After investing in Xiaopeng, Byton, and Aichi, Foxconn’s parent company decided to build its own car.
Editor’s note: This article comes from WeChat public account “ Car stuff ” (ID: chedongxi ), author: Juice
Car East and West News on January 17, according to Bloomberg, Hon Hai Precision Industry Co., Ltd. (hereinafter referred to as Hon Hai) plans to form a joint venture with Fiat Chrysler (FCA for short) to develop and produce electric vehicles in China. Hon Hai is the parent company of Apple iPhone assembler Foxconn.
▲ Screenshot by Bloomberg News
According to Hon Hai’s filings on the exchange, Hon Hai and its subsidiary Hong Teng International will hold 50% of the joint venture and the remaining shares will be held by FCA.
According to people familiar with the matter, the two parties will sign a cooperation agreement in the first quarter of this year. After the new company is established, it will launch cars in the Chinese market before considering exporting cars.
The chairman of Hon Hai Liu Yangwei said that Hon Hai will be responsible for product design, parts research and development, and supply chain management, but will not participate in the process of automobile assembly, and the future automobile business will account for 10% of its overall sales.
According to Fortune Magazine, Hon Hai’s full-year revenue in 2019 is US $ 154.7 billion (about 1.06 trillion yuan). This means that the newly established joint venture electric vehicle company will bring Hon Hai’s revenue of 106 billion yuan every year.
FCA declined to comment.
Hon Hai currently relies mainly on assembling iPhones for Apple to benefit. Apple’s orders account for half of its sales. In the past few years, this company has tried many businesses and invested too much.Electric car companies, but none have succeeded.
FCA has been unable to penetrate the Chinese market for many years. Its market share in China in 2018 was less than 1%, while rival Ford Motor Company ’s market share in China was 2.3%, and GM ’s market share was even more. It accounted for 13.8%.
Because of this, the two sides will establish cooperation, Hon Hai can develop new businesses, and FCA can once again hit the Chinese market. Although Hon Hai has no experience in automobile manufacturing, this company is more familiar with China’s supply chain, which will effectively reduce FCA production costs.
Foxconn’s parent company and FCA establish joint venture to expand domestic market
According to Bloomberg, Foxconn’s parent company Hon Hai plans to establish a joint venture with FCA, and the new company will focus on the development and production of electric vehicles.
According to a person familiar with the matter, Hon Hai and FCA will sign a cooperation agreement in the first quarter of this year. Hon Hai International’s Hong Kong-listed subsidiary Hong Teng International will also participate. Hon Hai and its subsidiaries hold the agreement. The joint venture has 50% of the shares and the remaining shares are held by FCA.
The chairman of Hon Hai Liu Yangwei said that Hon Hai will be responsible for product design, parts and supply chain management, but will not be involved in the process of automobile assembly. Liu Yangwei also said that the automotive business will account for 10% of Hon Hai’s overall sales in the future.
According to Fortune Magazine, Hon Hai’s full-year revenue in 2019 is US $ 154.7 billion (about 1.06 trillion yuan). This means that the newly established joint venture electric vehicle company will bring Hon Hai’s revenue of 106 billion yuan every year.
▲ Chairman of Hon Hai Liu Yangwei
FCA did not comment on this.
Since China is the world’s largest new energy market, Chinese consumers are more receptive to electric vehicles. So after the new joint venture is established, it will first launch cars in the Chinese market and then consider selling cars to other countries.
FCA is eager to enter the Chinese market Foxconn’s parent company wants to expand its business
Hon Hai has been assembling the iPhone for Apple. Why did it suddenly decide to form a joint venture with FCA for electric vehicle development?
Apple’s business accounts for half of Hon Hai’s sales, but the company is not satisfied with its current business. In the past few years, Hon Hai and its related subsidiaries have tried a number of new businesses, but they have not been successful. During this period, they also invested in multiple electric vehicle companies, including new car companies Byton, Xiaopeng, and Ai Chi also invested in companies such as Ningde Times and Didi.
This joint venture with FCA may be to increase its business projects.
FCA also has its own thoughts. For many years, FCA has been unable to make further progress in the Chinese market. In 2018, its market share in China was less than 1%, while rival Ford Motor Company ’s market share in China was 2.3. %, General Motors’ market share is even 13.8%.
▲ FCA brands and models
In order to increase market share in China, FCA CEO Mike Manley reorganized GAC Fick, a joint venture with GAC, in April, saying the restructuring “responds faster to changes in the Chinese market A try “.
This cooperation with Hon Hai is also to further explore the Chinese market.
Although Hon Hai has no experience in making cars, this company knows China’s supply chain better than other companies, and its subsidiary Foxconn has always been producing auto parts. Tesla CEO Elon Musk told a shareholder meeting in 2014 that Foxconn was supplying Tesla with some parts.
In general, this cooperation will be necessary for both parties.
Conclusion: Can Foxconn’s parent company make cross-border cars successfully?
Hon Hai ’s most well-known business is assembling mobile phones for Apple. The joint venture with FCA to establish an electric car production company will expand the company’s business scope.
At present, the domestic new energy vehicle market is not clear. The sales of new energy vehicles have fallen for six consecutive years, but at the same time, Tesla, Mercedes, BMW, Audi, Volkswagen and other large foreign car companies have also launched new ones in China Energy vehicles have further intensified competition in the domestic new energy vehicle market.
Although Hon Hai has no experience in the production of electric vehicles, FCA did not have much technical accumulation in electric vehicles, and has little success in the Chinese market. The joint venture between the two companies is in China. Whether the market can make waves is difficult to say.