Foxconn Technology Group’s (富士康科技集團) planned purchase of embattled start-up Lordstown Motors Corp’s auto plant in Ohio might make it a stronger contender to assemble electric vehicles for Apple Inc, but success with the endeavor is far from guaranteed.
The Taiwanese company is the largest maker of iPhones, giving it a potential edge as Apple explores the automotive sector.
Foxconn agreed to spend US$280 million on the Lordstown deal, one of the top vehicle-related investments it has made over the past two years.
Photo: AP
Foxconn’s early moves into electric vehicles have yielded few tangible results and Apple is expected to require solid proof of vehicle-manufacturing expertise before it settles on a partner — if the iPhone maker decides to make the leap into autos at all.
Shares of Hon Hai Precision Industry Co (鴻海精密), as Foxconn is known in Taiwan, fell in Taipei trading yesterday in a sign of investor doubt the plant purchase would be a game changer for the electronics giant.
“It is only logical for Foxconn to explore vehicle manufacturing to stay relevant,” said Steve Man, an automotive analyst at Bloomberg Intelligence in Hong Kong. “If you look at the upstream companies in its value chain, many are dabbling in electric, smart vehicles. Cars are becoming the next mobile devices.”
While Foxconn has inked several electric-vehicle partnerships, its investment in the business has been relatively modest and far behind that by auto giants such as Volkswagen AG or Hyundai Motor Co.
Scoring a deal with Apple would vault Foxconn into a major player in the rapidly growing segment, which it is targeting as a source of growth beyond low-margin electronics.
Apple, which is not expected to enter the market for several years, but is kooking into it, would be the ultimate prize for every aspiring electric vehicle manufacturer.
Working in Foxconn’s favor is its strong relationship with the US firm. The years-long partnership has expanded as Apple has added product categories and the company now accounts for about 50 percent of Foxconn’s annual sales.
Any Apple automobile is still years away and the company has suffered setbacks, including the departure of the head of its electric vehicle project to Ford Motor Co.
An Apple electric vehicle has for years been somewhat of a paradox — it is one of its most hotly anticipated products, yet the company has publicly said almost nothing about it.
Analysts at CL Securities Taiwan said in a note that the plant purchase is cheaper and quicker than building capacity from scratch, which “should help alleviate some investors’ concerns on the visibility for EV [electric vehicle] earnings contribution.”
Foxconn has yet to commercially release any vehicle following the debut of its electric vehicle platform last year.
It plans to start mass production of Lordstown’s Endurance electric pickup truck in Ohio in April next year, a person familiar with its schedule said.
The Lordstown deal “reflects Foxconn’s flexibility in providing design and production services for different EV customers,” Hon Hai chairman Young Liu (劉揚偉) said in a statement yesterday.
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