Taiwan-based smartphone manufacturing giant Hon Hai Precision Industry Co. (Foxconn) and state-owned oil supplier PTT PLC have signed an agreement to start electric vehicle (EV) manufacturing facility in Thailand.  The agreement, which follows the memorandum of understanding (MoU) signed between the parties for cooperation on EVs in June 2021, will help Foxconn in taking-off its ambition to be an EV manufacturer, says GlobalData, a leading data and analytics company.

The 60:40 joint venture between PTT and Foxconn, respectively, will use the individual EV capabilities of both the parties to manufacture and supply EVs in Thailand and the region. Foxconn will offer expertise in EV manufacturing, software & hardware technology and PTT will offer expertise in batteries & charging infrastructure, its network of partners and existing presence in the Thailand EV business.

Bakar Sadik Agwan, Senior Automotive Analyst at GlobalData, comments: “The production site will bring Foxconn’s EV ambition to reality. Foxconn has been aggressive towards its electrification plans recently. The company aims to start EV manufacturing in the US and Thailand initially and eventually move to the European market.

“Thailand is fairly new in terms of supply and demand with limited manufacturers producing in the country. With conducive policies and heritage in auto manufacturing, Thailand offers much more value to Foxconn compared to other markets. The company also has a manufacturing partnership in China with Byton, but it is reportedly on hold now. While China may be the largest EV market, it faces overcapacity issues due to the EV market being fragmented, which will affect many automakers’ ability to make enough margin.”

Thai government’s ambition to increase EV share in total capacity to 30% by 2030 by incentivizing local production and to be future ‘EV hub’ in the region will fuel-up Foxconn’s vision. Foxconn would have an early mover advantage. Further, PTT’s deep roots in the country will ensure smooth operations for the joint venture.

Foxconn seems to be well on track towards its EV ambition. The Thailand facility would see vehicles rolling out by 2023. An initial production capacity of 50,000 units is indicated, which will be increased three-fold by 2030. While the Thailand plant will officially mark Foxconn as an automaker, it’s US manufacturing plant with Fisker is also on the cards that will potentially start production around same time i.e., 2023.

Agwan concludes: “With deep knowledge of electronics and manufacturing, the company stands strong to carve out a niche in the market. Foxconn’s ambitions challenge the supply chain structure in the automotive industry which relies heavily on the tier-one suppliers. This would eventually ensure shorter lead times for production and a better gross margin for the company in the EV business, compared to low margins it presently has in smartphone manufacturing – which was another driving force for the shift towards EVs.”