Foxconn Considers EV Investments in Indonesia with Preliminary Talks

Foxconn [2354:TT] held preliminary talks with Indonesia regarding building an electric vehicle (EV) manufacturing factory in the country, as reported by Sina on October 25. Indonesia’s Investment Coordinating Board (BKPM) claimed that Foxconn planned to develop its EV and battery businesses in the country, while in turn, the government would provide incentive policies to support Foxconn’s investments. Nevertheless, Foxconn did not confirm BKPM’s announcement. According to people close to the matter, Foxconn has not made decisions and the discussions are in the early stage.

As Apple’s [AAPL:US] largest assembler, Foxconn receives around 50% of its sales income from Apple each year. However, Foxconn is facing stagnant sales revenue growth in the past few years, such as 0.82% in 2019 and 0.3% in 2020, while Apple has been cultivating other suppliers. To reduce the dependency on Apple, Foxconn issued its future transformation plan in 2019, focusing on EV, digital healthcare, and robot sectors. The company set its goal to provide components and services for 10% of global EVs by between 2025 and 2027. On October 18 of this year, Foxconn released its first batch of three pure EV models, which are branded under Foxtron, an affiliate of Foxconn.

Foxconn’s consideration to build a factory in Indonesia is attributed to the rich reserve of nickel in that country, which is one of the crucial raw materials to produce EV batteries. Citing data from the US Geological Survey, Indonesia produced about 760,000 tons of nickel in 2020 and has 21m tons in reserves, accounting for 30% and 22% of global total output and reserves respectively. In view of this, South Korean automaker Hyundai Motor Group and battery maker LG Energy Solution (LGES) have selected Indonesia to jointly build a battery plant with USD1.1bn this July. Prior to the talks with Indonesia, Foxconn announced its plans in August to set up EV plants in the US and Thailand in 2022 and start operations in 2023. For the Thai factory, Foxconn will partner with local oil giant PTT [PTT:TB] and aim at an annual production capacity of 2m EVs.

Sources:

https://finance.sina.com.cn/world/gjcj/2021-10-26/doc-iktzqtyu3506796.shtml

http://www.nbd.com.cn/articles/2021-10-18/1951090.html

https://finance.sina.com.cn/chanjing/gsnews/2021-10-20/doc-iktzscyy0672494.shtml

https://www.senecaesg.com/blog/hyundai-lg-energy-solutions-collaborate-in-usd1bn-ev-battery-investment-plan/

https://www.senecaesg.com/blog/foxconn-to-establish-ev-plants-in-us-and-thailand-in-2022/