It makes iPhones. Now Hon Hai wants to make cars for Japanese automakers.

Japan Times

10-04-2025

A Taiwan mobile phone manufacturer wants to produce electric vehicles for Japanese car companies, a seemingly unlikely proposition given the structure and history of Japan's auto industry.
And it just might work for Hon Hai Precision Industry.
EVs are different — they don't have engines, so it's much easier to manufacture them, allowing players not normally a part of the process to get a significant piece of the action.
"It's not necessarily the case where only carmakers can manufacture EVs. Thus, I think a trend to outsource production to electronics manufacturing services companies that have a certain scale and can cut costs is possible," said Taiji Goishihara, a partner at Deloitte Tohmatsu.
Japanese auto manufacturing has long relied on companies running their own plants and maintaining tight control over the process. Craftsmanship based on close coordination between carmakers and suppliers, especially with regard to engine-related systems, has also been considered essential.
The industry is vital to Japan in terms of jobs, exports and contribution to gross domestic product, so its heft and scale is important for the country.
Hon Hai — which does business as Foxconn and manufactures iPhones for Apple — is hoping to shake up that model a bit.
The New Taipei City-headquartered company wants to build EVs for Japanese car makers on a contract basis as the economics of carmaking change and new opportunities present themselves.
Some analysts said smaller carmakers and those struggling to raise funding to invest in EV production may find that it makes sense to rely on third-party manufacturers, although large automakers will likely stick to their tried-and-tested vertical integration manufacturing model.
'If you ask us whether Japan is special, we think Japan is special,' Jun Seki, chief strategy officer of Foxconn's EV business, said Wednesday at an event in Tokyo hosted by Hon Hai to explain its EV strategy in the country.
He pointed out that the Taiwanese company and Japanese companies may be able to achieve synergies due to them being close geographically and culturally.
Foxconn is already working with Mitsubishi Motors, according to Seki, a former Nissan executive. He declined to offer details about the partnership. Last month, some media reported that Foxconn will be producing EVs for Mitsubishi Motors for Oceania markets.
For relatively small carmakers, including Mitsubishi Motors, outsourcing EV production may be a realistic decision, said Nobuhiro Shibata, a director at Deloitte Tohmatsu.
"Benefits of outsourcing include hedging against risks related to in-house production, as EV demand is still volatile,' he noted.
Also, smaller carmakers tend to focus on niche products to differentiate themselves from rivals, so if they want to pursue such a strategy, investing in research and development would be more of a priority rather than production, Shibata added.
It is possible that even some of the larger carmakers will consider outsourcing production for certain regions, as producing vehicles locally is becoming key due to the escalating trade war driven by the U.S.' tariff policy, Goishihara said.
He is skeptical as to whether outsourcing will be a mainstream production trend in Japan's auto industry in the near future.
If the horizontal division of labor — where battery companies produce batteries and contract manufacturers handle assembly — accelerates, traditional carmakers would just become brand management companies, Goishihara noted.
'Therefore, I think they won't easily give it up,' he said.
Two large EV companies — the U.S.' Tesla and China's BYD — have proven that their vertical integration manufacturing models work so far.
A change in the production structure might trigger some issues for major Japanese automakers, including those related to employment.
Toyota has repeatedly stressed the importance of maintaining annual domestic production of 3 million vehicles to protect its head count.
Seki admitted that the auto industry is 'cautious' about Foxconn's move, so the Taiwanese maker is trying to win its trust.
He said Foxconn does not intend to sell cars directly to consumers to compete with traditional carmakers. Its focus is only on the business-to-business segment.
'If we sell cars with our own brand to consumers, they will never trust us,' Seki said, referring to prospective automaker clients.