Foxconn to set up EV plant in India; how it will change the stakes?

Talk of Foxconn and the first thing that comes to mind is a Taiwanese company that makes chips on behalf of Apple Phones. But outsourcing at Foxconn is a lot more beyond chips. It can also outsource the manufacture of electrical vehicles or EVs and that is exactly what it is planning in the Indian context. What was till now always known as Apple’s contract manufacturer, it is planning to manufacture electric vehicles in India which is in sync with its long term plan to expand manufacturing supply chain outside China.

The manufacture of EVs in India will be done by Foxconn‘s EV-manufacturing arm, Foxtron. The company plans to  expand its manufacturing plants to different locations in South East Asia. Apart from India, Foxconn is looking to have a robust and substantial presence in countries like Vietnam and Indonesia also. Foxconn already has a manufacturing facility in Sriperumbudur, outside Chennai, which exclusively manufactures iPhones for Apple Inc.

Foxconn also has a separate and dedicated plant operated by Foxconn’s Indian entity. Known as Bharat FIH, it manufactures phones for Xiaomi, which is their largest and most predominant customer. Now, Foxtron is looking to set up a separate plant for manufacturing EVs in the state of Tamil Nadu. This is a recent medication to the plans of Foxconn after seeing the rising demand for electric vehicles in India. Foxconn will foray into India, Vietnam and Indonesia and expand its manufacturing base globally.

However, it must be remembered that EVs are not the core competence of Foxconn. They have mighty experience in outsourcing chips and phones, but EVs is a new area. Only in the previous year, the company had purchased a manufacturing plant to produce EVs for the North American market. Having tasted success in that venture, Foxconn also has plans to replicate a similar model in South East Asia. To begin with, Foxconn will set up EV manufacturing plants in India, Indonesia and Vietnam and later look to expand its presence.
 

Ironically, the plans of Foxconn come at a time when Tesla is struggling hard to foray into the EV market in India. The most valuable electric car-maker (Tesla) has been in talks with the Indian government and has also established a unit in Bengaluru. However, while the Indian government has been insisting on Tesla setting up a plant in India to make EVs and export, Tesla plans to import Tesla into India from China and cater to the local Indian population. That is not something the Indian government is too pleased about. 

For Tesla, there is also the issue of steep duties payable in India. For example, import duty of around 60% is imposed on cars priced $40,000 and lower while a duty of 100% is payable on cars priced above $40,000. Tesla things this is just too steep and wants the government to reconsider. However, if the Tesla plans for India get delayed, then the big beneficiary would be Foxconn which has been waiting in the side lines. For Tesla, the headwinds are too many and Foxconn would likely take away the benefits ceded by Tesla.