Foxconn, the world’s biggest electronics contract manufacturer, is accelerating its push into the increasingly popular field of high-tech automobiles, with plans to team up with Stellantis on in-car software.
The two companies announced on May 18 that they are creating a 50-50 joint venture. Dubbed Mobile Drive, the joint venture will work on “digital cockpits” and personalized services for car dashboards, the companies said in a statement. Specifically, it will develop infotainment, telematics and cloud-related technology for cars.
Mobile Drive would pair the vehicle design expertise of Stellantis with Foxconn’s role in the “rapidly changing” software and hardware of consumer electronics, such as smartphones, the statement says.
The deal with Stellantis, the company formed in January from the merger of Fiat Chrysler Automobiles and PSA Group, shows Foxconn’s resolve to expand in the fast-emerging automotive tech space.
In February, Foxconn, led by Taiwanese billionaire Terry Gou, signed a memorandum of understanding with Los Angeles-based electric vehicle startup Fisker Inc. to develop and sell a new series of electric vehicles. Foxconn also has agreements with China’s Geely and Byton, among others.
The Taiwanese company, which makes gadgets for Apple and many others, has the manufacturing capacity, research prowess and market savvy to pursue high-tech cars, analysts say.
“I think Foxconn is mainly a contract assembler, but has its own research capacity due to the size of the company,” says Liang Kuo-yuan, president of the Taipei-based economic think tank Polaris Research Institute. “They’ve definitely seen the opportunity out there. The whole atmosphere out there in automotive is green, so they can go in that direction.”
The global connected car market, valued at $63 billion in 2017, is likely to reach $225.2 billion by 2025, Allied Market Research forecasts.
Young Liu, the chairman of Foxconn, called the tie-up with Stellantis “a natural extension of Foxconn’s global leadership in the development and application of smart technologies,” in the announcement.
Foxconn’s experience producing a range of consumer electronics can potentially help it in automotive, says Sam Abuelsamid, principal research analyst based in Michigan at Guidehouse Insights. Yet unlike iPhones and iPads, cars “must be designed to survive much harsher environments” such as humidity, vibration and temperature extremes, he adds.
“Automotive is a substantial revenue opportunity for Foxconn, especially as the market continues to evolve toward software-defined and electrified vehicles,” Abuelsamid says. “I have little doubt Foxconn can produce electronics that meet the durability requirements of automotive, but they will have to avoid shortcuts and do it right.”