Behind Foxconn's EV Progress: A breakdown with an investor banker's analysis

In an article first published in the Business Weekly, and through a media collaboration, republished in the Economic Daily News, an investor banker industry analyst attempted to break down why Taiwan tech giant Foxconn's Foxtron Vehicles business model will prove advantageous in the long run.

On October 18, Foxconn Founder Terry Guo arrived at the product launch event behind the wheel of Foxtron Vehicle's newly released Model E, the EV company co-invested by Foxconn and Yulon Motor.

As an electronics OEM and smartphone manufacturer, Foxconn's cross-industry collaboration with Yulon Motor was the biggest factor in enabling the conglomerate to build an EV within a year. As Taiwan's domestic auto brand, Yulon Motor spent years investing, designing, and manufacturing Luxgen, and built up the know-how and talent pool to eventually attract Foxconn into investing in the company and founding Foxtron Vehicles together.

Foxtron's business model is unlike the path Foxconn embraced in the past: the vehicles were designed by an Italian automotive expert. While this doesn't fully elevate the company's role to an "automaker," or does it mean Foxtron continues to carry on Foxconn's tradition as just an OEM provider. Foxtron's clients would be able to use the vehicles as a prototype platform to adjust specific details, add their brand, and sell it to their customers. Foxtron's model is similar to the barebone computer business model that Foxconn rode on to success 25 years ago.

Taiwanese suppliers are traditionally specialized in designing and manufacturing a single component; Foxconn originally started out by manufacturing a single terminal as well. However, Business Weekly's article argues that Foxconn is different due to being able to assemble a portion, ranging from 20% to 50% or the entirety of the product, yet also using parts that are not manufactured by themselves. Similar to Foxconn's core services, its EV open platform MIH and Foxtron are posed to become resource aggregators in the industry.

Foxconn Chairman Young Liu told Business Weekly that Taiwan's industries should have the capability to provide OEM and direct more efforts to develop system solutions and create more added value to their products. He pointed out that producing "smart" products will become the turning point for companies to find success in the new era. With Taiwan's advantages in hardware, semiconductor, and software, integrating these technologies with designing an EV will bolster the domestic suppliers' competitiveness.

Liu named their three advantages that paved the way for rolling out EVs within a year: integration of core technologies and resources, building an ecosystem, and embarking on a worldwide strategic alliance through MIH.