By Ben Foldy and Stephanie Yang
Foxconn Technology Group, the world's biggest electronics
contract manufacturer, has agreed to assemble cars for
electric-vehicle startup Fisker Inc., the latest deal for the Apple
iPhone assembler in its eager expansion into the automotive sector
over the past year.
Taipei-based Foxconn and Los Angeles-based Fisker have signed a
memorandum of understanding to jointly produce more than 250,000
vehicles a year, the companies said in a statement Wednesday.
While the exact location has yet to be determined, Fisker Chief
Executive Henrik Fisker said there is a very good chance initial
production will be in the U.S., in part because Foxconn already has
a factory in Wisconsin.
"They've got a factory there and quite a lot of land with quite
a lot of possibility for expansion," he said in an interview. "We
haven't made a final decision on that but that's an obvious
one."
The Foxconn collaboration is for Fisker's second model -- a
higher-volume electric car that the car maker aims to start
building in the fourth quarter of 2023, the companies said. The car
would be built on vehicle underpinnings developed by Foxconn and
would be sold in North America, Europe, China and India, they
added.
For Foxconn, the Fisker deal is the latest in a series of
tie-ups with auto makers to jointly develop or build vehicles,
including the then- Fiat Chrysler Automobiles N.V. -- now
Stellantis N.V. -- and China's Zhejiang Geely Holding Group.
In recent years, some electric vehicle startups like Fisker have
been focusing on designing cars while outsourcing vehicle
production, in a challenge to the traditional business model in the
automotive sector, in which established car makers designed and
produced their own vehicles.
The deal with Fisker is the first in which Foxconn will actually
manufacture the vehicles, and its first with a U.S.-based
electric-vehicle company.
The auto industry is confronting a wave of new tech companies
and startups looking to break into the business, an effort being
driven in part by new technologies like electric cars and
autonomous driving that are reshaping the competitive landscape.
Among them is Apple Inc., which has for years worked to develop its
own car and recently held talks with Hyundai Motor Group to
assemble an autonomous vehicle at a Kia Corp. plant in Georgia. The
talks have since broken down, The Wall Street Journal reported.
Foxconn, formally known as Hon Hai Precision Industry Co., has
been looking to diversify beyond its core business of contract
manufacturing for electronics.
It has also made multiple attempts to expand manufacturing in
the U.S. In 2017, Foxconn said it would invest $10 billion to build
a liquid-crystal display factory in Wisconsin to produce
large-screen televisions and other devices, a project that was
praised by President Donald Trump. But since, Foxconn has scaled
back its ambitions to a smaller facility that would make smaller
touch screens, and has been in a dispute with Wisconsin state
officials over the scope of the project.
In October, Wisconsin officials said that Foxconn had failed to
create enough jobs to receive subsidies in 2019. Foxconn said then
that it has achieved employment levels of more than 520 people --
the minimum required for subsidies -- and that it has invested $750
million in Wisconsin, including more than a half a billion dollars
for the factory.
In making a push into automotive, Foxconn recently launched a
new project to offer a customizable kit of base technology that
manufacturers can use for developing electric and self-driving
cars.
The company said earlier this year the initiative, dubbed MIH,
would be led by a co-founder of Chinese electric-car company NIO
Inc.
Fisker is one of several automotive startups that has ridden a
wave of investor enthusiasm for purely electric-vehicle companies
over the past year. It was founded in 2016 by Mr. Fisker, a
well-known designer that formerly worked at BMW and Aston
Martin.
Unlike other upstarts that have or are building their own
plants, Fisker is taking an asset-light approach to developing its
business, leaning on contractors to supply it with everything from
manufacturing to the service and maintenance centers. Executives
say that will help them sidestep the billions of dollars in capital
auto makers traditionally spend on assembly plants.
"The last thing an EV startup should be looking to do is build
its own factory," Mr. Fisker told the Journal last year. "I think
it's a really dumb idea, quite frankly."
Fisker instead focuses on design, software and engineering. For
its debut model, a luxury sport-utility vehicle called the Ocean
set to launch late next year, it is outsourcing the vehicle
manufacturing to auto supplier Magna International Inc.
The company began trading publicly in October after merging with
a special-purpose acquisition company backed by private equity
giant Apollo Global Management Inc. Its stock closed Monday at
$16.29 a share, up 82% since the merger closed.
The company, which has told investors it expects its first
revenues in 2022, is set to update investors on the results of its
first quarter as a publicly traded company after Thursday's
close.
Write to Ben Foldy at Ben.Foldy@wsj.com and Stephanie Yang at
stephanie.yang@wsj.com
(END) Dow Jones Newswires
February 24, 2021 09:16 ET (14:16 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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