China Economic Weekly reporter Lv Jiangtao | Beijing
January 8, 49-year-old Tesla CEO Elon Musk surpassed Bezos to become the world's richest man with $195 billion. Tesla, whose stock price rose 743 percent last year, is undoubtedly the star of the capital chase, and under the money-making effect, all kinds of capital have also gone down to build cars.
The most attention-grabbing of them all is the U.S. tech giant Apple. The media and investors have speculated that the Apple car will be OEM by who? Previously has been responsible for the OEM production of iphone cell phone Foxconn have a chance?
But Foxconn no longer seems to be satisfied with just playing the role of OEM, but is going to build the car itself. Its partner is none other than Byton Motors, which was previously shut down for half a year due to a broken funding chain.
Byton ushered in the "white knight"
January 5, Foxconn Technology Group announced that it signed a strategic cooperation framework agreement with Byton and Nanjing Economic and Technological Development Zone to promote the mass production of Byton's first model, the M-Byte, and to realize the first quarter of 2022 before the first quarter of the year. mass production of M-Byte, the first new energy vehicle of Byton.
Under the agreement, Foxconn will provide manufacturing technology, operation and management experience and industry chain resources to support the mass production and manufacturing of M-Byte, the first model of Byton.
Photo credit: Foxconn Technology Group WeChat public number
However, the signing ceremony did not disclose whether there was any investment involved in the tripartite cooperation and the specific amount of investment. Some media reports said that Foxconn intends to invest $200 million in Byton Motors.
For Byton, which has been mired in public opinion because it burned through 8.4 billion yuan but still hasn't built a mass-produced car, the $200 million, though not much, is undoubtedly a blessing in disguise.
Publicly available information shows that since its inception in 2016, Byton has conducted four rounds of financing, the cumulative amount of financing of about 8.4 billion yuan, investors including FAW Group, Qidian Holdings, Ningde Times, and so on. Which is the only investment in the new car-making enterprises of Ningde era, whether it is the amount of financing or the investors behind the scene, can be said to be luxurious.
Driven by capital, Byton Auto Nanjing plant was successfully completed, team construction is on schedule, the first production model M-Byte was launched in 2019, and the original plan was to officially put into mass production in mid-2020.
However, when the new car-making forces are ushering in the high-glory moments one after another in 2020, Baiteng Auto, which used to have a good hand, has come to the moment of life and death.
In June 2020, then-Byton CEO Dai Lei announced that the company had suspended business operations in mainland China since July 1st. At that time, CCTV named the exposure of Byton Auto, pointing out that it "owes wages, burned through 8.4 billion yuan to build a production car". A few months later, Dai Lei also left Byton.
On December 31, 2020, an internal email from Byton named "Notice of Extension of Work and Production Stoppage in China" was exposed by the media, which said, "It is with great regret that I inform you that after six months of work and production stoppage, all companies in China (excluding Hong Kong) still do not have the conditions for resuming work and production, and it has been decided by the research that, from January 1, 2021 onwards, the company will resume work and production. January 1, 2021, the work stoppage and production suspension period will be extended for 6 months until June 30, 2021."
Whether it's the explosion of unpaid wages or production stoppage, the lack of money has become a weight that Byton can't bear. What Foxconn can provide for Byton this time is not only the money it needs urgently, but will also include manufacturing technology, operation and management experience and industry chain resources.
Foxconn has long had the "ambition" to build cars
In fact, this cooperation can also be seen as a renewal of the relationship between Foxconn and Byton. As early as 2015, Foxconn, Tencent and Harmony Motors in accordance with 3:3:4 funding, *** with the establishment of Henan Harmony Fortune Internet Plus Intelligent Electric Vehicle Partnership (limited partnership). After that, the harmony Futeng fund incubated FMC and love car two new energy automobile project, of which FMC is the predecessor of Byton. But a year later, Foxconn and Tencent withdrew from Harmony Fortum.
And even earlier, Foxconn has never hidden its ambitions in the car-making field.
In 2005, Foxconn bought a 100% stake in Taiwan's Antai Electric, one of the country's four largest automotive wiring harness factories, for 370 million yuan, and formally ventured into the manufacture of battery cables, audio-visual transmission harnesses, reversing radars and intelligent devices and other automotive electronics.
Foxconn took orders from Tesla's supply chain in 2010, becoming the main supplier of the latter's center-control touchscreens, connectors and lithium batteries; and became a supplier of luxury brands such as Mercedes-Benz and BMW in 2013, supplying automotive electronics including in-vehicle entertainment devices and automotive electric machinery.
In 2018 Xiaopeng Auto received 2.2 billion yuan in Series B financing, with Foxconn as one of the investors.
In early 2020, Foxconn also announced that it was preparing to form a joint venture with Fiat Chrysler to develop and manufacture electric vehicles together, as well as operate a connected car business. In October of the same year, Foxconn also launched the MIH modular all-electric platform in a joint venture with Yulon Motors.
Industry insiders believe that all along, although Apple's business accounts for about half of the sales of Foxconn's parent company Hon Hai Precision, Foxconn has gradually seen the ceiling of this business under the influence of factors such as the decline of the global cell phone and electronics business across the board, as well as the rise of Huawei, Xiaomi and other domestic cell phones. Automotive electronics industry will become following home appliances, PC and cell phones after another whole industry chain level of development opportunities, the current automotive electronics has entered a new cycle of technological innovation, automotive electronics penetration rate and the value of a single car will be significantly improved.
Apple car who to OEM?
Apple has also been exposed by the media in the recent car-making program, then, Foxconn will OEM Apple car?
From the reaction of the capital market, the most likely OEM for Apple's car in the future is not Foxconn, but Canada's Magna International. Several foreign media and brokerage analysts have speculated that "there is already at least one large contract manufacturer ready to capitalize on this opportunity, and that manufacturer is Magna from Canada."
Evercore ISI analyst Chris McNally said:
"If Apple really wants to launch a car, then Magna International's subsidiary Magna Steyr (Magna Steyr) Automotive should be the best choice."
Facts show that Magna International is one of the world's largest suppliers of automotive components, generating nearly $40 billion in revenue in 2019 through products such as transmissions, automotive cameras, mirrors and seats. Its contract manufacturing subsidiary Magna Steyr's plant in Graz, Austria, produces niche luxury vehicles, including the Mercedes G-Class 4x4, Jaguar electric I-Pace and BMW Z4 sports car.
These companies often choose to outsource their manufacturing operations rather than build entirely new production lines because of relatively small sales volumes.In 2019, Magna Steyr assembled nearly 160,000 vehicles, more than many automakers produce, and earned $6.7 billion in revenue from doing so.
Magna's shares have nearly tripled since last March. The company's stock has accelerated especially since the revelation of Apple's plans to build a car, and its market capitalization has now risen to about $21 billion or so.
However, there are also brokerage research report analysis pointed out that if Apple eventually become Magna's customers, the company will also be like cooperation with Foxconn, open a hard price, Foxconn's operating profit has shrunk to about 2%, compared to Apple's operating profit of up to 24%. In contrast, Magna even if it really became a foundry of Apple's car, its resulting benefits may not be as high as the market expects.