Foxconn will set up a joint venture with Nippon Electric to enter the electric vehicle motor market

Foxconn announced on Wednesday that it plans to set up a joint venture with Japan's NJDCY.US in Taiwan by the end of the year. The move is intended to create a stronger supply chain for Foxconn's car-building plans.

Both Foxconn and Nippon Electric said they would conduct feasibility studies and contract negotiations with a view to establishing a joint venture. The joint venture will focus on the development, production and sales of traction motors and related systems, which will help expand power production to new markets while ensuring a stable supply to Foxconn. Other details will be decided in further negotiations.

In March, Foxconn signed a cooperation agreement with Nippon Electric, which will provide Foxconn with an electric powertrain, including a range of components such as motors, gears and transmission shafts that drive the car.

It is reported that Nippon Electric is already one of the major suppliers to the motor industry and has promised to provide drive motors to any ambitious electric car manufacturer, including the new power of electric vehicles in China, Foxconn and Apple.

Nippon Electric has pledged to invest nearly $10 billion over the next five years to capture about 45 per cent of the global market share and is expected to maintain its dominant position in the global electric vehicle motor market by 2030.

First-quarter operating profit jumped 60 per cent to 44.6 billion yen as demand for motors in electric cars (EV) and household appliances rebounded, according to Nippon Electric in April. At the same time, the company expects operating profit to rise 13 per cent this year to 180 billion yen and sales to rise 5 per cent to 1.7 trillion yen. But it is also facing the negative effects of a global shortage of semiconductors and a fierce price war in China's electric car market.

The way for Foxconn to build cars

In addition to working with Nippon Electric, Foxconn has set up a joint venture with Taiwan's Yulong Group, which is also headquartered in Taiwan. Last October, Foxconn launched a modular pure electric platform called MIH, which has been developed with other companies. Foxconn has reached various cooperation agreements with automakers such as Baiteng and Geely.

Foxconn invested 1 billion yuan in Ningde era as early as 2017, led Xiaopeng Motor's 2.2 billion yuan B round financing in 2018, and set up a joint venture with Geely in 2021.

Foxconn said recently that the first electric vehicles based on the company's MIH module platform will be released by the end of this year. Liu Yangwei, chairman of Foxconn, said this year will be an important year for Foxconn's electric car efforts, with two or three models using the open platform of Foxconn's MIH electric vehicle, including an electric bus and two passenger models, unveiled by the fourth quarter.

At the same time, he says, electric vehicles based on the MIH platform will account for 10 per cent of the global electric vehicle market by 2025.