Foxconn finds EVs harder to build than iPhones

Over the past decade, Foxconn Technology Group has followed Apple Inc.’s increasingly complex plans. to turn silicon, glass, plastic, copper and other materials into hundreds of millions of iPhones. And Apple is just one of dozens of A-list customers for the Taiwanese company; Google, Microsoft, Sony and many others have hired it to make phones, computers, tablets, game consoles, servers and more. So it’s not a stretch to think that Foxconn can do the same with cars.

So far, though, cars are proving more difficult than electronics.

Last year, Foxconn paid $230 million for a former General Motors Co. in Lordstown, Ohio, with the aim of making it the center of an automobile manufacturing initiative in the United States. As part of the deal, the previous owner of the 6.2 million-square-foot factory, four-year-old Lordstown Motors Corp., hired Foxconn to build its Endurance pickup truck, and the Taiwanese company took a stake in the startup.

Foxconn has made big predictions for its auto business, saying it will generate $33 billion in annual revenue by 2025. It has announced partnerships in Taiwan, Thailand and Saudi Arabia. While its electric vehicle components business is on track to grow fivefold to more than $3 billion this year, right now the only vehicles Foxconn has produced are a few prototypes, a few dozen electric buses and about 40 pickup trucks for Lordstown. .

Foxconn’s entry into EVs

  • May 2022: Signs agreement with Lordstown Motors to acquire the Ohio plant for US$ 230 million.

  • October 2022: It reveals two electric vehicles to be built in Taiwan, Thailand and the United States.

  • November 2022: Teams up with Saudi wealth fund to build electric vehicles.

  • November 2022: Agrees to invest up to $170 million in Lordstown and takes two board seats.

  • January 2023: Hires former Nissan executive Jun Seki as director of EV strategy.

In January, Lordstown asked Foxconn to suspend production because the trucks’ manufacturing cost exceeded their intended selling price of $65,000. A few weeks later, it became clear that Endurance was suffering from, well, a lack of stamina. At least one owner reported that the truck had lost power while driving in cold weather, prompting the company to issue a recall in February. Then, on March 6, Lordstown said that if it couldn’t partner with an experienced automaker, it would be forced to discontinue the pickup truck, its only model.

The announcement raises questions about Foxconn’s nascent EV business. Lordstown was effectively saying that Foxconn could not keep its flagship in production, despite its vast resources, its experience turning ideas into products, and decades of wrangling global supply chains to get those products out of the factory on time. and at cost. “Why does Lordstown need another strategic partner to bring the struggling project to fruition?” asks Danni Hewson, an analyst at brokerage AJ Bell. “Is it because Foxconn is simply not ready to become an EV powerhouse without a little outside help?”

Foxconn says it remains committed to its EV plans and that its expertise in electronics sets the stage for success in cars. But while Lordstown has promised to continue developing new vehicles with the Taiwanese company, the track record of other potential customers suggests that Foxconn remains far from realizing its electric car dreams. “You need people who are skilled in volume production,” says Ron Harbour, an independent industrial manufacturing consultant. “It can be done, but I haven’t seen it demonstrated by electric car start-ups. I would say it’s a long shot.

The closest thing to production is the Monarch Tractor, which last August contracted with Foxconn to build autonomous electric farm vehicles. Monarch manufactures them in limited numbers at a facility in Livermore, Calif., and the companies plan to move production to Lordstown by the end of March.

Less certain is Fisker Inc. Foxconn is in talks with the Los Angeles-based company to build a sub-$30,000 EV known as the Pear. Fisker says he expects Foxconn to build the car, but the two companies are still negotiating the cost, according to people familiar with the matter. And in September, Foxconn signed an initial deal with IndiEV, another California startup. At the time, Foxconn called the prospect of building the company’s prototypes a “success story”. But at the end of September, IndiEV had less than $220,000 in the bank. The company now says it intends to go public in a reverse merger, but that if it fails to complete that process by July, it risks going out of business.

These collaborations could yet succeed, and Foxconn could find other companies that want to build its vehicles. But one location in Mount Pleasant, Wisconsin, illustrates what may lie ahead. It was there that, in June 2018, Foxconn executives and then-President Donald Trump held a groundbreaking ceremony for what was to become a $10 billion, 20 million square foot LCD panel factory that Trump announced as “ the eighth wonder of the world”. .”

Over the next two years, Foxconn repeatedly lowered its ambitions. After originally promising to create 13,000 jobs at the site, Foxconn renegotiated its contract with the state in 2021. The company today says it has invested more than $1 billion and hired around 1,000 people. Those people are making electronics like computer servers, and Foxconn plans to add battery components at the Wisconsin site to deepen ties with existing automakers and startups. Still, Foxconn’s track record in Wisconsin is a red flag, says Michael Shields, a researcher at Policy Matters Ohio, a nonprofit that assesses the economic impact of major industrial investments in the state. “I think there’s cause for concern,” he says, “about what’s going to happen in Lordstown.”

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