Foxconn’s electric car unit depreciates amid a challenging industry outlook. Foxtron Vehicle Technologies (2258. TW), a division of the Taiwanese contract maker Foxconn (2317. TW), declined its share price on its first day of trading on the market on Monday. This was due to concerns about headwinds in the highly competitive market for electric vehicles.
Foxtron shares did manage to recoup some of their earlier losses, which reached as high as 9%, and ended the day down 2.7%, giving the company a market capitalization of approximately $2.7 billion.
Inflation and increased loan rates have increased the cost of purchasing a vehicle. In addition to these factors, electric vehicle manufacturers contend with supply-chain bottlenecks and pricing pressure.
The electric vehicle (EV) industry has been swamped by a red sea of price reductions by key players such as Tesla, according to an analyst at Mega International Securities who asked not to be named, citing the firm’s regulations on commenting publicly on listed firms. Significant players like Tesla have “flooded the EV market with a red sea of price cuts,” the analyst claimed. “Foxtron has lost money in 2021 and 2022, and we don’t think it will turn that around in the next two years.”
The local automobile manufacturer Yulon (2201. TW) is a partner in Foxtron, a joint venture between Foxconn, the largest contract manufacturer in the world for iPhones and other consumer electronics, and Yulon. Currently, it is only working with one customer, Luxgen, which belongs to Yulon.
However, according to Young Liu, who serves as chairman of both Foxtron and Foxconn, the corporation has a distinct plan for expanding its operations.
“Foxtron will build its foundation in Taiwan, leveraging our own design and service momentum in EVs as well as Foxconn’s proven business models to guide our entry into the North America and Southeast Asia mainstream markets.”
During the initial public offering, the company was able to collect 7.5 billion yen, which is equivalent to 235 million dollars. Separately, Liu declined to comment on what contingency preparations Foxconn has in place if founder Terry Gou completes his candidacy for Taiwan’s presidency by registering with the electoral commission. Gou has until Friday to complete this step, and he has the opportunity to do so.
China announced it was looking into Foxconn’s tax situation a month ago. The Chinese media, which revealed the investigation, attributed the action to Beijing’s displeasure with Gou’s intention to run for president.