There was a rather noteworthy development that our Automobile and consumer electronics industry readers should take note of.
Reuters reported this week that Chinese based automaker Geely Holding Group and Taiwan based consumer electronics contract manufacturing services provider Foxconn Group, formally known as Hon Hai Precision Industry, have announced a strategic partnership to build automobiles for various branded automakers.
In a joint statement each of the partners reportedly indicate that they will have half ownership interest and provide expertise services related to electric automobile volume manufacturing.
Reuters indicates that this is the second such deal for Geely, the other being with China based search engine technology provider Baidu. The report surmises from informed forces, not authorized to speak, that the automaker’s goal is to further optimize available manufacturing capacity.
Supply Chain Matters Perspective
The association of Foxconn as the go-to strategic contract manufacturing services provider to consumer electronics provider Apple, will obviously fuel more substance to earlier reports and speculation that the consumer electronics icon indeed has more active plans to launch its own branded electric vehicle.
The other connotation to this development is more added endorsement that the supply and manufacturing networks of both consumer electronics and automotive design are coming together. Clear evidence of that reality is provided with the current shortages of semiconductor based sub-systems impacting planned global automotive manufacturing plans.
The opportunity here is establishing first mover advantage and expertise in electric vehicle contract manufacturing services.
The other risk, as again noted in our 2021 Predictions for Industry and Global Supply Chains is one of the increased threat of the decoupling of high tech and consumer electronics supply networks. With increased trade and political tensions among the U.S. and China, automakers will have to consider the political dimensions for sourcing electric vehicle technology components and manufacturing capacity in various regions.
Our belief is that if Apple is indeed serious about marketing its own branded electric automobile, navigating the political waters will be far more challenging than the company’s current dependency on China based contract manufacturing.
© Copyright 2021, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.