Editing   by Xin Lanhua

China’s listed leading electronics manufacturer Luxshare Precision (立讯精密)   signed a strategic cooperation framework agreement with Chinese automobile maker Chery Group to go into a joint venture producing new energy vehicles with an investment of RMB10 billion ($1.58 billion), it announced recently.

Meanwhile,   Hon Hai Technology Group (Foxconn) also established its electric vehicle business and built a new energy vehicle alliance MIH covering the upstream and downstream industry chain.

Both   Luxshare and Hon Hai are manufacturing service providers for Apple and they are looking for growth space in the new energy vehicle market to find the next opportunity apart from consumer electronics. Their moves from different perspectives may point to the feasibility of an automobile ODM model.

Other companies in Apple’s supply chain and even electronic components companies such as Lens Technology and Goertek are also looking for new profitable fields that may follow suit, according to industry observers.

Statistics from IDC show that the global mobile phone market shipments in 2021 declined compared with that in 2019, but the sales of new energy vehicles rose steadily. This forces  Apple-listed companies to find new opportunities.

Luxshare became an Apple supplier in 2011 and is now the top AirPods producer. Among its top five customers, Apple accounted for nearly 70% of sales in 2020, showing high dependence on Apple.

Luxshare deployed in the automotive industry earlier. Its automotive business is focused on automotive electronics and intelligent networking. It told its investors on February 13 that Smart EV represents an unprecedented opportunity for China and will attract new players to come in. With its strength,   it has a goal to become a global Tier 1 leader in auto parts.  

Luxshare’s choice to work with Chery has been based on the latter’s rapid progress in EV   R&D in recent years. Chery has followed the model of Toyota’s R&D   quality system and Tesla’s disruptive innovation – referred to often now as double T, and achieved fast growth last year. Its ODM business will be put into production in 12 to 18 months. I

In October 2021, Hon Hai officially released Model C, Model E, and Model T at its Technology Day event. All of these EVS are based on the independent platform Foxtron, a joint venture by Foxconn and Yulon Group in October 2021

Hon   Hai’s MIH (Mobility in Harmony) Open Electric Vehicle Alliance, an open EV   ecosystem that promotes collaboration in the mobility industry, has 2,249   members, covering 61 countries and regions. In his new year’s greeting speech, Jack Cheng, CEO of MIH, said that MIH had launched several Working Groups: the 1^st is Powertrain and Energy   Management, to cooperate with partners in the industry, government, and academia. 2^nd  Security   & OTA; 3rd autonomous driving and advanced driver-assistance systems   (ADAS). At CES in Las Vegas this year, MIH cooperated with Japan’s Autoware and Tier IV to participate jointly.

Hon   Hai’s first electric bus, the Model T, will be officially delivered in March at the earliest. The first customer is Taiwan’s Kaohsiung Bus, which purchased   30-50 units, according to a Taiwanese media report.

Wang   Rongjin, a partner at Jinbang Capital, told JW Insights that the automobile market is far bigger than that of mobile phones, making it the next incremental space for many players.

He said that the automotive industry has a high threshold and strict standards. It takes deep understanding and more professional talents, customers’   recognition to get into the field.

There will emerge an automobile industry ODM model and form a new industry sector.  The automobile EMS are suggested to concentrate on individual product requirements, software and hardware decoupling, and functional applications, Wang pointed out.