China wants to dominate the electric car industry

China wants to dominate the electric car industry

Rumors of a possible electric car made by Apple have long been a source of excitement from investors and iPhone enthusiasts. While nearly a decade after the details on the project were released, the company's car hasn't materialized yet, that hasn't stopped other consumer electronics companies from pursuing their plans. On the other side of the world, it will soon be possible to order a vehicle from the Taiwanese company that makes Apple's devices in China.

In October 2021, Hon Hai Technology Group, better known internationally as Foxconn, announced plans to produce three electric vehicles under the Foxtron name, in collaboration with Taiwanese carmaker Yulon. Foxconn, best known for being the company that assembles 70 percent of iPhones, has ambitious plans in the automotive industry: to become the go-to manufacturer for an entirely new type of car. To date, the company has signed car manufacturing deals for two US electric vehicle startups, Lordstown Motors and Fisker.

Despite not having the appeal of Apple's products, Foxconn's vehicles - an SUV, a sedan and a bus - represent a significant leap for the company. Foxconn's ambitious expansion plan also reflects a broader shift in the automotive world, both technologically and geographically. Over the past hundred years, the United States, Europe and Japan have defined the concept of the automobile. Now, however, in the face of the evolution of cars - with the increase in electrification, computerization and the autonomy of vehicles - it could be China that will increasingly determine what the production of cars will become.

Chinese ambitions If Foxconn succeeded in establishing itself in the auto manufacturing sector, it would help make China an automotive epicenter capable of eclipsing the traditional powers of the United States, Germany, Japan and South Korea. Foxconn did not respond to interview requests from US.

WiredLeaks, how to send us an anonymous report Predictions indicate that the automotive industry will undergo major transformations in the coming years. A McKinsey report from October 2020 concluded that automakers will find new ways to sell vehicles and generate revenue through subscription applications and services. In some ways, the car of the future looks a lot like a smartphone on wheels.

This is one of the reasons why this is the best time for an electronics company to try their hand at automobile manufacturing , explains Marc Sachon, professor at the Iese Business School in Barcelona, ​​who studies the automotive industry. The propulsion system of electric vehicles is simpler than internal combustion cars, due to the smaller number of components and assembly steps. The electric vehicle supply chain is easier to manage than the conventional one. China, adds Sachon, has a solid supply chain in the electric car sector, from batteries to software to the production of components.

China is in a particularly favorable position to lead the race towards the 'electrification. The country already has some of the most advanced battery manufacturers in the world, such as BYD (which also manufactures cars) and Catl. Automakers in the region could have an advantage in understanding and using new technologies in the battery industry simply by virtue of their proximity to companies, similar to how software companies benefit from proximity to companies that design chips. .

China is already a global center for electric vehicle manufacturing. Chinese companies that make electric cars - including BYD, Nio and Xpeng - are increasingly questioning Tesla's leadership in the market. One of the most popular cars in the country is the Wuling Hongguang Mini Ev, a two-seater car that costs just under 5,000 euros. Electric vehicle sales in China have been supported by government subsidies and surpass those of any other nation: according to data from the China Passenger Car Association, an industry organization, they accounted for 14.8 percent of sales last year. total number of cars in the country, an increase of 169 percent compared to 2020. In 2021, electric vehicles accounted for 4.1 percent of auto sales in the United States and around 10 percent in the European Union (EU).

Electronics companies' big breakthrough Companies of consumer electronics consider the automotive sector more and more as their territory, due to the growing computerization and connectivity of modern cars. In contrast, traditional car manufacturers, which have built their fortunes on vehicles that change shortly after purchase, have not been able to adapt quickly to the new possibilities offered by software and connectivity.

Many companies recognize the challenge to the status quo a great opportunity. Alongside the possible project to build its own car, Apple is developing increasingly advanced automotive infotainment software. Alphabet - the company that controls Google - has invested millions of euros to develop software for self-driving cars through its subsidiary Waymo. Some large technology companies are already planning their own vehicles: in March Sony announced its intention to build electric cars in collaboration with Honda.

But if interest is growing elsewhere, in China it is already exploded . Huawei, Tencent, Alibaba and other companies have entered into agreements with car manufacturers to develop software and services. Chinese smartphone maker Xiaomi announced last October that it plans to build four different electric vehicles, and rival Oppo has similar ambitions, according to some reconstructions. Earlier this month, Jidu, a company created by automaker Geely and the company that operates the Chinese search engine Baidu, unveiled its first vehicle, the Robo-1. At the push of the Chinese government, Baidu has invested heavily in the artificial intelligence necessary for autonomous driving, another reason that leads the company to consider itself a nascent car manufacturer.

The implications for the EU and the US "The combination of electric vehicles and autonomous driving creates opportunities for companies like Foxconn, Xiaomi and so on, "explains Gregor Sebastian, an analyst at the Mercator Institute for China Studies, a think tank that deals with relations between China and Europe.

A study by Sebastian and colleagues published in May concludes that the switch to electric vehicles could have profound implications for trade between the EU and China in the coming years, and transform Europe from a net exporter to a net importer of vehicles. In China, most of Tesla's electric cars are for export, but domestic manufacturers are catching up. Nio, which is headquartered in Shanghai, is said to be looking to build manufacturing plants in the United States and Europe; Foxconn said it plans to produce automobiles at a large Ohio plant that was formerly operated by General Motors. overcoming some difficulties not just.

Foxconn's skills fall above all in the field of assembling complex devices using the human workforce, not without heavy consequences. This is a very different business from car manufacturing, which is largely automated work. Foxconn has already faced difficulties in introducing a larger share of robots into its production lines in the past. While electric vehicles are easier to produce than conventional ones - thanks to fewer parts to assemble - making enough cars to an adequate standard is notoriously difficult, with minimal profit margins for most companies. car manufacturers.

Mike Juran, chief executive of Altia, a company that makes software for developing graphical interfaces for cars and other products, points out that cars are profoundly different from smaller devices, which do not have to transporting human beings at high speed. As an example, Juran points to the complexity of the touchscreen interfaces of some new vehicles: "These are not smartphones on wheels - he explains -, but cars equipped with a technology that should be adequate for the task to be performed, which is, in fact, a a matter of life or death ".

See more Subscribe to Gadgetland and other Wired newsletters! Arrow Foxconn's automotive projects do not appear to have supported the company's share price, which has fallen nearly 20 percent over the past year, in line with the rest of Taiwan's stock market. The company may see automobile manufacturing as a way to broaden the range of products it produces and increase its profit margins, but the project will require significant investments in new manufacturing capabilities and could take years to complete. Foxconn president Young Li said the company intends to build a battery supply chain in Kaohsiung, China. Although China's auto industry is the largest in the world, sales of new vehicles dropped 11 percent in April 2022, according to the China Passenger Car Association, and few Chinese companies have achieved overseas success. br>
Furthermore, it is not certain that the number of companies willing to outsource the production of cars is as high as in the smartphone sector. Indeed, Sebastian points out that the shortage of chips and raw materials has prompted auto makers to try to acquire a larger share of the supply chain. Concerns over data privacy and market access may also complicate Chinese companies' attempts to export vehicles and build and sell cars in the EU and the US, adds Sebastian.

However, if Foxconn will make the leap and China will prove to be a growing powerhouse of the auto industry, incumbents from other countries better watch their backs. Sachon foresees a future in which Foxconn will produce millions of low-cost standardized cars, which will then be differentiated through software, a bit like the low-end models in the smartphone boom. And if Apple eventually decides to put a car on the market, Foxconn could be in the ideal position to produce it: "If Foxconn were to make it, for OEMs [original equipment manufacturers, manufacturers who make components that will then be used by others. established companies will be extremely difficult to compete on price level, "explains Sachon.

This article originally appeared on US.

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