When you think of electric vehicles or evs, Tesla is probably the first name that pops into your head, and maybe Rivian or even Forward with its F one fifty lightning electric pickup truck that's been sold out everywhere. One name that's likely not on that list Fox Khn, the Taiwan based tech giant, is best known as the company that manufactures iPhones for Apple, along with dozens of popular
electronic devices for other companies. Bloomberg's Read Stevenson reports that now Fox Cohn wants to do the same thing for EV's. The company is betting that many automakers won't want to deal with the complexity and expense of developing their own EV production lines. Instead, they'll hire Foxkhnn to build the cars for them. The company bought a sprawling former General Motors plant in Ohio, and it's refitting it to manufacture electric vehicles.
Fox Con has the flexibility to say, look, we'll take your business whichever percentage of the car you need us to handle, and the proposition that they can do it faster and cheaper.
I'm west Kasova today on the Big Take fox CON's leap from your pocket to your parking spot. Read We talk a lot about how electric cars are their future, and every manufacturer wants to get in on it, just like Tesla, but they're having a hard time. Why has it been so difficult for legacy auto makers to switch out combustion engines for electric ones.
Combustion engines are the product of one hundred plus years of technology, they're existing custom there's a lot of investment that you know, went into hybrids, and to ditch all of that. It's the classic innovator's dilemma, Right, do you kill your current customer base in order to transition to an entirely new set of customers. The economics are different, and so what you're finding with Ford and GM and Stilantis, you know, the transition is very tricky. It's going to
take longer than most people think. It's going to involve a lot of pain, and so what you're saying this year, for example, is it's just going to happen in fits and starts. So Ford loses money on every F one fifty lightning electric pickup that they make. The company as a whole, it's ev unit is on track to lose four and a half billion dollars this year. That sort of leads you to the notion that starting from zero is the way to go. You can kind of look
at Tesla as really an anomaly. You know, they kind of pulled off the impossible, which is going from a startup into a fairly largely scaled manufacturer that's purely focused on EVS. Obviously byd in China and Neo in China and other companies have also gone well along this path. And so when you look at it from both ends, from the startup end and then from the sort of legacy carmaker, and coming from either end of those spectrums is just proving to be absolutely a nightmare for some.
So every auto manufacturer wants to get into EVS because it's the future and yet really expensive to make, especially at scale. And into this picture you write, comes Fox Khan, the giant Taiwanese manufacturer. Can you remind us just what Fox Cohn is?
So Foxcom makes two out of every three iPhone, They make the Nintendo switch, ring doorbells, Sony PlayStation, Google Pixel. There's actually a pretty good chance that you're listening to this podcast on a device that was built in one of fox CON's factories, and it's made its business essentially as a manufacturer for other name brands. It's not a
brand unto itself. Instead, what it does it leverages massive scale and access to labor in China in order to build devices for essentially almost any major electronics manufacturer that
you can think of. In fact, they're the world's third largest private employer after Amazon and Walmart, with one point two million employees spread across the world, and even within one factory in Shensan, China, they have hundreds of thousands of people working in dozens of factories with restaurants, a bank of fire station, power plant, hospital, all within a single facility that they use to make the iPhone and all these other gadgets.
And read with this kind of capability to build all kinds of products, you write that a lot of these big name brand manufacturers years ago said it's just not worth trying to manufacture this stuff ourselves. We'll just give it to Fox kind to do it for us for.
All these gadgets. You know, initially many of these brands started to make them themselves close to home or in the United States or elsewhere, and then realize that outsourcing it made far more business sense. And so essentially this is the argument that Foxcom wants to bring to the EV industry that when you look at how these startups are struggling, how these legacy carmakers are struggling, their proposition is, look,
we'll build the EV for you. You can keep the brand name, you can keep all the flourishes that you would put onto it. But we can pull resources, we can access labor, we can build deep and wide supply chain in order to make the economics of building and selling EV's work for essentially any customer. A customer can go to fox Conn and say, you know what, you build ninety percent of the car, and we'll build ten percent of it the badge and the colors and maybe the interior design.
Or they may say, you know what, we can build sixty percent of the car, and we need fox Con to build specific parts, maybe the suspension, maybe the powertrain, and fox Con has the flexibility to say, look, we'll take your business whichever sort of percentage of the car you need us to handle. And the proposition that they can do it faster and cheaper.
And read one of the things you write is the reason why fox Kin is able to do this is they not only manufacture things but they have access to every kind of part you would need for a product all around.
The world exactly. So the other way to think of fox con is that it's also a supplier and not just an assembler. And so whether it's developing technology on its own, it's designing its own chips, it's designing components,
it can build it. It can also go find it, and when you look at commonality across devices, it can start to take advantage of scale, so that motors or certain components might be found in multiple different vehicles just because they have access to it, and they can offer it to those name brands much cheaper.
So you could see why a struggling automaker looking to get into the EV market or even a startup would find this as an alternative to trying to do all this stuff themselves. But what's in it for fox hhon? Why would they want to take on this really big puzzle which is completely different from what they're doing right now.
So for fox Cohn, what you're seeing is that their core business smartphones and electronics and gadgets, we're reaching a certain saturation point. Foxconne has gone out and tried to find ever bigger markets to break into and Eves was one of them. You know, with the disruption and the transition to electric vehicles, they see an opportunity to kind of wedge themselves in there.
And it is the idea that because fox Hn is so huge, they need to take on big markets in order to even make a blip in their earnings.
Exactly, they had two hundred and twenty two billion dollars in revenue last year, and in order to really move that needle, the electric vehicle industry was an obvious target. Even at the current status of the industry, we're talking about three hundred and eighty billion dollars. And in addition to that, fox Conn is going to be looking at other areas such as robotics and digital health devices.
So read fox KHN wants to move into making electric vehicles, and you write that one of the centers of this operation is actually in the US.
Exactly. The big difference between making evs and something like a smartphone is that you're going to have to produce them locally. There's transport costs, there's also local tariffs and regulations and subsidies that you can't tap into unless you build locally. Smartphones and gadgets and devices are much easier because most of them are hauled as air cargo around the world from those factories in China, and so fox Con is going to be building ev factories around the
world or buying them. The one that's being built is in Thailand right now, but the one that's actually sort of operational right now is in Lordstown, Ohio, in the eastern part of the state. And this is a factory that GM started in nineteen sixty six. It made a bunch of Chevies over the years, and in twenty nineteen, GM was really seeing demand shrink for especially its compacts. Hybrid vehicles were really sort of the preferred choice for
at least smaller vehicles. Lordstown was identified as one of the plants that would be closed and it went idle in twenty nineteen. There was a bit of a blip before fox Conn took over. Essentially a startup called Lordstown Motors Corp. Came in initially took the factory off of GM's hands, and then later on another deal sort of ended up with Foxcom buying the factory from Lordstown Motors.
Lordstown Motors went Chapter eleven earlier this year, so essentially you know, fox Con is the last remaining entity standing in Lordstown. It owns the plant. It bought it for two hundred and thirty million dollars, and what it's essentially doing is it's preparing it for a future where they will be building evs for a variety of manufacturers.
After the break, a look inside fox CON's Ohio factory.
When I visited the plant, it's actually a multiple buildings spread across a huge swath of land right next to A eight in Ohio. There's an assembly building, there's a metal stamping plant. There's a paint shop, but it's not really a shop. It's just a huge building onto itself.
And what they're doing is they're essentially taking inventory. So in one building, where they used to have robot arms, you know, welding parts together, all of those robot arms have now been removed off the line and set off and lined up on the side. They're assessing which ones might need repair, which ones work fine. The metal stamping machines are also being inventoried in a similar manner. The assembly lines have kind of been stripped back to their basics.
One of the people there told me that what they were creating was sort of like a supermarket of factory parts, so that whenever they did start to get orders for making vehicles, they could pull them out and start rebuilding the assembly lines for whatever the customers would need. And really that's the big question here, is whether the business is going to come in the coming months or years.
And who's working there right now, who's taking this inventory and getting the factory ready for its next customers.
Yeah, so the workers at the factory are mostly former GM workers. For a brief period, many of them worked for Lordstown Motors, and now they work for Fox Cohn. When I was there, they opened up a shop actually so that the employees could go and get Fox con t shirts and hoodies and baseball caps. And along with a bunch of Taiwanese employees, they're essentially preparing the factory, or at least keeping it sort of at a bare subsistence level so that they can build evs when that day comes.
Now, this isn't Fox Cohn's first attempt to start a manufacturing plant in the US.
You're absolutely right. In Wisconsin, just a few years earlier, the founder of the company, Terry Guoh, who was still running it at the time, essentially he saw sort of a threat to his business model with the Trump administration coming in. Trump was keen to get factories back to the US employee workers in the US otherwise, you know, the threat was that he would impose tariffs on products
that were built in China and elsewhere. So the idea by Terry Guoh, Foxcon's founder was to build electronics in Wisconsin, and so he started a factory there. In fact, it's still there. It actually employs even more people, about a thousand people. But it wasn't really clear from the get go what the factory was going to build. Initially, the idea was flat panel televisions. Right now it's doing some
assembly of servers. But the current CEO, Young Lieu, who took over from Terry Guoh and nineteen, has essentially decided that the Wisconsin factory is going to become part of the supply chain for EV manufacturing in the US and at Lordstown, and that it could possibly be used to build battery packs.
So this factory in Lordtown aims to be far more ambitious because you write that building EV's is many times more complicated than building even a device like the iPhone.
Building an EV is somewhere between I would say, building a smartphone and building a car. So if you imagine a smartphone has several hundred components, circuit boards, et cetera, a battery, chips, it starts to resemble an EV. But an EV has many more components one thy, five hundred and above. But then when you look at it from the point of view of a fuel burning engine car,
you're looking at tens of thousands of components. You know, the engine alone has thousands, and so evs essentially kind of sit in between that and fox CON's bed is that, well, look, it's going to be simpler than building a car. It's going to be more complicated than building a smartphone. But we have decades of experience building a variety of devices, servers, computers, kindles, laptops, tablets, and so essentially an EV is just sort of a bigger version of that. As far as fox Conn is.
Concerned, Red you said that they're getting the factory already for future orders, but have they gotten any interest. Are any manufacturers coming to fox Hunt and saying, please make our cars for us.
The interesting thing is there is exactly one customer that is taking advantage of this factory in Lordstown. It's called Monarch Tractor. It's an electric tractor that can be operated remotely with a huge battery that lasts for about fourteen hours. And if you think of the labor shortage that's going on in the US, especially in the agricultural industry, it's not a far fetched idea to have electric tractors that
can be operated remotely. You don't have any traffic concerns when you have a tractor going through crop fields and one person can actually operate several at the same time. And so this essentially became a perfect kind of test case for fox con to build a vehicle electric vehicle without a whole lot of risk. These tractors from Monarch cost about eighty nine thousand dollars each. They're fairly straightforward devices. It's all hand assembly at the moment because there's not
a huge amount of volume. But what it does is it's a proof of concept. It's something to show other potential customers what Foxcunt can do at the factory. Based on my conversations there, it seems that there's about ten potential entities that are looking at building vehicles in Lordstown, and about five of them are in a fairly advanced negotiation stage. Foxcott hasn't told me which companies it's negotiating with. It could be startups, or it could be legacy car makers.
The one that is public knowledge is Fisker. They're looking to build a second car called the Pair, and they've publicly disclosed that their negotiations with fox Con, But as far as I can tell, they haven't reached any final agreement yet.
Read is there any indication of when this factory would be up and running.
It's essentially up and running right now, just at a really really minor scale. At full capacity, this factory when it was turning out Cheves could make about three hundred and fifty thousand vehicles a year. Fox Con, with some expansion there's some more land around, the factory could make five hundred thousand vehicles a year. But just to put that into perspective, Tesla made one point four million last year.
But that's not necessarily the number that matters. It's essentially a factory for components as well, So even if if a large number of vehicles aren't necessarily assembled there, the Lordstown factory can actually build components for other parts of its supply chain, or it could just make components for
a conventional automaker. In fact, one of the stories I heard there was that while they were getting this factory refurbished and ready to run again, they got an inquiry from one of the Big three I believe, to make door panels, and Foxcom, being a fairly pragmatic company, I think, took the proposal seriously because, well, you know, door panel's door panel, and if somebody wants to buy them, they'll make them.
Are they actually starting to hire people for the future. How many people will work this plant once it's at full capacity.
So at the moment, the factory in Lordstown has about four hundred people. That's probably more than they need. At the moment, I think when the factory was at full capacity and running multiple shifts, there were about sixteen hundred people there. So that's potentially as large as it might get at least for a capacity of around you know, three hundred and fifty thousand vehicles. Beyond that, you know,
it could actually go into multiple thousands of people. But that's just all going to depend on, you know, how much business they get.
When we come back. Read pays a visit to Fox Khan's CEO. Read, the Lord's Down factory that's under development is just one of several manufacturing facilities that Fox Khan plans to build for this big EV push.
Is that right?
Yeah, So the factory in Lordstown is one that they bought. It's essentially turn key with a little bit of elbow grease and work. But in Thailand they're taking an entirely different approach. They hooked up with a state investment entity and outside Bangkok they're building an EEV factory from scratch.
The goal there is within a few years to be able to churn out about one hundred and fifty thousand evs and then down the road they're looking at potentially opening an EV facility in India and then ultimately in Europe, where they also have quite a large manufacturing presence.
And read when you were reporting this story, you went and spoke with fox Con CEO. What did he tell you about this big push to steer the company toward evs.
Yeah. So, Young Leu, who joined fox Con in two thousand and seven, took over from the founder in twenty nineteen. He's got I think a monumentally complex job, you know, managing one point two million employees. He's got to keep the existing smartphone manufacturing and electronics device business going. And then the EV project is his project. He initiated it after taking over, so he's keeping a pretty close eye
on it. To learn a little bit about Fox Con itself and its corporate culture, you know, I went to visit its headquarters and spend some time with chairman and CEO Young Liu in tu Cheng, which is this suburb of Taipei. It's full of factories and the building is unassuming. It's a five story building. As I sort of made my way around the ground floor, you turn a corner
and you come across a small factory. You know, behind these sort of soundproof doors, you have stamping machines that are uncoiling thin copper tape stamping out connectors or components for circuit boards. And you know, the factory was there since day one when it was built, probably forty forty plus years ago. I asked people there, you know, why is there a factory here? Most companies would have moved it out a long time ago. And you know, all
I got was essentially a verbal shrug. They were like, well, it's there, because it's always been there. If you think of the culture of this company, it costs money to move a factory, and you don't get the components. While the factory is being moved, you lose efficiency at least for a while, so there's no reason to get rid
of the factory. So there it stays. The interesting thing was it was kind of across the hall from the cafeteria, so as you're kind of walking through that floor at lunchtime, you get sort of the smell of braised pork belly and Taiwanese food mixed in with like lubricating oil for the snapping machines. So spending time with the CEO, Young Leu, I saw him sit in in a couple meetings, and it was really interesting because he wasn't working in an office.
What he was working out of was a conference room, a huge desk with a huge screen in front. But what he had kind of a raid around him were products from his most important customer, Apple, So there was a MacBook, two iPads, he had an Apple Watch on his wrist, and he had an iPhone on his hand, and you know, he's sort of using all of these
devices as he's in the call. Every now and then he would sort of tap an unmute button on his iPad and talk to a couple of secretaries and assistants that were on the call, essentially giving them items to follow up on or things to look up or things to take care of while he was in the call. And so I got the impression that, you know, he really doesn't sort of waste a lot of time typing out emails. What he was doing was sort of absorbing information and then acting on it in real time. That's
probably what his entire day is like. What he told me was that he only really starts typing messages when he gets home.
And what did he have to say about box CON's future? Where does he want to take this company?
So the strategy that young Leu came up with is what he calls three plus three and EV's robotics and digital health devices make up the first three, and then the technologogy behind the second three is going to be semiconductors, telecommunications, and artificial intelligence. And so what he's really trying to do is break into three kind of naiscent markets and develop the technology to do so.
The methodology is to divide and conquer. We divide EV into different subsystems, and then for the ones that we are familiar with, then we move on to that quickly. But for the ones that we were not familiar with, you know, we either go invest or go acquire from the outside.
It's not just going to be about offering to assemble all of these gadgets for other entities. What he also wants to do is become the supplier and build all the components that are going to be necessary to essentially capture market share in these three large markets.
And read there's been a lot of speculation that Fosky, which makes Apple devices, now moving into electric vehicles might mean that Apple's long rumored push to make an electric vehicle will be a fox cont venture.
Yeah. So the sort of unspoken subtext to all of this is that Apple has been working on a car, a project that isn't so much of a secret anymore, for the better part of a decade. They're still working on it, but the timeframe is not clear. Our best guess at the moment, based on reporting by Bloomberg News, is that an Apple car could debut by the end of the decade. And so another way to look at all of fox CON's efforts here is that it's sort
of ramping up expertise and volume and facilities. Should the day come when Apple goes looking for a manufacturing partner for evs, that fox Con will be ready because it has the long history with the company and it has built up the capacity to deliver the evs that Apple's going to want to design and sell.
And what did Foxon say about that? Did you ask them fox Con? It's hard to get them to talk about any of their customers, but especially hard to get them to talk about Apple. They are arguably Apple's most important partner, and Apple is arguably their most important customer. It's a relationship that they don't want to damage, and so any conversation about any upcoming Apple product, whether it's an iPhone or an Apple Watch or an ev it's going to be a very short conversation read.
Thanks so much for taking us inside fox Con.
Thank you, it was a lot of fun to report.
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