Apple is adored the world over for coming up with innovative products. But Apple does not manufacture the iPads and iPods that have taken the consumer electronics market by storm.
No, they are made by Foxconn, a Taiwanese company. And now Taiwan wants to follow a similar strategy when it comes to electric vehicles.
More than two decades ago, Taiwan recognized it was going to be swamped by China in its traditional machining, casting and forging industries. The island nation decided it better get into consumer electronics, but it also knew it only was a matter of time until China came to dominate that segment, too.
So it put together a strategy to become a dominant player in the supply chain for consumer electronics. Today, many if not most of the critical components in consumer electronics, even though they are assembled in China, are made in Taiwan.
Taiwan recognizes it never will have enough sales volume in light vehicles to compete with major industrial countries. But it wants to replicate the contract-manufacturing model it built in consumer electronics and become a major player in the EV supply chain.
The country figures if it has world-class components it can sell to any and every auto maker, the world will beat a path to its door.
During a recent trip to Taipei, it was fascinating for me to see the strategic plan Taiwan has put in place. Taiwan is involving its national research laboratories to work on specific technologies for electric cars.
It’s working on batteries, electric motors, power electronics and EV chargers. Then, specific Taiwanese companies are assigned to work with those labs to ensure the research gets developed into commercial products.
Taiwan even came up with a name for its EV initiative: eMIT, which stands for “Engineered and Made in Taiwan.” And it's involved in discussions and negotiations with China to eliminate tariffs on those components, so Chinese auto makers can import them at very low cost.
That's exactly how Taiwan did it in consumer electronics. And the payoff has been huge. Foxconn, for example, has 1.2 million employees, making it one of the largest employers in the world.
The company plans to hire another 300,000 people before the summer is over, with most of those jobs going to China.
That’s right, Foxconn is going to hire more people in the next few months than General Motors’ total global employment. And now it is getting into EV components.
It's instructive to compare Taiwan's strategic approach to the non-coordinated efforts in the U.S. Michigan, for example, has thrown boatloads of incentives at battery manufacturers to locate in the state.
Maybe the state has given away too much. It soon will face a glut of battery capacity, calling into question how many of those battery factories will survive. And the state will play next to no role in manufacturing other EV components.
Despite all the hype, EVs are unlikely to sell in the numbers proponents are promising. Even so, Taiwan's strategy still could pay off. It's also developing electric bicycles, scooters and motorcycles for emerging markets.
Thanks to smaller, portable battery packs that can be recharged easily, those types of personal transportation can sell in big numbers.