Joint venture shows deepening convergence between tech sector and car industry with software a key battleground
Last modified on Tue 18 May 2021 09.06 EDT
Stellantis and the iPhone assembler Foxconn have agreed a deal to work together on in-car information and entertainment technology, in a sign of the accelerating convergence between the tech and automotive sectors.
On Tuesday, the companies revealed a 50-50 joint venture to develop touchscreens to control many of the car’s functions, as well as providing entertainment for passengers and “seamless” integration with apps on customers’ smartphones.
For Foxconn the deal will allow it to continue its push to diversify earnings away from dependence on Apple, potentially putting its technology in millions of cars per year. For Stellantis, formed at the start of 2021 in a merger between Peugeot and Fiat-Chrysler, it will allow it to catch up with rivals in the race to sell services via in-car apps.
Software is increasingly seen as the key battleground for the automotive industry, as tech firms eye the possibility of selling services such as mapping and video streaming to people sitting in connected cars.
Analysts at UBS, an investment bank, predicted the automotive software market will have expanded to $1.9tn (£1.4tn) by 2030 – more than current revenues for selling cars with internal combustion engines.
There are 250 software engineers working on the Stellantis-Foxconn joint venture already, mainly from Foxconn, which is a subsidiary of Taiwanese parent company Hon Hai Precision Industry. The joint venture will aim to provide technology to Stellantis’s brands, which also include Vauxhall, Jeep and Alfa Romeo, as well as to other carmakers.
Carlos Tavares, Stellantis’s chief executive, said software would be key for the new company.
“It was clear from day one that we had to transform ourselves,” he said on a conference call on Tuesday to announce the deal. “Software will be at the core. This disruption is a must for Stellantis.”
Tesla, the US electric car pioneer, was the first carmaker to put a large touchscreen in mass-produced cars, and it is seen by some analysts to have a significant software lead against traditional carmaking rivals.
Fiat-Chrysler and Foxconn first announced that they were working together on electric car technology in January 2020, but work on the partnership was interrupted by the long merger process.
The Stellantis-Foxconn tie-up does not include contract manufacturing of parts beyond the “infotainment” system, but the Taiwanese company is also pursuing deals to build entire cars for other companies. It has already agreed to build electric SUVs for US startup Fisker and Chinese startup Byton.
Electric cars have significantly fewer moving parts than their fossil fuel counterparts, meaning the barriers to entry could be lower for wealthy tech companies. Apple itself has long considered working on an electric car.
Foxconn is the biggest assembler of iPhones for Apple, a position that has earned it enormous revenues of 5.3tn Taiwanese dollars (£135bn) in 2020.
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