Chinese automaker Geely is looking to position itself among the leading EV players through a series of tie-ups and deals to make it the sector’s go-to contract manufacturer.
Of four deals recently announced, a venture with Taiwan's Foxconn to provide electric vehicle (EV) contract manufacturing, is possibly the most critical, sources claimed.
A subsequent agreement to build mass-market electric vehicles for embattled Los Angeles-based start-up Faraday Future would be handled by the venture with Foxconn.
Geely, which is China's largest privately owned automaker, has also made a separate pact to make smart electric cars for internet giant Baidu Inc, with the first model due to be launched next year. And it is joining forces with Tencent Holdings Ltd to work on smart car control and autonomous driving technology.
Geely has several electric car models on the market and in September launched a brand new EV-focused platform, developed at a cost of 18 billion yuan ($2.8 billion).
Like many others in his industry, Geely Chairman Li Shufu has watched on as valuations for electric car manufacturers like Tesla Inc and Nio Inc have soared.
Lifting Geely, which owns Volvo Cars and 9.7% of Daimler AG, to a place where it can claim a bigger chunk of China's burgeoning electric car market, has preoccupied Li for much of the past year, it’s claimed.
The flurry of tie-ups unveiled last month would see Geely offer not only its assembly lines but also its engineering and development expertise.
"The chairman's attitude towards contract manufacturing is clear – he is embracing it and actively pursuing it," a Geely executive said.
Outsourcing production of some models through original equipment manufacturing (OEM) deals is common in the auto industry but Geely's plans represent the most aggressive attempt yet by an automaker to build up a contract manufacturing business.
The deal with Faraday was not well received by the market with shares in its main unit, Geely Automobile, sliding some 16% over four days in the wake of the news.
However, the deals could address chronic under-utilisation at Geely plants. For example, Geely Automobile, which houses its Geely brand cars, is capable of building more than 2 million vehicles a year but sold only some 1.3 million in 2020.
- Reporting by Reuters