Foxconn Technology Group’s planned purchase of the Lordstown Motors Corp. car plant.
The Taiwanese company is the largest maker of iPhones, which gives it a potential advantage as Apple explores the automotive industry. Foxconn has agreed to spend $ 280 million on the Lordstown deal, one of the major vehicle-related investments it has made in the past two years.
Foxconn’s early moves toward cars have yielded few tangible results, and Apple will have to require a solid test of vehicle manufacturing expertise before deciding on a partner, if the iPhone maker decides to make the leap to cars. Shares of Foxconn’s flagship unit, Hon Hai Precision Industry Co., fell on Friday in Taipei as a sign of investor doubt that the purchase of the plant will change the game of the electronic giant.
“It only makes sense for Foxconn to explore vehicle manufacturing to stay relevant,” said Steve Man, an automotive analyst at Bloomberg Intelligence in Hong Kong. “If we look at companies in their value chain, there are many that are dedicated to electric and intelligent vehicles. Cars are becoming the next mobile devices. ”
Although Foxconn has established several electric vehicle partnerships, its investment in the business has been relatively modest and far behind that of automotive giants such as Volkswagen AG or Hyundai Motor Co. growing segment, which is geared as a source of growth beyond low-margin electronics.
Apple, which is not expected to enter the market for several years, but is actively engaged in it, would be the final prize for all aspiring electric vehicle manufacturers. Working for Foxconn is his strong relationship with the American consumer electronics giant. The collaboration over the years has expanded as Apple has added product categories and now the company accounts for approximately 50% of Foxconn’s annual sales.
Any Apple car is still years away and the company has suffered setbacks, including the recent departure of the head of its car project at Ford Motor Co. the company has said almost nothing about it.
While Lordstown shares jumped 8.4% on Thursday, they lost 18.3% on Friday in the US Hon Hai fell 1.9% in Taipei. Shares have lost about 20% from the recent high in March.
Analysts at CL Securities Taiwan said in a note that buying the plant is cheaper and faster than building capacity from scratch, which “should help alleviate some investors’ concerns about the visibility of the contribution to the benefits of electric vehicles “.
Foxconn has yet to commercially launch any vehicles after the debut of its EV platform last year. According to a person familiar with his schedule, he plans to start mass production of the Lordstown’s Endurance electric pill in Ohio in Ohio.
In comparison, vehicle manufacturers such as Tesla Inc., Volkswagen and Hyundai are already producing EV models and spending billions of dollars on product development and capacity. Ford and SK Innovation Co. of South Korea said this week that they plan to invest $ 11.4 billion in the construction of three battery factories and an F-series electric van assembly plant in Tennessee and Kentucky, the largest investment in the history of d ‘American cars.
Still, Foxconn has moved forward. Signed a manufacturing agreement with Fisker Inc. and formed a partnership with the Thai state conglomerate PTT Pcl. Pacts were also agreed with Stellantis NV and Zhejiang Geely Holding. One of the vehicles Foxconn will build at the Lordstown plant is Fisker’s Project Pear, which stands for Personal Electric Automotive Revolution.
The Lordstown deal “reflects Foxconn’s flexibility in providing design and production services for different electric vehicle customers,” Hon Hai President Young Liu said on Friday.