Foxconn bets big on China’s electric vehicle market with new investments

Clean Capital News

BY ARMAN KAZEMI

October 2, 2014

September 2014 may just prove to be one the biggest months for the electric car so far.

Earlier this month, Tesla Motors announced a deal with the state of Nevada to build its 5 billion-dollar lithium-ion “gigafactory” just outside of Reno in its drive to produce the mass-market electric vehicle.

Now the manufacturer of the Apple iPhone has made its move on plans to invest in China’s burgeoning EV market. And with a target price of $15,000 USD, it could give Tesla’s own prospects for China’s domestic market a run for its money.

According to ComputerWorld, the Taiwanese tech giant Foxconn Technology Group will invest $811 million to build an EV battery factory in China’s northern Shanxi province, where company boasts its iPhone assembly complex and another factory dedicated to robots and automation equipment.

Although remaining sparse on details, Foxconn will presumably capitalize on Chinese government subsidies for “new energy vehicles,” as an article in GreenCarReports states.

According to the report, the People’s Republic of China also offers incentives for buyers of certain, mostly domestic, EV manufacturers.

Foxconn has a leg up on that score as well, as it already manufactures the lithium-ion batteries for the BAIC E150 car, a Chinese EV that will sell for around $20,300, according to TheGreenOptimistic.

With 40 to 50 per cent of sales currently arising from its partnership with Apple – and rival manufacturers competing for that business with lower costs – Foxconn has an interest in diversifying its revenue stream.

“We need to put our money in long-term technology investments," Foxconn CEO Terry Gou has told shareholders. “Right now, making notebooks and other devices isn't worth it for us.”

Besides ambitions to manufacture its flagship Model S in China to avoid importation taxes, as well as capitalize on the aforementioned government subsidies, Tesla Motors also plans to build a pan-Chinese Supercharger network to support its eventual move into the country’s domestic market.

With its legacy infrastructure in China, Foxconn already has a jump on the Chinese market, but it has to make the right moves fast to beat Tesla to the punch.

“When a typhoon comes, even a pig can fly,” Gou once joked. And if this new round of investments is any indication, Foxconn can already feel the weather turning.



Photo Credit: David Van Der Mark