Foxconn Is Building an Electric Car Factory Next to Where It Makes iPhones

The core of Foxconn’s business is in Zhengzhou, the capital of Henan province in central China, known as “iPhone City.” That’s where a network of suppliers, infrastructure and factories, and sometimes as many as 250,000 Foxconn employees, manufacture most of the world’s iPhones for Apple.

Now Foxconn, a Taiwanese electronics giant, is planning to build a new, 700-acre campus in Zhengzhou to make electric cars.

The question is, who will be the customers?

In February, Apple canceled its long standing project to develop electric cars after plowing more than $10 billion into it. Many of its rivals in China have charged ahead.

For Foxconn, the investment in Zhengzhou is part of a broader push to reduce its dependence on Apple. Sales of iPhones in China have slumped, and Apple and other American device makers have shifted some manufacturing to other countries.

Foxconn plans to make cars designed and sold by other companies, the way it has made iPhones for Apple. So far it has won orders from Luxgen, a subsidiary of a Taiwanese automaker it has partnered with to make a limited number of buses and cars.

“They need a breakthrough, which means finding a major customer,” said Kirk Yang, the chairman of private equity firm Kirkland Capital.