A new player is entering the automotive industry. With a lot of money, political support and tremendous production know-how – but without automotive expertise. We spoke to Peter Fintl, Director Technology and Innovation at Capgemini Engineering, about the opportunities for Foxxconn and the challenges for the established car brands.
Mr. Fintl, Foxconn is a largely unknown electronics giant. Most only remember scandals in Apple manufacturing. But Foxconn is putting out feelers into another industry, mobility. What are the chances there?
Giant hits it. Foxconn has sales of over $215 billion worldwide. From the iPhone to game consoles, everything comes from Foxconn factories. The production takes place mainly in Taiwan, China, India, Vietnam, where low location costs are combined with a very high production quality. Foxconn says little to consumers, and the actual name Hon Hai Precision Industry Co. even less.
No wonder they don’t make anything under their own name. You can search for Foxconn for a long time in the electronics market.
And yet Foxconn is the world’s leading manufacturer or manufacturing partner for everything that concerns information, computer or telecommunications technology. You can’t find the brand, but if you look at your electronics store at home, there is a very good chance that these products were manufactured in Foxconn plants or at least components were supplied by Foxconn. From humble beginnings in Taiwan, the company has grown into a true “production octopus” delivering high quality technology at highly competitive prices.
Foxconn is already the biggest in this area, but that doesn’t seem to be enough. What’s next?
That’s right, if you’re already the biggest pike in the carp pond, you naturally ask yourself, where can you grow further? And one area Foxconn executives have identified is mobility. As is well known, the cards are currently being reshuffled. We are witnessing the rapid transition from combustion engines to electric vehicles, as well as the development of connected, automated vehicles – including new business models. The example of Tesla showed how even a newcomer can shake up the industry. Also because as a start-up you do things differently, certainly faster and because buyers today look more at connectivity, range and passenger experience instead of horsepower and the number of cylinders.
As a matter of fact. Everyone is looking at the drive, but the change in the experience from driving to networking, information and entertainment is usually underestimated and Foxconn should be perfectly positioned here.
And Foxconn has been exploring this mobility market for a few years, unnoticed by most observers. In 2019, the feelers began to be put out in the direction of car production. You founded the “Mobility in Harmony” initiative. Hardly anyone here in Europe knows that, but it is an association of companies – primarily from Asia – that want to develop a vehicle platform for electric, connected and automated automobiles. This is the technical blueprint on which you can later build vehicles.
So it’s not primarily about establishing a Foxconn car brand?
First, a vehicle platform or platform technology is provided. This is a construction kit that customers can use to implement a specific project. Secondly, Foxconn would also offer development services through its subsidiary Foxtron. Just like Magna or other engineering service providers for the auto industry are already doing. And thirdly, Foxconn has gotten into hardware production, for example taking a stake in an electric motor manufacturer in China.
This is a comprehensive project.
And not everything. Fourth, you also want to be the manufacturing partner. This means that an established manufacturer or a newcomer can not only develop a car at Foxconn, but also have it built right away.
So I have a vision and Foxconn accompanies me to the finished product. Doesn’t Foxconn make a lot of enemies with that?
Of course there are a lot of potent competitors. Not only the contract manufacturers, but also the suppliers and development partners must take the Foxconn plans seriously. Entering a new industry like this requires a lot of resources. But you have to remember how big Foxconn actually is and what structural advantage they have. To put it bluntly, established car manufacturers want to climb out of “combustion hell” into “electric heaven”. The iPhone company Foxconn would like to become a helping partner of the industry.
Many have wanted to conquer the car world, but only Tesla succeeded in a coup d’état. It also took the South Koreans a long time to succeed. How do you rate the chances?
Foxconn is not an underfunded start-up with cloudy ideas about how to make the world a better place. It’s in a different league, it’s a huge industry player. Not only has Foxconn accumulated enormous knowledge about complex global production processes, the company is also very, very well financed. Foxconn has always managed to consistently generate profits amidst fierce competition. And they have massive political support in Taiwan. The government has decided to become a “big player” in the auto industry as well and is supporting the project to the best of its ability. And of course it is a good time right now, also because there are many electric start-ups around the world that have visions, but the partners need and the established manufacturers are also looking for ways to efficiently get niche models back on the road.
It’s also important to remember that Foxconn is of course a Taiwanese company, so Foxconn is very closely associated with Mainland China.
Foxconn is a Taiwanese group and in this respect also maintains excellent relationships with American companies. On the other hand, Foxconn naturally uses Mainland China as an efficient production base. The company employs almost a million people there and is currently the largest private employer in the People’s Republic. Now Foxconn is also striving for greater internationalization in production, moving from the East Asian region towards India, towards South America and now with a car factory in Ohio also in the USA.
Are there concrete numbers for the car market?
Foxconn wants to capture around 5 percent of the global market for electric vehicles by 2025. This would account for sales of approximately 31 billion US dollars: that’s quite a number. And I don’t think it’s entirely unrealistic. They already have a couple of vehicle manufacturing orders in hand and, through their stake in Lordstown Motors in the United States, have access to both technology and a factory.
But this strand is not all. Foxconn also wants to participate in the race for the autonomous vehicle together with Nvidia.
Foxconn has partnered with Nvidia for autonomous driving. That means the fast processors and the software come from Nvidia and also a predefined set of sensors. In addition to Nvidia, other suppliers are also used for the sensors. All in all, Foxconn would above all like to contribute its production know-how and produce these Nvidia-based control units efficiently.
This isn’t the first time Nvidia and Foxconn have worked together, by the way. As early as 2011, Nvidia and Foxconn founded a joint R
In addition to technical difficulties, the autonomous vehicle has a cost problem. The full sensor equipment at Waymo, for example, is really expensive. Does a – let’s say very cost-conscious – manufacturer like Foxconn have advantages here?
With the radars, we are priced in a low three-digit euro range and there are still some rationalization options, also through new technologies, such as the imaging radar.
Lidar technology has so far been very expensive. That already cost several thousand euros in production. And with multiple sensors, the price runs away. New developments such as solid-state lidar, with no moving parts, can be manufactured much more cheaply. On the other hand, manufacturers are trying to get by with fewer lidar sensors. The trend here is towards a “top lidar” mounted above the windshield. So far, Foxconn has also been dependent on systems from suppliers.
Today, a complete set of sensors costs well over 10,000 euros. This is too expensive for private customers and the mass market. At what price could Foxconn offer this? Is the high-end sensor package now available at a discount price?
That would be a nice idea, unfortunately Foxconn can’t do magic here either. A minimum level of sensor technology, beyond the cameras, is necessary to be able to represent automated driving safely. The example of the supposed industry leader Tesla with its “camera only” strategy shows how big the actual hurdles are – and how easy it is to get into a dead end.
The usual strategy of first offering new technology very expensively and with very good margins in the upper class and then slowly letting it seep down the line would not work. How might Europeans react?
Foxconn is attempting to offer a full vehicle platform with its partners in the “Mobility in Harmony” initiative. In this way, the group wants to distribute the economies of scale – and the associated costs – across a large number of different models. This corresponds to the platform strategy of the large OEMs, only here it is distributed among several customers. The positioning of Foxconn as a supplier and service provider represents an enticing offer for car manufacturers. In this respect, it will be exciting to see which manufacturers jump onto the “Hon-Hai” platform. Things are a bit different for the previous suppliers. On the one hand, Foxconn wants to use their components in its platform, on the other hand, the group is positioning itself as tough competition, for example with electric motors.
