Luxshare Precision "car manufacturing"? Fruit Chain Company accelerated the layout of new energy vehicles

The smart electric vehicle track has ushered in another heavyweight, and Luxshare Precision, which currently has a market value of nearly 300 billion, has decided to enter.

At a research meeting on February 13, Wang Laichun, chairman and general manager of Luxun Precision, said: "We believe that Smart EV is an opportunity that Chinese automakers have not encountered in a hundred years... The opportunities brought by the Smart EV (Smart Electric) include not only the whole vehicle, but also the more vitality of the Tier1. ”

Luxshare Precision's market positioning is the tier 1 supplier (Tier1) of the depot. Wang Laichun said that the market size of Tier1 itself is almost 70% of the total output value of all car companies, such as the world's four major Tier1 manufacturers Bosch, Denso, ZF, Magna, the revenue scale is more than 30 billion US dollars. Among the world's top 100 Tier1 manufacturers, there are 8 Chinese companies, and under the new pattern, the market needs ODM to build cars.

At the same time, she stressed: "Luxshare Precision does not build the whole vehicle, but cooperates with Chery New Energy to develop the ODM business of building a good car for others, and aims to seize the window of opportunity to fight into the world's leading Tier1." ”

Cross-border is not easy, need more resources and support, Luxshare Precision chooses and car companies to make alliances. On February 11, Luxshare Precision issued an announcement that the company and a number of Chery companies signed the "Strategic Cooperation Framework Agreement", and Luxun Precision and Chery New Energy intend to jointly establish a joint venture company, specializing in the research and development and manufacturing of new energy vehicles.

Capital is naturally indispensable, and Luxshare Precision enters the game with heavy gold. On the same day, Lixun Precision Controlling Shareholder Lixun Co., Ltd. signed the Equity Transfer Framework Agreement with Qingdao Wudaokou, stipulating that Lixun Limited would purchase 19.88% of the equity of Chery Holdings, 7.87% of the equity of Chery Shares and 6.24% of the equity of Chery New Energy held by Qingdao Wudaokou for 10.054 billion yuan, and after the completion of the transaction, Lixun Limited would not form control over Chery Holdings, Chery Shares and Chery New Energy.

Some manufacturing foundry executives told the 21st Century Business Herald reporter: "New energy vehicles contain a huge blue ocean market, which is an industry that everyone will definitely cut into." "For the huge automobile industry, the amount of tens of billions of dollars may only be the beginning, which warriors can compete for a place in the future, and will stage a protracted competition."

10 billion to start

Luxshare Precision itself has been broadening its product line and looking for a new growth curve. As a leading manufacturer of consumer electronics and an important supplier of Apple, Luxshare Precision once soared in market value of more than 400 billion yuan, but now it is declining.

From the performance point of view, Luxun Precision volume is still growing, but due to the impact of the epidemic, raw materials, consumer electronics boom, etc., the growth rate of non-net profit in the first half of 2021 is lower than market expectations. At the same time, the pain points of the fruit chain relying on apples have always existed, and market sentiment is also fluctuating, and Luxshare Precision wants to cultivate more robust product lines.

All along, Luxshare Precision has carried out a series of acquisitions, step by step into notebook cables, automotive electronic cables, mobile phone cables, communications, headphones, wireless charging, to iPhone assembly and other fields. Among them, the OEM Apple's wireless headphones AirPods are widely known, in the industry's view, a large number of OEM Airpods marks the strength of Luxshare Precision in high-complexity and precision intelligent hardware manufacturing and scale production, and also allows Luxshare Precision to achieve a breakthrough from parts to the whole machine FOUNDRy.

Now, Luxshare Precision is entering a new track. According to the financial report, in 2020, Luxshare Precision achieved sales revenue of 92.501 billion yuan and net profit attributable to the parent company of 7.225 billion yuan. From the numerical point of view, Luxun Limited's investment of about 10 billion yuan exceeded the net profit attributable to the mother of Luxun Precision for the whole year of 2020.

Its determination to invest in new energy vehicles is evident. Industry insiders told reporters that the level of investment of tens of billions is the beginning, the main source of income of Lixun Precision is still from the consumer electronics industry, although the revenue growth rate of automobile-related business is high, but the proportion of the base is low. The addition of large-scale enterprises will have an impact on the market, and whether it can become a "new storm" in the market also needs to observe the landing products.

For customers and models, Luxshare Precision did not disclose the specific situation, "but the ODM business has a relatively clear landing project, which will be put into production in about 12-18 months." The joint venture is expected that the main target business will be the business of foreign traditional brand car companies and the domestic new Smart EV brand business," said the executive of Luxshare Precision, "Luxshare Precision synergistic ODM car investment, in addition to the need for more investment overseas, in the domestic ODM car, currently based on Chery's existing production capacity platform and the future Chery new energy related planning, Luxshare Precision does not need too much investment, and we are determined to participate, focusing on Tier1, will be combined with interests to consider the decision." ”

After holding hands with Chery, Luxshare Precision said that it will seize this opportunity to achieve Tier1 take-off in the next 35 years, and achieve 1 to 100 in the rapid realization of important components from 0 to 1 and rapid growth in scale through the new platform.

At the same time, the executives of Luxshare Precision also frankly said: "Luxun Precision's automotive business started from scratch, after 10 years of development to achieve a breakthrough, to reach the current scale of revenue, so it is very difficult to achieve a breakthrough from 0 to 1 or 1 to 100." Especially in this period, if we follow the current rhythm and speed, we are afraid of missing the window. Especially when there is an ODM opportunity, we are also worried about losing the opportunity to enter key components. ”

Fruit Chain's new car arena

On the other hand, in recent years, from Foxconn to Luxshare Precision, Apple's foundries are accelerating their entry into the field of new energy vehicles. Some investors told reporters that after the vigorous semiconductor investment boom in previous years, the new energy automobile industry chain this year is the focus of attention, and the valuation of enterprises in the upstream of the industrial chain has been very high.

According to data from the Ministry of Industry and Information Technology, the annual sales of new energy vehicles will exceed 3.5 million units in 2021, and the market share will increase to 13.4%. The Association expects that new energy vehicles are expected to exceed 6 million in 2022, and the penetration rate of new energy vehicles will reach about 22%. No one wants to miss the industrial opportunity, Apple cars or still on the road, but the foundry has been in advance to lay the foundation.

In fact, foundries have long been involved in the automobile industry, but the degree of participation in the industrial chain has not been very deep, and now they want to deepen the tentacles of foundry into the new energy industry.

According to reports, the main products of Luxshare Precision's automotive business are connectors/connecting wires, low/high voltage vehicle wiring harnesses, special wiring harnesses, etc., and the main customers include domestic traditional car companies, new car manufacturing forces and some large Tier1 manufacturers. In addition to the original traditional business, BCS outside the body has now added intelligent cockpit, intelligent driving, power module, Internet of Vehicles and other services, with customers all over the world, including Volkswagen, General Motors, Tesla, BBA and Japan's three major brand customers.

According to Luxshare Precision, when the ODM car-making business model was less than one million units in the early stage, Luxshare Precision was more to assist Chery to develop ODM business and build the platform well, because there were essential business differences and management differences between doing brand and doing ODM. With the continuous development of the ODM business, the core components business will also be brought into play.

In addition to Luxshare Precision, Foxconn is an industry pioneer. Hon Hai Group has made a series of moves in 2021, released three electric vehicles, cooperated with the American electric vehicle company Fisker, and geely established an automobile foundry company to invest in Byton. Although the development of Byton is lamentable, the pace of Foxconn's investment has not stopped, and the intensity is still increasing. Liu Yangwei, chairman of Hon Hai Group, previously said that the global electric vehicle market is expected to reach 36 million vehicles per year from 2025 to 2030, while Foxconn will take 10% of the global market share from 2025 to 2027.

Whether it is Foxconn or Luxshare Precision, they have entered the oem of the whole vehicle through cooperation. Luxshare Precision is experimenting with new models, and Foxconn has a wider range of layouts from brand to manufacturing. Although some companies are not currently involved in automobile manufacturing, they have also entered the links of components and automatic driving, such as LingyiZhi manufacturing acquired Zhejiang Jintai in June 2021, horizontally expanded the layout of new energy vehicle structural parts business, and issued an announcement in July to invest in the construction of battery precision structural parts projects in Jingmen, Hubei Province. Overseas Flex has also long been involved in the automotive field and participated in Baidu's autonomous driving solution cooperation.

Vertically, Luxun Precision and other manufacturing representatives are extending their comprehensive strength to the integrated layout; horizontally, the head enterprises of Apple's industrial chain are extending their boundaries, with the changes in user needs and brand demand, foundries have also entered the stage of integration and intensive competition of the whole industry chain.

The track of new energy vehicles is in contention, and foundries are facing not only the competition of peers, but also the old automobile supply chain and the competition of a number of technology giants, such as Huawei's positioning is also as a supplier to help car manufacturers build good cars.

The players in the stadium are faced with opportunities, questions, challenges, and even failures. Who will be the real warrior in the new energy vehicle market, and wait and see.