Taiwan-based contract manufacturer Hon Hai Technology Group, popularly known as Foxconn, has outlined plans for EV (electric vehicle) manufacturing. The company already has partnerships to produce EVs for Fisker and Lordstown Motors and now aspires to make cars for Tesla.

Foxconn is famous for assembling Apple products and is the world’s largest contract manufacturer of electronics. The company now has ambitions in the EV industry where it seeks to replicate the success of electronics contract manufacturing.

At the annual Tech Day, Liu Young-way, Foxconn’s chairman said “Based on our past records for the PC and cellphone markets … we’re at about 40-45% of the overall market share. So, ambitions-wise, hopefully we are able to achieve the same kind of achievement like in the ICT (information and communications technology) industry, but we will start small, which is about 5% in 2025.”

Notably, Foxconn has already started to focus on EV manufacturing. It previously partnered with EV startup Fisker to produce Pear, its second vehicle. Fisker partnered with Magna for producing its first model, the Ocean SUV.

Earlier this year, Foxconn completed the acquisition of the Lordstown plant from Lordstown Motors. Lordstown Motors had to sell the plant as the cash-started EV startup company is fighting a survival battle amid high cash burn.

Foxconn would now produce the Endurance pickup truck for Lordstown Motors. The model is running way behind schedule and even now Lordstown Motors expects to sell about 50 of these in 2022.

Foxconn Wants to Make Tesla Cars Someday

Meanwhile, Young-way has bold aspirations and said that it wants to make Tesla cars someday. Tesla currently produces cars at four plants, two of which are in the US. The company also has a plant in Shanghai, which is believed to be its most productive and profitable plant.

It also set up a Gigafactory in Berlin where it is currently ramping up production. The Elon Musk-run company was the largest EV seller in Germany in the first nine months of the year and its deliveries in the country were far ahead of Volkswagen.

Tesla wants to sell 20 million EVs globally by 2030 and Musk has said that the company would need to set up more Gigafactories. Notably, while some EV startups like NIO and Fisker have partnered with third parties to produce cars, Tesla makes cars at its own factories.

Lucid Motors and Rivian also have their own manufacturing operations. Given Tesla’s manufacturing prowess and strong balance sheet, it remains to be seen if it ever partners with Foxconn to make its cars.

Tesla to Benefit from the Inflation Reduction Act of 2022

After President Boe Biden signed the Inflation Reduction Act of 2022, several Wall Street analysts issued bullish notes on Tesla. According to Wolfe Research, Tesla would stand to gain from the Inflation Reduction Act. Wolfe upgraded Tesla stock to a buy and raised its target price.

Tesla cars would now be eligible for the $7,500 EV tax credit from 2023 which would help it better compete against rivals. The company has said that it would begin Semi deliveries this year. Next year, Tesla is also slated to begin the deliveries of Cybertruck, which would compete with Ford’s best-selling F-150.

Apple Plans to Enter the EV Industry

Coming back to Foxconn, the company has unveiled some EV models. It has however made it clear that it does not intends to get into the self-branding of cars. Apple reportedly has plans to get into EVs and autonomous cars but hasn’t been able to find a suitable partner so far.

Many believe that the real challenge for Tesla would not come from legacy automakers but from Apple. In the past, analysts like Gene Munster of Loup Ventures have said that Apple’s eventual entry into the EV (electric vehicle) industry would be the biggest threat to Apple.

Strategic Vision conducted a survey of 200,000 new car buyers and for the first time, it included Apple cars on the list of potential cars that buyers would like to buy. The results showed that Toyota topped the list followed by Honda. 38% and 32% of the respondents respectively said that they would consider a Toyota or a Honda brand car in the future.

Could Apple Partner with Foxconn for EVs?

26% of the respondents said that they would ‘Definitely Consider’ an Apple car in the future. Ford came fourth with 21% while Tesla was in the fifth position with 20% saying they would consider a Tesla car in the future.

Apple and Foxconn already have a long-standing partnership to produce gadgets. The two companies might even partner to produce EVs in the future.

Over the long term, Apple’s entry into EV and autonomous driving would be a key driver. Analyst Katie Huberty believes that an entry into mobility would lift Apple’s TAM (total addressable market) 20-fold. With its strong brand and focus on quality and innovation, Apple might just be the Tesla killer that analysts have been prophesying for a long.

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