Foxconn, the world’s largest contract assembler of consumer electronics, has begun discussions with Vingroup, the largest conglomerate in Vietnam, about working together in the fast-growing field of electric vehicles.
A spokesman for Hanoi-based Vingroup confirmed that the company had “received proposals” from Foxconn but said that “nothing is concrete yet.” Any partnership would focus on developing electric vehicle batteries and other parts, he adds. “No decision on working together to produce EVs has been made yet,” he says.
Reuters reported on Friday that Foxconn has proposed acquiring EV production lines owned by Vingroup’s automotive unit, VinFast. VinFast prefers a partnership that would help brand itself as an eco-friendly automaker and wants to retain its EV business, according to the Reuters report.
“Foxconn views electric vehicles as a promising new growth driver for the company,” says Chris Robinson, a senior analyst with Lux Research. “It has developed a platform of technologies upon which other companies can build cars around. Use of an existing platform would allow VinFast to reach the market faster and spend less time and money on designing a powertrain,” he says.
A deal would make each billionaire-run company more competitive in a fast-growing, competitive sector. The global electric vehicle market stood at an estimated $140 billion in 2019 and should reach $700 billion by 2026, research firm Facts & Factors says in a report released in January.
Both companies have already worked on EVs. Foxconn signed a memorandum of understanding last month with Los Angeles-based EV startup Fisker Inc. to sell as many as 250,000 vehicles in China, Europe, India and North America. Foxconn had agreed before to build electric cars with Fiat Chrysler and Geely, among other carmakers. The company will be able to use existing assembly technology to compete.
Billionaire Terry Gou founded Foxconn, also known as Hon Hai Precision, 47 years ago and the company now sees $172.8 billion in annual sales. The company best known as an Apple contractor has tried over the past decade to diversify product lines. Foxconn has set a goal of taking 10% of the global EV market between 2025 and 2027. Foxconn did not respond to a request for comment.
Vingroup car-making unit VinFast will introduce its own electric, self-driving sport-utility vehicles this year with Tesla-like features at a lower price, the deputy CEO said in January. The parent company led by Vietnam’s richest person, Pham Nhat Vuong, had debuted electric scooters two years ago in the home market. Other Vingroup units develop housing, build resorts and make smartphones. Annual sales come to $5.6 billion.
The conglomerate calls EVs “part of VinFast’s predetermined roadmap since joining the auto market three years ago.” They will increase VinFast’s popularity and help control emissions, the company says.
Foxconn and Vingroup aren’t total strangers either. The two leveraged manufacturing capacity last year to work with New York-listed ventilator developer Medtronic on making ventilators that help keep Covid-19 patients alive.