Foxconn’s deal with Byton, its most concrete foray into the auto sector, amplifies the threat to established automakers that technology companies such as iPhone maker Apple and other non-traditional players could use contract assemblers as a shortcut to competing in the vehicle market.
By lowering manufacturing and the associated capital costs as a barrier to entry, contract assemblers could enable technology companies to focus on software and digital connectivity features that will define automotive competition in the coming years.
On Monday, Canadian auto supplier and contract assembler Magna International Inc expanded its alliance with U.S. electric vehicle startup Fisker Inc.
Reuters reported last month that Apple is pushing to design an electric vehicle and batteries, aiming at a possible 2024 launch. Apple declined to comment.
The company last year announced plans to set up a joint venture with Fiat Chrysler to build electric cars and develop internet-connected vehicles in China. It has not made major announcement on the partnership since then.
Foxconn said in October it aimed to provide components or services to 10% of the world’s EVs by between 2025 and 2027.
Byton, which is backed by state-owned automaker FAW Group and battery supplier Contemporary Amperex Technology Co Ltd , was building a car factory in the eastern city of Nanjing before it suspended production from July to conduct a reorganisation of the firm.
Byton was launched in September 2017 by Future Mobility Corp, a company co-founded by former BMW and Nissan Motor executives, and also has software and design facilities in the United States and Germany.
Bloomberg reported earlier on Monday that Foxconn’s listed company Hon Hai Precision Industry Co plans to invest $200 million in Byton, citing an unidentified person familiar with the matter. Byton declined to comment on the investment.