“In China, where the future of the car is looking more and more electric, newcomers to the auto industry are looking for partners to help them build their vehicles,” Norihiko Shirouzu reports for Reuters. “Enter Canadian auto supplier Magna International which aims to spearhead a shift to contract vehicle manufacturing through its new partnership with state-owned Chinese carmaker BAIC Group.”

“According to five people familiar with the matter, their joint venture is likely to build vehicles for ride-hailing giant Didi Chuxing and possibly Chinese electric car startup Singulato Motors, in addition to BAIC’s electric unit BJEV,” Shirouzu reports. “The Magna-BAIC deal, announced in June, realizes a long-held dream of Magna Steyr, the supplier’s Austrian unit and the world’s biggest player in the still niche business of contract car assembly, to expand beyond Europe.”

“It could also portend the rise of an ‘automotive Foxconn’ for electric cars – an idea discussed by industry executives for years,” Shirouzu reports. “Given EVs’ low volumes compared to traditional models, it makes sense for some firms to outsource assembly in the same way Apple Inc and other tech companies do with Taiwan’s Foxconn.”

“Magna is well placed to take on the challenge, already producing cars for Mercedes-Benz, BMW and Jaguar in Europe, including the all-electric Jaguar I-Pace SUV,” Shirouzu reports. “‘This is exactly what some people think companies like Tesla should have done — let experienced companies like Magna do the manufacturing for them,’ said James Chao, Shanghai-based chief analyst at consultancy IHS Markit. ‘They would allow them to ramp up much more quickly, without production hiccups.'”

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