Model B, Model V? Tesla has launched a new car?
"Experience Hon Hai 's own electric car is already one of the most anticipated birthday activities I look forward to every year." When Foxconn founder of Hon Hai Technology Group, the parent company of Hon Hai Tech Group, appeared at the venue and celebrated his 72nd birthday with everyone's cheers, you may be able to come back to your senses from the trance. It turns out that this is not Musk's situation.
Image source: Foxconn
Hon Hai Group Recently released the crossover SUV Model B and the pickup electric vehicle Model V. The model naming continues the "Model" series. As early as last year, it had launched three electric cars, Model C prototype, Model E sedan and Model T electric bus. It is reported that Model C is expected to be delivered to consumers by brand customers next year. So far, Hon Hai Group has released five models.
is not just a car model naming that is highly similar to Tesla. Liu Yangwei, chairman of Hon Hai Group, even called out to Musk at the press conference: "I hope one day, I can help Tesla build cars."
"We used to build PCs and mobile phones. In the future, we will build EVs (electric vehicles) and stick to the original intention of CDMS, which will not change." Liu Yangwei said. What Liu Yangwei mentioned is CDMS, also known as Contract design and manufacturing service, refers to commissioned design and manufacturing services. Obviously, after Foxconn entered the automobile industry with a high profile, it did not want to get rid of the title of "professional OEM".
Professional OEM for decades
For every 10 iphone produced in the world, 7 are from Foxconn's assembly line workers.
Foxconn first became the foundry of HP and Dell , and then won the OEM orders of three major mobile phone manufacturers, Nokia , Motorola and Apple , and became Huawei's foundry of when Huawei rose.
However, the high binding to Apple also means that Foxconn has become the company that has been most affected by Apple's business fluctuations. In 2016, Foxconn's revenue declined for the first time since its listing in 1991, mainly because of the decline in shipments of its OEM phones that year.
After this, Apple mobile phone sales failed to return to the level before 2016, and Foxconn's mobile phone OEM business was also affected.
In the first half of this year, Foxconn ushered in a rare growth. In its financial report, Foxconn said that driven by Apple's strong sales momentum, the company's net profit in Q2 reached NT$33.29 billion (approximately US$1.11 billion), and increased by 12% year-on-year. However, Foxconn is still cautious about the outlook for the third quarter, and smartphone demand is expected to slow.
, a subsidiary of Foxconn, listed on Hong Kong stock , , Fuzhikang Group 2022 interim report shows that the company achieved operating income of US$4.125 billion from January 1, 2022 to June 30, 2022, a year-on-year increase of 4.76%, and a net loss attributable to the parent company was US$23.78 million, and the loss of decreased by 15.63% year-on-year. In other words, although the revenue of the subsidiary companies that mainly engage in mobile phone OEM business has increased, they are still in a loss state.
Mobile OEM business is no longer enough to make Foxconn "fill in full". Foxconn needs to diversify its business to find a breakthrough.
In fact, after the mobile phone industry dividend peaked, many mobile phone companies have announced their car manufacturing plans, such as OPPO, Xiaomi , Sony , and Apple. " Apple car is just a four-wheeled iPhone. Since we can build iPhones, why can't we build electric cars?" Terry Gou once made a bold statement.
This is like a response to Musk. Musk once publicly joked: "Cars are very complicated compared to mobile phones. You can't go to suppliers like Foxconn and say, build a car for me." Foxconn has made a clear statement now, "You can help Tesla build cars."
However, in the view of industry insiders, Foxconn released a new car to prove that it has the ability to produce OEM, so as to obtain orders from new brands and traditional car companies.
Foxconn had been involved in the automotive industry many years ago.As early as 2015, Foxconn invested in Aizhi Auto . In 2020, Hon Hai Group announced the establishment of a joint venture with Taiwan Yulon, Honghua Advanced, with Foxconn holding 51% of the stake. The three models of Model E, Model T and Model C, which were first released last year, were created by the company.
Unlike a group of bigwigs who personally came to build cars, Foxconn entered the automobile industry to "OEM". Industry insiders believe that directly building a complete vehicle has high risk, and R&D and manufacturing costs money, and users may not necessarily pay for it if it is built.
Nowadays, in the mid- and low-end market, Foxconn has obtained several OEM orders.
In May 2022, Foxconn's parent company Hon Hai Group acquired a factory in Ohio, USA. In October, it signed a cooperation with the American electric vehicle company INDIEV to assist in the manufacture of prototype cars.
This year, Foxconn attacked the Southeast Asian market and jointly established an electric vehicle company Horizon Plus with Thai Petroleum Group to provide OEM services to local companies.
OEM is a good business for doors?
In the car manufacturing blueprint planned by Liu Yangwei two years ago, the global electric vehicle market size is expected to reach 30 million from 2025 to 2027, and Foxconn's goal is to seize 10% of the market share at that time. Two years later, when Liu Yangwei talked about the goal again, he said, "Foun Hai's goal remains unchanged. He hopes to achieve the same market share of 40%-45% as the ICT industry, but we need to take it step by step. First, we plan to reach 5% of the electric vehicle market share in 2025."
Although Liu Yangwei's goal is a little more conservative than two years ago, this cannot be regarded as a "small goal". In 2021, Tesla sold 930,000 vehicles, accounting for only 13% of the global electric vehicle market; in addition, BYD is 8.6% of the market, and Volkswagen Group only accounts for 4.6%.
"Foxconn's biggest advantage lies in its supply chain." Liu Yangwei believes, "We are spread across 24 countries around the world, which undoubtedly has become a huge advantage for us to enter the electric vehicle industry."
But is OEM a good business? New car-making forces will use OEM production methods to produce before building factories and obtaining production qualifications. But no matter whether the foundry makes money from it or not, it is always in the role of "can be replaced at any time".
For example, Haima Automobile has been OEM for Xiaopeng G3 for 4 years. Since the Zhaoqing factory under Xiaopeng was put into production in June 2020, the original cooperative OEM business has been gradually cancelled. Xiaopeng Motors once clearly pointed out the potential risks of products manufactured by Haima Automobile in its Hong Kong stock prospectus, such as "the production of cars with third parties must bear operational risks, and we have limited control over this"; "Haima does not comply with the agreed timetable or encounters production capacity restrictions and quality problems, and we may suffer delays"; "The ability to successfully establish a brand may also be adversely affected by Haima Automobile's quality awareness", etc.
, and JAC Motors has obtained a certain amount of income by NIO OEM, but its operating income is decreasing year by year and its losses are also expanding. Financial report data shows that JAC Motors' revenue in 2018 was still around 50 billion yuan, while in 2021 its revenue was only 40.21 billion yuan; its non-net profit further expanded from -978 million yuan in 2019 to -1.884 billion yuan.
In addition, , which was once manufactured for Leapmotor, was liquidated in bankruptcy as early as 2020.
Car manufacturing has infinite charm, and Foxconn will not be the last company to squeeze into this field. However, in the era of rapid development of automotive intelligence, if an OEM does not have core technology, it may not escape the fate of being led by the car company.
At the same time, for the crowded car market, compared to an ordinary name that is prone to sinking among the numerous cars, Tesla may be the fastest way Foxconn can think of to get the industry to notice itself. But after all, the automobile market has developed to this point. Even Zotye, who has just been resurrected, says that it will be original in the future. Foxconn is bound to tie Tesla to make gimmicks, which is destined to be not a long-term solution.
Author: Liu Shanshan
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