Foxconn, the world’s largest electronics contract manufacturer, is strengthening its foothold in the automotive industry. The Taiwanese company has bought a 50% stake in Mitsubishi Electric Mobility, the supplier’s automotive equipment arm.
Despite the name, Foxconn hasn’t bought itself an EV company from Japan. The announced equal joint venture is about parts making. Mitsubishi Electric Mobility manufactures alternators, ignition coils, radar sensors, steering motors, and the like. The electric powertrain business is only a small piece of the cake.
Discount price
The Japanese supplier also makes modules for EV inverters, but those are not part of the deal. Still, the outlook is to bundle their efforts and market electric architectures in the end. But not complete electric cars.
Foxconn pays ¥115 billion (roughly $727 million) for the joint venture through its investment arm, Lin Yin, six times the company’s operating profit. All in all, Mitsubishi, which is restructuring its business, is giving Foxconn a considerable discount.
Through the joint venture, both companies aim to develop EV platforms together. These will not ne exclusively used by Mitsubishi but will also be sold to third parties. Mitsubishi brings the parts; Foxconn adds the China Speed – or should we say, Taiwan Speed? – to accelerate the development cycle.
“Anchor in Japan”
This isn’t the first time Foxtronn and Mitsubishi have walked the aisle together. Both companies signed a 50-50 bus venture with Mitsubishi Fuso last summer, and Mitsubishi sells a Foxconn-built ASX in Australia and New Zealand.
Jun Seki, Foxconn’s EV chief strategy officer with automotive experience as a Nissan executive, said that Mitsubishi’s electronic control technology was “the most attractive thing” about the deal. He added that he wants to make the company “our anchor in Japan”. A bridge to team up with other suppliers and automakers. That vision lines up with Foxconn’s business case as a manufacturer for external partners.
Competitive EV platform
Foxconn, best known as the Apple iPhone assembler, has pursued strong ambitions in the automotive industry for some time. But it has had to correct course a few times. It has been piling up EV projects and failures for several years, ranging from Foxtron prototypes, the Lordstown plant in the U.S. that fell through, to the Fisker partnership that died with Fisker.
But Mitsubishi, though not in its best shape, isn’t Fisker. Buying technology credibility in Japan, with a partner whose name opens doors at Japanese automakers and that is still tied to Nissan and Renault, seems a smarter route than another factory bet.
For Japanese automakers, this might prove an opportunity. They ultimately get an EV platform option with Japanese quality stamped on it, while it is competitive with the new technical age surging in China, still the most important EV market in the world.
