Foxconn seeks a way into the EV industry, but it is running out of time

Foxconn, formally known as Hon Hai Precision Industry Co Ltd, seeks a way into the electric vehicle industry, wishing to do for EVs what it had done for iPhones in the past. However, before it can do that, it must first find the EV industry’s equivalent of Apple, and time to do it is quickly running out.

Foxconn seeks entry into the EV industry

Foxconn is a Taiwan-based contract manufacturer, and its intention to enter the electric car industry is a clear indication that the company considers the sector to be the next big hit. Meanwhile, it has a very limited window of opportunity to enter with a worthy firm whose product will go big, as it faces competition from, major automaker firms, delivery providers, and other companies getting involved.

For the time being, the EV industry is still mostly seeing losses, but the firm seems convinced that its time is coming. Now, the electronics giant has to win a big contract in order to ride the wave of disruptions once it actually starts. The firm is expected to provide an update regarding its EV manufacturing business in a March 15th report. So far, however, the firm has stated that the results of its many collaborations would finally be realized, one by one, throughout 2023.

Foxconn expects that the demand for electric cars is driving industry disruptions in a sector where traditional carmakers are struggling to find cleaner and smarter solutions. The company is offering a simple deal for all those struggling car firms — an opportunity to let it build their next electric vehicle, with a specialized supply chain, batteries, chips, and more. It also acquired a plant in Ohio that used to belong to General Motors. On top of that, it also found a perfect executive to “lead the charge,” that being Nissan’s former executive, Jun Seki.

By choosing to build in Ohio, the company offers access to US federal incentives to its customers, thanks to the Inflation Reduction Act, which is another one of its largest selling points.

The time is running short

Kylie Huang, an analyst at Daiwa Capital Markets, said that Foxconn needs to quickly find a contract with a traditional automaker by the end of the year. If they don’t do it, it will only become more difficult to achieve this in 2024. Further, if Foxconn fails to catch the wave, it will have to team up with lower-tier automakers from China.

Foxconn still has more things working in its favor, such as its Mobility in Harmony EV platform (MiH), which could yet win customers over. The platform is considered “the Android system” for electric vehicles.

AutoForecast Solutions’ VP, Sam Fiorani, stated that everyone’s eyes are bigger than their stomach in the EV market, but his firm still estimates that Foxconn could hit around 65,000 EVs in 2025, and 157,000 in 2026. In other words, the demand will grow in time, and the time to enter the industry and go big with it is now.