Aside from carmakers, world-class Tier One suppliers with a business scale that can compete with major carmakers are also key roles to influence the evolvement of traditional automotive industry. For instance, the top five suppliers in the world – Bosch, Denso, ZF, Magna, and Hyundai Mobis are significant suppliers with trillions NTD of annual revenues. Certainly, when coming to the future automotive world, not only carmakers have to make transformation, so do these Tier One suppliers. Otherwise, ZF, specializing in gearboxes, or Magna, focusing on interiors and powertrains, will suffer impacts in terms of revenues and profits. The existing advantages in operation of these major companies are the familiarity with carmakers’ operation and tacit understanding from long-term cooperation. However, just like traditional carmakers, their disadvantages are also overly getting used to the operation model of traditional automotive industry. Starting from years ago, the competitors of Tier One suppliers were coming from ICT giants with more expertise, bigger scale, and better profitability. For example: Nvidia, Qualcomm, Baidu, and TSMC, etc.; And now Tier One suppliers will face face-to-face challenges from major electronic companies including Foxconn, LG, and China’s Luxshare that want to master the core technologies of the automotive industry in the future…
- Foxconn strives for estuary ( car assembly ). The way of Foxconn’s entering to automotive industry is “comprehensive”, which includes the batteries, chips, the system integration of smart cockpits, software development, to OEM of whole vehicles assembly works. Foxconn really brings the OEM spirit of IT industry into the automotive industry. In addition to the cooperation with Yulon Group, Foxconn had already begun global business plan including the OEM for Fisker, Lordstown, INDIEV, the development of smart cockpits with Stellantis, and the production of whole vehicles cooperated with Thailand, Saudi Arabia, etc., Foxconn also wants to ensure the suppliers will have an “estuary” for the business development.
- LG cooperates with Magna. After the underperformance of cellphone business, LG established a joint-venture company with Magna in the end of the year before to become an automotive Tier One supplier, which focuses on the huge business opportunities of intelligent BEVs. LG’s experience in IT industry and technology in Lithium-ion batteries can compensate with Magna’s technologies of traditional ICE cars, which will be a win-win situation for both of their business development.
- Luxshare cooperates with Chery Automobile for the future. Chery Automobile is a famous self-owned brand in China that their performance is extraordinary since the beginning of this year, and it’s now ranked at 10th of the sales volume of car companies. Luxshare, as the strongest rival of Foxconn in the OEM business of cellphones, invested Chery Automobile in the beginning of this year, and they signed a strategic framework agreement to develop BEV platforms at the level of ODM. Different from Foxconn, Luxshare isn’t aim at the OEM of whole vehicles, but to improve their ODM capability by working with the mature manufacturing process of Chery Automobile.
To sum up, the competition of world-class major Tier One suppliers will be evolved from the situation that each of them have their own sphere of influence in the era of ICE cars to combat in many ways in the era of BEVs… For instance, the combat of the technology for the ODM integration of trio electronics, the combat of upstream resources like wafers or raw materials of batteries, the combat of the system providers for BEV startup brands, or even dealing with the compatibility issues derived from the direct collaboration between IT giants and carmakers such as AI chips and the autonomous driving technologies. The intensity of these commercial competitions will not be inferior to the strict challenges that will be faced by carmakers in the future.