Foxconn, officially known as Hon Hai Precision Industry Co., is planning to become a contract manufacturer for electric vehicles (EVs) and is seeking partnerships with Japanese automakers.

Jun Seki, chief strategy officer of Foxconn’s EV division, indicated that the company will announce collaborations soon.

Seki, a former executive at Nissan and Nidec, noted the company aims to enhance its presence in Japan, where it is mainly known for assembling iPhones and owning Sharp Corp.

Foxconn intends to use its manufacturing experience to attract carmakers interested in outsourcing EV production.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Foxconn’s EV pivot follows its proven electronics manufacturing playbook

Foxconn’s approach to EV manufacturing mirrors the successful contract manufacturing model it established with Apple beginning in 2000, which transformed the company into the world’s largest electronics manufacturer with over 800,000 employees globally1.

The company now produces approximately 40% of global consumer electronics, demonstrating its ability to scale manufacturing operations while maintaining the confidentiality required by premium brands like Apple and Sony2.

This diversification strategy aligns with Foxconn’s earlier moves into other sectors, such as healthcare in 2015, showing a consistent pattern of leveraging its manufacturing expertise to enter new high-growth industries3.

By positioning itself as a trusted contract manufacturer for EVs, Foxconn aims to replicate the deep supplier relationships that helped it become essential to Apple’s supply chain, where it produces 500,000 iPhones daily at its massive Zhengzhou facility alone4.

2️⃣ Rising EV production costs are driving a fundamental shift toward outsourced manufacturing

The global engineering services outsourcing market in automotive is projected to grow from $59.43 billion in 2023 to $132.20 billion by 2032, reflecting automakers’ increasing willingness to partner with external manufacturers amid electrification challenges5.

Traditional automakers face immense capital requirements and technology integration challenges when transitioning to EVs, making outsourcing an attractive option to reduce costs and focus on core competencies6.

The automotive component outsourcing market is expected to grow at 5-6% annually over the next decade as manufacturers seek specialized expertise for complex EV components and systems7.

This trend is further accelerated by legacy automakers’ struggles with developing competitive software and user interfaces for EVs, leading many to partner with technology specialists rather than developing these capabilities in-house8.

Recent Foxconn developments