Electric vehicles manufacturer Fisker Inc (NYSE:FSR) announced Wednesday a manufacturing deal with Apple Inc (NASDAQ:AAPL) supplier Hon Hai Precision Industry Co., Ltd. (OTC:HNHPF), which is popularly known as Foxconn.
What Happened: California-based Fisker said it has signed a memorandum of understanding with Foxconn for a project, codenamed "PROJECT PEAR," to develop a breakthrough new segment EV.
Under the agreement, Foxconn will manufacture the vehicle, with projected annual volumes of over 250,000. The company expects to have the vehicle to have a global scope, targeting markets in North America, Europe and China.
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Teams from Fisker and Foxconn will establish several workstreams focused on design, technology, engineering and manufacturing, the companies said. They expect to conclude discussions and enter into a formal partnership agreement during the second quarter.
Production is expected to start in the fourth quarter of 2023.
This will mark Fisker's second EV brand following the anticipated launch of the Ocean SUV in the fourth quarter of 2022. Fisker went public in October through a SPAC deal.
"The creation of Project PEAR with Foxconn brings together two likeminded and complementary companies, each focused on creating new value in a traditional industry. We will create a vehicle that crosses social borders, while offering a combination of advanced technology, desirable design, innovation and value for money, whilst delivering on our commitment to create the world's most sustainable vehicles," said Henrik Fisker, CEO of Fisker.
Why It's Important: The deal underlines the value proposition of EV, which is touted as the future of the automotive industry.
Wedbush analyst Daniel Ives estimates the EV market opportunity at $5 trillion in the next 10 years and sees many winners around the globe.
Foxconn's ambitious EV plans include a partnership with Chinese startup Byton and an automotive contract manufacturing services along with Chinese automaker Geely Automobile Holdings Ltd (OTC:GELYF). It also recently appointed Nio Inc – ADR (NYSE:NIO) co-founder Jack Cheng as head of MIH, its open software and hardware platform for developing EVs.
In premarket trading Wednesday, Fisker shares were jumping 26.21% to $20.56.