Foxconn will invest another 1 billion yuan to return to Henan and develop the electric vehicle industry. Let's wait and see.

Don't let Foxconn get away!

For reasons that are well known to all, "Foxconn withdraws from Henan" has become a hot topic on the Internet. In the narratives of many media, Foxconn and Henan are gradually drifting apart and eventually parting ways, which seems to be an irreversible trend.

But in fact, many exaggerated rumors are just like "the actors are not tired, but the audience suffers from back pain". Foxconn has never completely withdrawn from Henan. It is even preparing to make a big news: building cars.

On July 24, Foxconn announced that it would invest 1 billion yuan to build a new headquarters building in Zhengzhou, Henan, including seven management centers. At the same time, Foxconn also transferred some orders previously transferred to the Indian foundry back to Zhengzhou and resumed the "crazy recruitment" mode. The current hourly wage has risen to 25 yuan.

The focus of Foxconn's construction in Zhengzhou this time is the "new business headquarters building". Within Foxconn, there has always been a so-called "3+3" saying. The first "3" refers to the more traditional smart manufacturing, digital economy, and green development, and the second "3" refers to the three emerging fields of electric vehicles, health care, and robotics technology.

Did you see it? Electric cars! This is one of the hottest manufacturing industries at the moment. After investing in Henan for so many years, Foxconn’s image has always been “low-end OEM”. If it can get on the “electric car” line, its overall image will be completely changed.

Zhengzhou originally had no say in China's new energy vehicle industry chain. But now that Zhengzhou has BYD's production base, its status will soon change. If it can attract BYD, it can also attract other new energy manufacturers, such as Foxconn, which has been frantically testing the edge of car manufacturing.

In many people's minds, Foxconn is just a foundry that makes money from the difference in labor costs. But in fact, Foxconn is a world-leading player in the field of precision manufacturing. At least in the field of automobile manufacturing, with its strength, it can definitely make a living.

Foxconn first entered the automotive industry in 2013, when it manufactured various parts for BMW, Tesla, Mercedes-Benz and other automakers, which was somewhat related to the automotive industry. Foxconn boss Terry Gou once said that the Apple car is just an iPhone with four wheels.

The implication is, if I can make Apple, what can’t I make?

Where there are ideas, there are impulses, and where there are impulses, there are actions.

Foxconn has invested in Byton together with Tencent, and is also an early investor in Aiways. It is also a partner of Fiat, Xpeng, and Geely. It has also invested in CATL. It even spent a huge amount of 4.7 billion yuan in 2022 to acquire Lordstown Motors, a famous American new car manufacturer.

More importantly, although Foxconn has no experience in car manufacturing before, it is not a complete "outsider" in the automotive field. It began to build its own MIH pure electric platform in 2020.

According to Foxconn, this platform is a modular and open platform. Partners can build SUVs and sedans based on this platform, and the wheelbase and battery size can also be customized. If a manufacturer wants to build a car but lacks platform R&D capabilities, it can hand over this job to Foxconn.

Foxconn has increased its investment in Henan this time, and is still focusing on electric vehicles. How will it play this time?

There are two main types of players in the automobile market. One is the OEMs with their own brands, such as Volkswagen, Toyota, and BYD, which are more familiar to consumers. The second is parts suppliers such as Volkswagen, Bosch, Huawei, Hesai Technology, and CATL.

The latter is more likely to be the path that Foxconn follows. To become a car manufacturer with its own brand, the cost is too high and the cycle is too long. Foxconn is good at manufacturing everything, but building a brand is a bit tricky for it.

It is unlikely that Foxconn will engage in large-scale conventional auto parts manufacturing as there are too many competitors. Moreover, for OEMs, the risk of hastily switching suppliers is relatively high, so the path left for Foxconn is quite narrow.

But Foxconn may have another way to play the game. It can play to its old strengths and provide OEM services, including for the automotive industry.

There are a number of potential partners in the automotive market who want to build cars, but their own strength is limited, and they do not have enough funds to build a complete vehicle manufacturing plant. At the same time, they do not have strong project management capabilities, or simply cannot keep up with the production capacity, so they are unable to deliver orders and lose customers in vain. It seems that instead of doing it themselves, it is better to hand over the production process to Foxconn, just like Apple mobile phones.

This idea can be said to be the closest to Foxconn’s main business, which is all OEM, but before it was mobile phones and now it is cars, which are essentially the same.

As early as 2020, Foxconn launched its own MIH platform; in 2022, Foxconn also released two new cars, Model B and Model V. These actions are not really to build cars, but to tell the outside world: I can build cars, and you can rest assured to give me orders.

But this OEM model was despised by Musk in 2015.

Tesla was still in its infancy at the time, but Musk directly stated that the complexity of cars is not on the same order of magnitude as mobile phones, and you can't go to a company like Foxconn and say "build me a car."

Foxconn has reinvested in Henan and put its focus on electric vehicles, which may be able to come up with something new. However, from the current perspective, Foxconn's car manufacturing has not yet had a clear development model. According to the agreement signed between Foxconn and the Henan Provincial Government, the first phase will invest 1 billion yuan to build a new business headquarters building, and the subsequent investment amount has not been finalized.

Data from the Henan Provincial Government website shows that during the 13th Five-Year Plan (2016-2020) alone, Foxconn's investment in Henan reached a staggering 300 billion yuan, driving more than 200 industrial chain companies to move into Zhengzhou. In comparison, an investment of 1 billion yuan is really a small deal.

Therefore, no matter how Foxconn enters the automotive market, it is still in the stage of testing and exploring. Let us wait and see what kind of sparks it can create in the booming new energy track in China.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.