Dive Brief:
- Automotive supplier ZF Group announced that electronics contract manufacturer Foxconn is taking a 50% stake in its passenger car chassis systems division, ZF Chassis Modules, according to a press release.
- The joint venture will develop products for both internal combustion engines and electric vehicles, with a strong focus on growing the EV market. Customers will include both global premium and high-volume automakers.
- The move bolsters Foxconn’s plans to diversify to electric vehicle manufacturing.
Dive Insight:
Taiwan-based Foxconn, which is the world’s largest contract manufacturer with revenue of approximately $220 billion in 2022, is seeking to diversify its business and expand into the automotive sector. This joint venture with ZF Group aligns with the company's 3+3 transformation strategy that prioritized key industries, including electric vehicles and robotics.
ZF Chassis Modules, with an enterprise value of roughly $1.1 billion, bundles ZF's passenger car axle systems assembly. In addition to axle systems, ZF’s chassis technology includes networked and electronically controllable vehicle braking, steering and damping systems. Sales of ZF’s chassis modules unit are expected to exceed $4.5 billion in 2023.
The two partners are also in talks about expanding the scope of the joint venture in the larger transportation and mobility space.
“ZF as a globally active automotive supplier and Foxconn as a leading electronics manufacturer complement each other excellently to jointly open new customer groups and expand its presence, especially in growing markets,” ZF CEO Holger Klein said in a statement.
In October 2020, Foxconn Chairman Liu Young-way said the company plans to provide components or services to around 10% of the world's EVs between 2025 and 2027. By January, Reuters reported that Liu is aiming for Foxconn to take 5% of the global EV market by 2025, generating an annual revenue of $32.6 billion.
In November 2022, the Foxconn-led Mobility in Harmony Consortium debuted an open EV development platform dubbed Project X, intended to lower the barrier for companies entering the market. The consortium was established in July 2021 to promote a global set of open standards for the manufacturing of EVs. Consortium members include ZF and Microsoft.
Foxconn’s joint venture agreement with ZF follows the June bankruptcy filing by its U.S. EV partner Lordstown Motors. In November 2021, Foxconn purchased the Lordstown Motors’ Ohio factory, a former GM plant, for approximately $260 million. The deal preceded the creation of a $100 million joint venture with Lordstown in May 2022 to develop EVs for the global market.
