Mercedes-Benz, BMW, and other OEMs.
In addition, Foxconn has also launched large-scale investments in the field of automobile manufacturing, and has successively invested in CATL , Xiaopeng Motors , etc. In addition, Foxconn has also carried out cooperation in automobile manufacturing. In 2014, it announced that it would cooperate with BAIC to develop and produce power batteries; in 2015, it joined forces with Tencent and Harmony Auto to co-found Harmony Futeng (later yellowed); cooperated with Shuohe to develop electric vehicle battery materials; cooperated with Gogoro to build smart battery exchange systems; established joint venture with Indika Energy to develop vehicle-mounted lithium iron phosphate batteries and produce electric vehicles.
According to incomplete statistics, since 2020, Foxconn has cooperated with at least dozens of automobile industry chain companies.
From this we can see that in the past layout, cooperation and supply have always been the main theme of Foxconn. Although he has mastered his career in the field of mobile phone OEM, Foxconn seems to have not thought it clearly about car manufacturing.
When Foxconn announced its entry into the electric vehicle field in October 2020, it did not come up with a model to open the way for itself like other car companies, but instead jointly released a "MIH EV open platform" with Yulon. At that time, Liu Yangwei pointed out that Hon Hai provided an open chassis platform for the industry through the MIH alliance, allowing more companies to design cars. Although
clearly requires OEM, Foxconn has not received a relatively decent OEM order to date.
What is known at present is that in May last year, an agreement was reached with the US electric vehicle company Fisker to produce about 150,000 cars each year. Production will start in 2024. This year, it signed a cooperation with the US electric vehicle company INDIEV to assist in the manufacture of prototype cars. In addition, it also established a joint venture with the Thai Petroleum Group to establish an electric vehicle company Horizon Plus to provide OEM services to local companies.
Zhang Xiang said: "Auto OEM is a very niche business model. This market is very small, with less than 1% of the entire market. It is often some car companies that take out some models with fewer orders for OEM, because they are more likely to produce themselves. For example, Magna is used for OEM, NIO , Xiaopeng , Ideal and other new forces have found factories to OEM, but in the end they all built their own factories to produce, because OEM will be restricted in many places."
So, in the face of a niche market like automobile OEM, Foxconn spares no effort to promote and create momentum. Why?
Looking for new business growth points
New energy vehicles Under the wave of wave, more and more off-market giants are entering the market, such as Huawei , Apple, Xiaomi , and their mobile phone companies that had almost nothing to do with cars before were concluded one after another.
In this regard, industry insiders believe that these giants will either perform well in the original industry and do not want to miss the next opportunity to make money, such as Apple, or the original industry lacks growth and need to find new growth points, such as Huawei and Xiaomi.
Judging from Foxconn's performance, it should also belong to the latter like Huawei.
Industry data shows that the total sales of mobile phones in the first half of this year fell by 16.9% year-on-year. In terms of PC tablets, global shipments fell for four consecutive quarters, down 11% year-on-year. The market generally believes that terminal products such as mobile phones and computers have reached the ceiling.
In this regard, Anxin Securities analyzed that the automotive electronics industry will become another major development opportunity at the entire industrial chain level after home appliances, PCs and mobile phones.
Zhang Xiang believes: "It is unlikely that this business line for Apple's OEM is long-term. Now many production lines of Apple mobile phones have been transferred back to the United States. Foxconn's orders on Apple are decreasing. Foxconn needs to find new business growth points, and car manufacturing is currently a hot topic. The purpose of Foxconn's continuous momentum is to raise funds and maintain stock price and market value."
However, the market does not seem to buy it. Model B released a concept video on the 10th of this month, and the next trading day US stock Hon Hai Precision's stock price fell by nearly 3%. On the day of the press conference on the 18th, Foxconn closed down 2.29% to $6.37.
The capital market does not buy it, so will traditional OEMs take advantage of Foxconn’s OEM manufacturing?
Liu Yangwei believes that Foxconn is working with partners of the MIH (Mobility in Harmony) platform to break the closed loop of traditional automobile manufacturing, and is expected to reduce the design time of automobiles by half and reduce development costs by one third in the future.
Relevant person in charge of a well-known domestic vehicle manufacturing company said that it is a good thing to be able to reduce costs, but this is based on the premise of scale and high integration of complete vehicles. The current integration level of the automobile industry is not high, and in a short period of time, the OEM business model may be difficult to achieve.
Some people in the automotive industry also questioned: If Foxconn wants to manufacture Tesla, it must first reduce the cost to a lower cost than Tesla. I am afraid no company can do it at the moment. Although Foxconn beats Tesla in the naming of models, Tesla may not necessarily buy it in the end. In addition, no car company is willing to give hot-selling models to OEM factories, and it is not easy for Foxconn to get large OEM orders.
Judging from the online voice, there are also different opinions on Foxconn's OEM production of cars. Some people believe that Foxconn has a strong industrial chain foundation and strong production and processing capabilities, and is fully capable of bringing out this business model. Some people also believe that the automotive industry has not yet mature OEM cases. OEM often represents the lack of core technology and competitiveness, and faces important challenges of serious homogeneity.
If you want to manufacture OEM, you still need to get market recognition
More than 0 years ago, Foxconn founder Terry Gou said at an internal meeting: " Apple car is just a four-wheel iPhone . Since we can build iPhones, why can't we build electric cars?" Does the
sound a bit familiar? This fully highlights Foxconn's confidence in car manufacturing.
In May 2022, Foxconn's current chairman Liu Yangwei proposed the goal that by 2025, Foxconn's global market share of electric vehicles will reach 5% and shipments will be 500,000 to 750,000 units per year. The goal of
is not small. For comparison, the sales of BYD in 2021 are only about 720,000. In other words, Foxconn will exceed the sales level that BYD will only achieve in 20 years within 2-3 years. This development speed is currently "unprecedented" in the automotive industry.
has released 5 models in two years. This speed seems to make people feel that Foxconn really has two tricks. But in Zhang Xiang's view, "Foxconn launches all prototype cars, which does not mean mass production. The cost of making a prototype car is very small, and one can be made for one or two million. Foxconn is just a press release, and there is no new car launch conference like traditional car companies. The purpose is to raise funds and maintain its own stock price and market value."
It is worth noting that even the five models are Model C which will be delivered next year, Foxconn seems to be deliberately hiding the model parameters and is not active in the marketing of the product.
Industry insiders believe that Foxconn is just showing off its muscles and sending the market the signal that it can produce electric vehicles, so that traditional vehicle manufacturers can pay attention to themselves, and ultimately achieve the purpose of OEM.
However, Foxconn may ignore a relatively important process in the automotive market, that is, market verification. The launch of a prototype car in
can only prove that it can be built, but this does not mean that it can pass the market verification. Only by truly pushing the car to the market, allowing consumers to buy and use it, and then obtaining market feedback can a company truly demonstrate its ability to build cars.
Obviously, at present, mature car companies are unlikely to hand over their cars to Foxconn to take risks. After all, once they are screwed up, they will destroy their own brand.
Foxconn can rely on the Yulon Group and Model C (the model name in Yulon Group is Luxgen n⁷). After all, Yulon Group has also produced relatively successful works such as Nazhijie .
According to Liu Yangwei, the mass-produced version of Model C is only available for pre-order for 3 hours, and the order exceeds 15,000 vehicles. No matter how many orders you can finally make, you will be able to truly see Foxconn’s true strength in making cars after delivery next year.
