Foxconn, the world's largest electronics manufacturer, has recently announced its intentions to develop electric vehicle batteries in Wisconsin and Ohio as part of a campaign to boost domestic production in the United States, Nikkei Asia tells us in a report.
The decision comes as the US government pushes for expanded local manufacture of EVs and their components, such as batteries, in order to create a more resilient supply chain.
Nikkei cites that Foxconn began investing in EV production in mid-2019. The Taiwan-based electronics supplier has since acquired the Lordstown auto assembly complex in Ohio and a large manufacturing site in Wisconsin.
The recent approval of the Inflation Reduction Act (IRA) adds to Foxconn's efforts, as local production is required to receive tax breaks under the legislation.
What Is the Inflation Reduction Act (IRA)?
According to the World Economic Forum, when President Biden approved the Inflation Reduction Act (IRA) into law in August 2022, $370 billion in funding was instantly released to provide tax credits for clean energy projects.
The policy seeks to reduce greenhouse gas emissions in the United States by 40 percent below 2005 levels by the end of the decade. Today, EV battery manufacturers such as Foxconn are leveraging its packages.
The IRA Is 'Very Good' for Foxconn
Foxconn Chairman Young Liu told investors that the implementation of the IRA is "very good" timing for the company, which has found opportunities in building battery-related capacity.
Foxconn's earnings from EV components reached $649 million in 2022, and the company anticipates an increase to between $1.5 and $3 billion this year. Liu expects it to generate $35 billion in revenue by 2025.
Read Also: Foxconn, Apple Supplier, Says Shenzhen Campus Operations Back to Normal
Nikkei notes that smaller competitors of Foxconn, such as Pegatron, Quanta Computer, Compal Electronics, and Delta Electronics, also intend to grow their EV-related capacity in North America this year.
However, Foxconn's initiatives are more significant due to the company's scale and diversification approach. In an effort to expand its capacity beyond smartphones, Foxconn's capital expenditures reached a new high of $3.5 billion in 2022.
Foxconn Eyes Continued Expansion
According to reports, Foxconn's revenue is predicted to remain constant until 2022, while the company's revenue component, smart consumer electronics, is expected to drop.
But, growth in its other vital areas, such as cloud, networking, computing, and components, is projected this year.
Foxconn has been seeking to diversify its operations in recent years, pushed by geopolitical tensions in China and increased demand from governments and clients for supply chain localization.
The company's manufacturing capacity outside of China already accounts for 30% of total capacity and is expected to rise further.
Earlier this month, Tech Times reported that Foxconn Chairman Liu visited India, where the business is aggressively expanding its manufacturing base, and met with Indian Prime Minister Narendra Modi.
Despite China's post-lockdown reopening boost, Bloomberg reported that the company's monthly income plummeted to $13 billion last month.
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