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Will Foxconn Shake EV Industry?

Apple supplier Foxconn, with an aim to diversify its business and reduce overdependency on Apple for revenue generation, is betting big on electric vehicles (EVs). During the Hon Hai Tech Day 2020 (HHTD 20) event on October 16 last year, the company launched MIH, an “EV software and hardware open platform”, with an aim to position it as the “Android system of the EV industry”.

Foxconn is not new to the automotive industry. It has already entered partnerships with Yulon Group and FCA Group to produce EVs, provide parts and handle supply chain management. But will the self-declared aim of becoming the Android system of the EV industry make it a threat for traditional automakers? To find the answer, we will have to understand the extent of Foxconn’s ambitions in the automotive space.

MIH to target both software and hardware ecosystems

With the global smartphone industry maturing, Foxconn is looking for an alternative business opportunity. EVs and autonomous vehicles (AVs) perfectly fit into this strategy because here Foxconn can use its existing expertise in automotive and smartphone component manufacturing. However, Foxconn has no plan to make cars under its brand name. Instead, it will manufacture cars for its partners, just like it assembles phones for Apple.

Most of the automakers are using a closed system for developing cars. But Foxconn is aiming to build an open EV platform where any automaker can alter the design to meet specific requirements. Tesla is using its own platform to build EVs, just as Apple does in the smartphone industry. Since Tesla has come a long way in the race for EV industry dominance, Foxconn wants to become the Android of the EV industry. Getting into a partnership with a major automaker will be a challenge as such automakers may not be interested in sharing their core expertise with an open platform.

In the age of AVs, the software will play a crucial role. Foxconn is trying to tap this segment by having a software system that allows automakers and service providers to offer unique features.

Foxconn EV Announcement Timeline

Right partnerships to drive success

Foxconn has entered a partnership with Chinese EV start-up Byton, which is facing insolvency, to revive its EV brand. Foxconn is targeting to produce the M-Byton model starting 2022.

Foxconn has inked another partnership with Geely Holding Group to provide customised consulting service to automakers working with CASE (Connected, Autonomous, Shared and Electrified) technologies.

Apple is in talks with Hyundai Motor to build a pure electric autonomous car from 2024. It will be interesting to see how the iPhone maker and assembler compete in the same segment. Or will Foxconn start manufacturing cars for Apple as it does for its phones? the next couple of years, we may also witness more smartphone makers entering this space.

Whatever may be the situation, right partnerships with ecosystem players and the presence of an experienced leadership team will play a vital role in the success of the business.

Industry veterans to aid in faster development of MIH

Foxconn has hired an experienced leadership team for the MIH platform, which indicates that it is serious about this foray. Jack Cheng, who is a co-founder of NIO, ex-MD of Fiat China and chairman of XPT, besides earlier working with Magneti Marelli and Ford Motor, has been appointed as the CEO of MIH platform. William Wei has been appointed as the chief technology officer (CTO). He has more than 20 years of experience in internet and mobile computing which can help Foxconn build a software-powered car like Tesla.

MIH has already more than 400 partners, with ecosystem players like Amazon Web Services, Mediatek, Qualcomm, ST Micro, Texas Instruments, Eaton and Dana. Foxconn also launched an EV developer kit technical specification on January 31, 2021, displaying seriousness about following the declared timeline.

Foxconn’s aim goes beyond EV platform

As part of a new strategic plan, named 3+3= ∞, Foxconn is focussing on three emerging technologies: EVs, digital healthcare and robotics.

As part of a long-term plan, it is trying to become a key supplier for the EV and AV ecosystem. It is already working with CATL and SES to develop its solid-state battery by 2024, while aiming to get a 10% market share in the EV component and services industry by 2027.

Foxconn is also trying to build a state-of-the-art battery management system (BMS), powered by cloud-based artificial intelligence (AI) to improve battery efficiency.

Some airport shuttle buses with Level 3 autonomy and one of the smallest LiDARs (A15) in the world are supported by Foxconn technology. The MIH platform is being readied for 5G, 6G over-the-air (OTA) update and vehicle-to-anything (V2X) communication. Therefore, Foxconn is preparing for the connected and AV space in future. However, it may face strong competition from Qualcomm and Microsoft in this segment.

Counterpoint’s take

As Foxconn is not interested in building its car brand, it may not be a threat to major automakers. But EV component suppliers may face stiff competition from Foxconn. Scalability and price will play a key role in the selection of component players by EV makers.

Large automakers with a clear goal of electrification may not be interested in an open platform as it may raise questions of security and intellectual property. However, small players and start-ups will be more interested as a shared open platform will require less investment.

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Soumen is a Senior Research Analyst who is tracking IoT, Automotive and Telecommunication ecosystem at Counterpoint Technology Market Research. He is interested in IoT applications, connections, components, electric vehicles, connected cars, autonomous vehicles, semiconductors, shared mobility, services and emerging technologies. He started his career as an Energy Analyst with Manikaran Power Ltd. He has experience in working with DISCOMs and SLDCs in Indian power and energy industry. He is currently based in Gurgaon. He holds an Electrical Engineering degree and MBA in Marketing & Finance.

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