Compiled by/Yong Yan
Foxconn, a "simple" enterprise, usually doesn't care much about style and product appearance. Even their investor conference is held in a monotonous concrete brick building in the suburb of Taipei, China Apple The headquarters of the main agents.
But in March this year, the world's largest contract electronics manufacturer staged a real performance: in a historic building, they arranged a unique activity space and received 500 managers.
However, the most central part of the booth is not the latest model of smart phone, but a prototype of the car chassis made of steel and rubber, which looks particularly shiny in the light. It is the protagonist of the first MIH member meeting. MIH is an industry alliance established by Foxconn, which provides a complete software and hardware platform for manufacturing electric vehicles. This activity is actually a gesture of Foxconn: the enterprises that have been producing smart phones for you in the past ten years are now preparing to produce cars for you.
Entering the field of electric vehicles
The emergence and popularity of electric vehicles are subverting the internal structure of vehicles and their internal working methods. In this process, electric vehicles are converging between the two largest industries in the world (automobile industry and electronics industry) to form a new industry with larger scale.
Liu Yangwei, chairman of Foxconn, said that the integration between the automotive industry and the electronics industry has brought obvious advantages to the company in terms of shortening the product cycle and overall speed. He believes that the "just in time" business model and the way of managing suppliers adopted by automobile manufacturers are outdated and must be changed. "We hope to bring this change to the automotive industry," he said
Liu Yangwei, Chairman of Foxconn In just a few months, Foxconn has gathered more than 1200 enterprise members for MIH, including software giants such as Arm and auto suppliers such as Konzelmann, a German plastic parts manufacturer. They have also established joint ventures with some automobile manufacturers.
On May 18, Foxconn and Stellantis, the world's fourth largest automobile manufacturer (a group formed by the merger of PSA and FCA), formally signed a memorandum of understanding to jointly establish a new joint venture called "Mobile Drive" with the voting power of 50:50. In addition, Foxconn has also signed a cooperation agreement with the Chinese electric vehicle company Baiteng, and signed an agreement to produce vehicles for the American electric vehicle enterprise Fisker from the end of 2023.
It is also a good thing for Apple that the largest agent of Apple will enter the electric vehicle manufacturing industry, because the latter also intends to enter the automobile market. In recent years, there have been rumors that Apple will launch its own electric vehicle, and it is reported that its internal Project Titan plan is just its car building project.
Before that, Foxconn had hardly disclosed where they planned to produce electric vehicles. Foxconn and Fisker have said that they will start producing cars in the United States, but the specific production location is still under consideration. At present, the two sides have multiple possible production locations in the United States, including Foxconn's larger factory in Wisconsin. In addition, the company may readjust some of its manufacturing plants in China.
At present, many electronic enterprises are competing to enter the manufacturing industry, hoping to play their role in the automobile manufacturing industry, and Foxconn is leading this trend. Asustek, another Taiwan based company that started manufacturing Apple phones, is now working on Tesla Assemble parts of electric vehicles. Delta Electronics is a Taiwanese manufacturer of various power electronic components. The company is producing charging modules and power systems for electric vehicles, that is, transforming the power of motors into moving parts of vehicles.
These electronic enterprises are marching into the automobile supply chain, which indicates that a turning point is coming in the industrial history: the two major industries in the world, namely, the automobile industry and e-commerce, are moving towards integration, and then these two industries will usher in unimaginable huge changes.
Up to now, several countries have set relevant dates before which they will phase out gasoline and diesel vehicles. In other words, the rise of electric vehicles is inevitable. Although electric vehicles are not very different from traditional internal combustion engine vehicles in terms of appearance and functions provided by consumers, they are very different from each other internally. Therefore, the traditional automobile manufacturers now face a severe choice: either quickly acquire new capabilities in electrical engineering and software, or exit the automobile manufacturing industry. At the same time, electronic companies hoping to enter the automotive supply chain also need to master new mechanical capabilities and completely different safety concepts.
The traditional vehicle manufacturing method requires cooperation between suppliers from the initial stage of development to the integration of auto parts. Once upon a time, cars were mainly hardware products, and the most important part was the engine. In this case, this way of making cars was really feasible.
Bosch Auto Parts Factory in Serbia However, Zhou Lei, a partner of Deloitte Consulting in Tokyo, said that when the manufacturing industry changes to electric vehicles and autonomous vehicles, there will be a huge problem in the traditional way of manufacturing cars: the cost is too high, and it will take too long, so it is difficult to work efficiently. The consulting company said that if today's internal combustion engines are mainly composed of hardware, then software and content, such as in car entertainment and connectivity services, are expected to become the most important part of future electric vehicles.
Zhou Lei said: "The new challenge facing traditional automobile manufacturers is that they need to learn how to use these suppliers from new industries. Only those suppliers with cost competitiveness can be selected." He pointed out that currently Tesla's supply chain has begun to rely heavily on enterprises from multiple industries.
Opportunities brought by chip shortage
In fact, this offensive of electronic enterprises is not the first time that suppliers have tried to seize more manufacturing business from automobile manufacturers. Magna, a Canadian auto parts manufacturer, has been providing automobile contract manufacturing services for more than ten years. Its production includes chassis as well as vehicle business. Used to be affiliated with American automobile suppliers Delphi Ambofu announced last year that it is developing an intelligent car architecture, which can be used to build intelligent cars.
However, electronic companies entering the automotive supply chain see opportunities for greater change. Liu Yangwei, chairman of Foxconn, believed that the automobile manufacturers failed to control the sharp fluctuations in demand during the pandemic, which led to the current shortage of automobile chips, which proved that the traditional supply chain model was unable to meet the requirements of the electric vehicle era.
Liu Yangwei compared Foxconn with traditional auto suppliers and said, "Compared with Magna, speed is our main competitive advantage. Magna has been operating in this industry for many years, but they operate in a traditional way. They have a traditional supply chain model. Therefore, we also have our own advantage, that is, we do not have the legacy model. "
Liu Yangwei hopes that the lessons from the chip shortage can persuade automobile manufacturers to start cooperation with Foxconn, because the latter has the experience of managing the entire vertically integrated supply chain, rather than insisting that everything should be achieved through traditional automobile suppliers.
Steve Taylor, head of business development of the International Federation of Automotive Engineers (FISITA), said: "MIH may become an important bridge between the scientific and technological community and the automotive manufacturing industry." He described the automotive industry as "an industry dominated by mechanical engineers who spend a lot of time on physical collision and stress testing of prototype vehicles" 。
The readjustment and integration of the two industries will bring great changes to the automobile industry. According to the data of the International Labour Organization, the industry valuation of the electronics industry last year was about $22 trillion, and the number of workers in this industry reached 18 million.
According to S&P Global Market Intelligence, the combined revenue of automobile manufacturers in 2019 also reached $22 trillion. In addition, according to the data of the United Nations Industrial Development Organization, the number of workers employed in the automobile manufacturing industry is close to 14 million.
But there is a huge difference between the two industries. Historically, the automotive industry has always been driven by mechanical capabilities. Its production cycle can be as long as several years, and its products can be highly customized to meet the needs of different types of consumers, such as ordinary families, racing enthusiasts, etc. In contrast, a large part of the electronics industry, such as the consumer sector where Foxconn is located, is becoming more and more commoditized, and the product cycle is extremely short, with new models appearing every few months.
In addition to the high safety and reliability standards, Japanese automobile manufacturers have long believed that the art of manufacturing automobiles cannot be easily copied by new latecomers, because it involves a complex process, that is, precise adjustment of each of the 30000 components inside the automobile, so that it can work together seamlessly. High precision manufacturing, known as suriawase or adjustment technology, distinguishes cars from smartphones and laptops, which can be assembled in the same way by assembling a large number of parts.
The importance of software highlights when the era of automatic driving comes
Industry experts said that two new trends will change the automobile manufacturing industry: first, the different forms and structures of electric vehicles, which simplify the design of automobiles. Secondly, the number of computing tasks to be performed by automobiles is increasing, which requires automobile manufacturers to integrate functions that are traditionally scattered among different suppliers.
Michael Schallehn, partner of Silicon Valley Office of Bain Corporation, a consulting firm, said: "The most important part in the electric vehicle is the battery. It has a large size and weight, so it needs to be placed at the bottom of the body, so as to stabilize the body and improve the driving experience. In addition, the motor size of electric vehicles is very small, and they are closer to the position of the wheels. Therefore, you can put the power transmission system (that is, the parts that drive the wheels to rotate) and chassis at a very low position in the car, and then leave the rest of the space for the passengers in the car. "
Foxconn automobile chassis prototype made of steel and rubber This structure gives birth to a structure similar to a skateboard, which has developed rapidly in recent years. This standard flat bottom structure contains all key components, which can also be easily modified by automobile manufacturers for use in different models. "If you push this trend forward quickly, it will make the current automobile supply chain much simpler and many complex things will disappear," said Shalian
He also pointed out that in recent years, the on-board computer has also achieved rapid development. Previously, it only included the in car infotainment system and instrument panel, but now it has covered every function in the car, which also makes the supply chain integration more urgent. After entering the era of automatic driving, vehicles will rely on software systems for continuous updates, and the simplicity of the supply chain will play an important role. Shalian believes that this situation may make all software development work in the hands of a single manufacturer, rather than decentralized suppliers.
Both auto manufacturers and top parts suppliers such as Bosch, Continental or GKN have been keenly aware of this challenge.
As early as 2015, Continental It acquired the automobile business of Elektrobit Corporation, a Finnish software company, at a price of 600 million euros, and later acquired Argus, an Israeli network security company, at a price of 430 million dollars in transactions in 2017. These acquisitions helped the mainland strengthen its software development capabilities and added hundreds of engineers.
Arnold Antritz, CFO of Volkswagen Arno Antlitz, VW's chief financial officer, said that the company would increasingly develop its own software. As part of its $30 billion investment plan, they would introduce more technology into the company.
He added: "We are also studying if we can get more knowledge about integrated software and chip design. After entering the era of electric vehicles, this knowledge becomes more important. The number of chips used in vehicles will be reduced, but its computing power will become more powerful."
Transformation needs to break through the security barrier
While automobile manufacturers and their traditional suppliers are competing to acquire electronic technology development capabilities, electronic groups entering the automotive industry supply chain are also trying to solve technical problems that are not traditionally part of the electronic industry.
Analysts and executives said that the biggest obstacle for electronic enterprises to enter the automotive market is the more stringent safety standards formed in the automotive industry. Hai Yingjun, the director of Delta Electronics, said: "For a home computer, system crash is acceptable, and you can restart the system. For a car, system crash is absolutely impossible."
Hai Yingjun, Director of Delta Electronics The metal shell wrapped around the electric motor of the vehicle is very important for the safety of the vehicle. Hai Yingjun said: "The motor rotates at a very fast speed. It can rotate about 100000 times per minute, so its temperature is very high. The oil inside the housing is responsible for cooling it. The housing needs to be very solid, and there should be no leakage. The difficulty is that because the car is always moving, it is not like a computer. Therefore, a screw may become loose, or a crack may appear at the edge. Even worse, because of these problems, the car may catch fire. "
The enclosure of Delta motor is manufactured by an external supplier. Hai Yingjun said that the company also hopes to complete this work by itself, possibly by acquiring other suppliers or other companies with strong machinery manufacturing capabilities. He said: "We are good at producing power parts, but in electric vehicles, there are many mechanical parts, and we are not good at this."
Delta is also trying to combine its individual components, such as power converters and motors, into an integrated power and control unit. The company's goal is not to sell its products to other suppliers, but directly to the automobile manufacturers themselves. If this goal can be successfully achieved, Delta's position will be promoted, making it the same supplier as the mainland or Bosch.
A larger transformation is taking place, and the eventual disappearance of the internal combustion engine means that automobile manufacturers will lose the design and engineering experience accumulated in the past decades. Since most other parts of traditional automobile manufacturing have been outsourced to suppliers, some industry experts believe that in the future, automobile manufacturers will become enterprises responsible for brand management and customer service.
Some other car companies have chosen to launch their own electric vehicle architecture, such as Volkswagen and Volvo. The purpose of these traditional car companies is to resist attacks from enterprises in the industry caused by new technologies such as Foxconn. Other car enterprises, such as GM and Honda, have chosen to share the electric vehicle platform, thus minimizing the cost of platform opening.
Experts believe that all transformation will continue for a long time in the future, while Foxconn and other companies just entering the automotive industry will need to invest a lot of money and make long-term efforts.
"One thing we need to remember is that the production of automobiles requires a huge scale of manufacturing. Today, a large automobile manufacturer can produce hundreds of thousands of cars every year. On the whole, the global annual output of automobiles is between 90 million and 100 million. You need many factories to reach this number."
He also added: "The transportation of cars is also a matter of high cost, and you can't easily transfer production like smart phones or semiconductors, so you need to set up many factories around the world. In addition, automobile products also need to pay a large amount of tariffs. It is a very, very difficult thing just to enter this market and gain meaningful production share, and it will take some time for enterprises to realize it. "
