News / Foxconn unveils plan to build electric vehicles – but not in China

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Developments this week have laid bare the growing enmity between the US and China, as tit-for-tat supply chain adjustments and reshorings demonstrate a disintegration of trust in globalisation.

Foxconn, headquartered in Taiwan, announced it would respond to an increased mistrust in the people’s republic by switching its production focus from the centralised production of iPhones and laptops in China onto manufacturing  electric vehicles (EVs) across a wide array of countries.

Chairman Young Liu told the BBC car manufacturing was intrinsically a less centralised business and explained: “It doesn’t make sense to make [EVs] in one place, so regionalised production for cars is very natural.

He said new Foxconn car factories would be situated in Ohio, Thailand, Indonesia and India.

A child of globalisation, Foxconn has produced iPhones using designs from the US and labour and manufacturing capability in China. But last month, it announced plans to shift production to India, buying around 1.2m sq metres of land near Bengaluru, in Karnataka, in a reported $700m investment.

Foxconn’s biggest customer, Apple, has already made inroads into India, intending to build iPhone cases there – though a high rate of defects presented an early stumbling block, the UK FT reported.

Meanwhile US carmaker General Motors (GM), has drawn up plans to reshore its steel sourcing, in a deal with ArcelorMittal North America, announced this week.

In contrast to Chinese product, of which only a fraction is recycled, GM will buy steel made from 70% scrap material, which will have a major impact on the imbued carbon emissions of each vehicle. The new deal follows another in February, with US Steel in Arkansas, which claims to produce metal with as much as 90% recycled content.

“We don’t want to be at the end of the supply chain, we want to be at the beginning,” Craig Glidden, GM’s EVP of legal, policy, cybersecurity & strategic technology initiatives, told media.

China’s uncompromising lockdown stance during Covid-19, and the supply chain disruption that resulted, as well as its position on the Russia-Ukraine war, has soured relations with the US and EU.

Last year’s EU Chamber Business Confidence Survey for Foreign Companies in China revealed that more than half the 620 European companies surveyed believed business in China was becoming “more political” – and about 60% said doing business in China was “more difficult.”

“Business sentiment has partly improved following China’s zero-covid policy ending, with businesses now able to see some light at the end of the tunnel,” Bettina Schoen-Behanzin,VP of the EU Chamber of Commerce in China, told The Loadstar recently.

But she confirmed: “Other economic headwinds remain, including an increasingly politicised business environment, supply chain complications and long-standing market access and regulatory challenges, [that] continue to erode China’s standing as an investment destination.

“To meaningfully restore investor confidence, comprehensive structural reforms that address these challenges need to be implemented.”