Apple suppliers Foxconn and Nidec plan electric vehicle tie-up

Foxconn and Nidec have launched talks to set up a Taiwan-based joint venture next year to build motors for electric vehicles, as the two Apple suppliers make an aggressive push into the market.

Japanese manufacturer Nidec will deepen ties with Taiwan’s Foxconn — the world’s largest contract electronic manufacturer — and is planning to spend $9bn in acquisitions over the next five years to increase sales of electric vehicle motors.

“Currently. the majority of our [automotive] clients are carmakers. But in addition to those who have traditionally been selling cars, we are now seeing loads of new entrants from other sectors,” Jun Seki, a former Nissan executive who was appointed Nidec’s chief executive earlier this year, told an online news conference.

Nidec’s joint venture with Foxconn’s automotive division builds on a partnership announced in March to develop electric vehicle drive systems. The companies did not disclose how much they will invest in the joint venture, saying they will conduct feasibility studies and negotiate details of their contract by the end of the year.

For Foxconn, it is the latest in a series of joint ventures and partnerships including with Chinese, Taiwanese and European carmakers as it makes its way into the automotive supply chain. 

Among recent deals, it has a co-operation agreement with Chinese electric vehicle company Byton and plans to manufacture for US electric vehicle designer Fisker from late 2023.

Last year, it founded an industry alliance called MIH to offer a complete software and hardware platform for making electric cars. Its push into electric vehicle manufacturing could also make it easier for Apple, its largest customer, to enter the car market.

Nidec also has a joint venture with Stellantis, the car group formed by the merger of FCA and PSA, and with China’s Guangzhou Automobile Group. 

Nidec also said on Wednesday that it planned to double its revenue to ¥4tn ($36bn) by the fiscal year ending in March 2026, of which one-third is expected to come from sales of automotive products. The group has ambitions to increase its revenue to ¥10tn by fiscal 2030.

The key to reaching that target will be mergers and acquisitions, a hallmark strategy of the Kyoto-based manufacturer, which has historically expanded through aggressive cross-border takeovers. 

Shigenobu Nagamori, the group’s founder and chair, poached Seki from Nissan as his successor and to strengthen the group’s push into cars.

“To take ourselves to ¥10tn [in sales], we need to bring in the relevant talent and acquire large companies,” Nagamori said.

Asked about its M&A strategy, Seki said he would focus on filling technology and geographical gaps in areas where the company sees growth.