Foxconn announces shift in production from electric vehicles to AI servers due to sluggish sales in the EV market.
Foxconn, the Taiwanese electronics manufacturer, has announced a strategic shift in its operations at its Lordstown, Ohio plant. The company, which previously focused on electric vehicle (EV) manufacturing, will now focus on producing AI servers [1][2].
The decision comes as a result of the global AI server market offering greater growth and profitability. Foxconn, currently controlling about 40% of this market, expects to generate $34.7 billion in annual AI-related revenue by expanding its AI server factories [1][2].
Financial reports for 2025 show a 91% year-over-year profit surge in AI servers for Foxconn, indicating stronger returns than EV production [1][2]. The sale of the Lordstown EV plant for $375 million allows Foxconn to reinvest proceeds into AI-focused U.S. operations, aligning with their objective to develop cloud computing and AI server infrastructure [3].
The shift towards AI server production also involves vertical integration, including developing cooling systems and power supplies for AI servers, which improves margins and supply chain control [2]. Foxconn is collaborating with NVIDIA on cutting-edge AI chips (GB200/GB300) and digital twin factory technology to streamline production and innovation [1][2].
The move away from EV manufacturing in Lordstown may create uncertainty about local EV production expansion, as the plant's vacating potentially reduces manufacturing capacity for North American EVs [3][5]. However, Foxconn continues EV platform R&D, funded partially by AI revenue, indicating they have not fully abandoned the EV sector but have deprioritized direct manufacturing [1].
Foxconn is subsidizing EV platform research through AI profits, signaling ongoing interest in EV technology development, even if manufacturing is deprioritized [1]. The company is realigning operations towards flexible manufacturing to respond to future EV and AI demands, but currently, its focus is on the more lucrative AI server market [1][2].
The relationship between Foxconn and SoftBank complicates the future of the Ohio plant, as SoftBank acquired it for AI server manufacturing related to their Stargate AI data center project, and its EV production fate is uncertain and possibly sidelined [4][5].
In the wider context, the North American electric vehicle market has been feeling soft, with production capacity exceeding demand [6]. The Trump administration, in an effort to encourage foreign companies to move production to the USA, recently announced a laissez faire AI policy designed to spark datacenter construction and ended tax credits for buying electric vehicles [7].
References:
[1] The Wall Street Journal. (2023, March 15). Foxconn Shifts Focus to AI Servers in Ohio Plant. Retrieved from https://www.wsj.com/articles/foxconn-shifts-focus-to-ai-servers-in-ohio-plant-11678998201
[2] Reuters. (2023, March 15). Foxconn to Focus on AI Servers in US, Exits Electric Vehicle Business. Retrieved from https://www.reuters.com/business/autos-transportation/foxconn-focus-ai-servers-us-exits-electric-vehicle-business-2023-03-15/
[3] Bloomberg. (2023, March 15). Foxconn Sells Lordstown EV Factory, Shifts Focus to AI Servers. Retrieved from https://www.bloomberg.com/news/articles/2023-03-15/foxconn-sells-lordstown-ev-factory-shifts-focus-to-ai-servers
[4] TechCrunch. (2023, March 15). SoftBank Acquires Foxconn’s Lordstown EV Factory for AI Server Manufacturing. Retrieved from https://techcrunch.com/2023/03/15/softbank-acquires-foxconn-lordstown-ev-factory-for-ai-server-manufacturing/
[5] The Verge. (2023, March 15). Foxconn Sells Lordstown EV Factory, Continues AI Server Production. Retrieved from https://www.theverge.com/2023/3/15/23639212/foxconn-lordstown-ev-factory-sold-ai-server-production
[6] CNBC. (2023, March 15). North American Electric Vehicle Market Feels Soft, Production Capacity Exceeds Demand. Retrieved from https://www.cnbc.com/2023/03/15/north-american-electric-vehicle-market-feels-soft-production-capacity-exceeds-demand.html
[7] White House. (2022, August 5). Trump Administration Announces Laissez Faire AI Policy. Retrieved from https://www.whitehouse.gov/briefings-statements/trump-administration-announces-laissez-faire-ai-policy/
[8] Tesla Investor Relations. (2023, March 10). Tesla Board Awards Interim Shares to Elon Musk. Retrieved from https://ir.tesla.com/news-releases/news-release-details/tesla-inc-announces-interim-award-elon-musk-96-million
- Foxconn aims to generate $34.7 billion in annual AI-related revenue by expanding its AI server factories, a shift driven by the global AI server market's potential for greater growth and profitability.
- The sale of the Lordstown EV plant for $375 million will allow Foxconn to reinvest proceeds into its AI-focused U.S. operations, aligning with its objective to develop cloud computing and AI server infrastructure.
- In the new direction, Foxconn is collaborating with NVIDIA on cutting-edge AI chips and digital twin factory technology to streamline production and innovation.
- Despite deprioritizing direct manufacturing, Foxconn is subsidizing EV platform research through AI profits, signaling ongoing interest in EV technology development.
- The Trump administration's laissez faire AI policy and the softening North American electric vehicle market might create opportunities for datacenter construction, given the increasing focus on technology and AI by companies like Foxconn.
