(ATF) Apple supplier Foxconn and Chinese carmaker Geely said they would form a joint venture (JV) to sell contract manufacturing and customised consulting services to the global automotive industry.
The deal, which was announced on Wednesday, marks Foxconn’s continued expansion into the auto sector and reflects Geely’s desire to partner with technology companies.
The joint venture, in which Foxconn and Zhejiang Geely Holding Group will each hold 50%, will provide contract manufacturing and customised consulting services to automakers and ride-sharing companies, with a specific focus on electrification, connectivity and autonomous driving technology, the two companies said in a statement.
Sales of new energy vehicles (NEVs), including battery-powered electric vehicles (EVs), plug-in petrol-electric hybrids and hydrogen fuel-cell vehicles, have outpaced those of traditional cars in China as they play a key part in the government’s plan to green the economy and develop “smart” city infrastructure.
The JV’s board of directors will consist of five members, with Foxconn appointing three, including the chairman, and Geely appointing two.
It is the second big tie-up involving Geely to be announced this week. Last weekend, the carmaker said it had joined forces with search engine giant Baidu to produce intelligent EVs. Baidu, said it would combine its autonomous driving technology and internet connectivity infrastructure with Geely’s car manufacturing expertise.
Gao Feng, the spokesperson of the Ministry of Commerce, said on January 14 that the production and sales of NEVs in China hit a record high in 2020 although the overall auto production and sales narrowed by 2% and 1.9%, respectively, as consumption was hit by the Covid-19 pandemic.
In December, the production and sales volumes of NEVs were 235,000 and 248,000 units respectively, both hitting new monthly highs, up 55.7% and 49.5% year-on-year. China Association of Automobile Manufacturers (CAAM) expects domestic sales of NEVs to grow by a whopping 40% this year and reach 1.8 million units.
Geely reported that its December 2020 sales, including sales of Lynk & Co-branded electric vehicles sold by the 50-50 JV reached 154,202 units, a year-on-year increase of 2%. In September, the JV launched the Lynk Zero all-electric concept car.
AIMING TO DIVERSIFY
The Foxconn-Geely tie-up follows moves by both companies to take larger roles in contract manufacturing for automakers. Taiwanese firm Foxconn, which depends on Apple for half its revenue, has been expanding into the auto sector to diversify its business.
In 2015, Foxconn set up a joint EV rental service with Beijing-based BAIC Motor. Last year, it launched a platform to help automobile companies make electric cars. And this month, Foxconn signed a deal with embattled Chinese EV startup Byton to help produce its first vehicle.
Cheered by Tesla's commercial success, tech companies are increasingly pouring money into developing EVs or the intelligent technologies that go with them like autonomous driving and car-to-car communication systems.
Alibaba has formed an EV joint venture with SAIC while China's Didi Chuxing is making EVs designed for ride hailing services with BYD. Huawei, Changan Automobile and Tesla’s battery supplier Contemporary Amperex Technology have announced a partnership to create a premium EV brand.
Tencent Holdings, Amazon.com and Alphabet have also developed auto-related technology or invested in 'smart-car' startups. Apple is also reportedly pushing to design an EV and batteries, aiming at a possible 2024 launch.