The electric vehicles industry has been hot with an exciting deal coming in every other day. After Lucid Motors formally announced its deal with Michael Klein’s SPAC yesterday, another EV start-up and Lucid’s rival, Fisker, has joined hands with Apple supplier Foxconn Technology to build an electric vehicle that will be sold in North America, Europe, China, and India. Shares of Fisker rocketed over 20% in morning trading Wednesday post the announcement.
Fisker – Foxconn Deal
Fisker and Foxconn have signed a memorandum of understanding under which the Taiwan-based manufacturer will produce 250,000 electric vehicles annually for the EV company. The deal is codenamed “Project Pear” (Personal Electric Automotive Revolution) and is expected to start production in the fourth quarter of 2023. The timeline suggests that Foxconn will have to scale up rapidly to meet the milestones.
Fisker Electric Cars
Launched in 2016 by car designer Henrik Fisker, Fisker merged with a SPAC, Spartan Energy Acquisition, last year to go public. Henrik Fisker himself worked as a designer for Aston Martin and BMW. He also designed the Fisker Karma for his previous company, Fisker Automotive, which unfortunately didn’t survive long and filed for bankruptcy protection in 2013, eventually selling off its assets. Now, Fisker has a market capitalization of $5.26 billion.
The Fisker Ocean
Currently, the company already has an agreement in place with automotive contract manufacturing company, Magna, to build its first expected car known as the Fisker Ocean. It is estimated that Magna will start producing the Fisker Ocean electric SUV in the fourth quarter of 2022. The car is based on engineering built by Magna but improvised by Fisker. The company said that a production-intent prototype of the Ocean will be disclosed later this year.
The company has 12,000 pre-paid reservations for the Fisker Ocean SUV at a cost of $250 each until now. The car is expected to be sold at a starting price of $37,500 before tax incentives once in production.
Under the deal with Foxconn, whose financial terms have not been revealed, Fisker’s second model will start being developed. Merely a vague design sketch of the car was revealed, and the target price was kept undisclosed.
Mr. Fisker said that he intends to keep the final design a surprise until the very last moment possible. In the sketch that was shared, the design resembled the coupé-shaped SUVs manufactured by luxury automakers with large wheels and a body similar to a sports car.
Foxconn Technology’s Resources
Foxconn Technology Group Chairman Young-way Liu said that the company’s vertically integrated global supply chain and accumulated engineering capabilities help the firm in manufacturing the key elements of an EV which include the electric motor, electric control module, and battery. To meet Fisker’s target, this supply chain and engineering capabilities will be crucial.
This is not the first time Foxconn will be manufacturing electric vehicles. In January 2020, Foxconn announced a joint venture with Fiat Chrysler Automobiles to manufacture EVs in China. Under the deal, each party would own 50% of the venture to build and manufacture the EVs and engage in an “Internet of Vehicles”. Since then, FCA has merged with France’s PSA to create Stellantis.
Last month, Foxconn announced a deal with the Chinese parent company of Volvo and Lotus, Zhejiang Geely Holding Group to develop and manufacture vehicles for other automakers with more focus on electrification, connectivity, and autonomous driving technology along with vehicles designed for sharing.
The deal would merge Geely’s experience in the automotive fields of design, engineering, R&D, intelligent manufacturing, supply chain management, and quality control with Foxconn’s knowledge in manufacturing and Information & Communication Technology (ICT). The two companies aim to provide consulting services on whole vehicles, parts, intelligent drive systems, and various automotive ecosystem platforms to automakers and ridesharing companies.
The deal between Fisker and Foxconn is expected to close in the second quarter of this year.