An abrupt top management shakeup at China's Byton Auto is casting clouds over a cooperation deal between Foxconn Technology Group and the Chinese EV startup.
China's state-run First Automotive Works (FAW), now a major creditor of the debt-ridden Byton, recently has unexpectedly taken over its management and appointed Zhang Ying, a legal representative of many subsidiaries under FAW Group, to serve as new chairman at Byton, aiming to re-chart the EV maker's development course, according to industry sources.
Foxconn has moved to withdraw its managers and workers from Byton's Nanjing-based plant, awaiting further development of the management reshuffle, the sources said.
In January 2021, Foxconn, Byton and Nanjing Economic and Technological Development Zone signed a strategic cooperation agreement to jointly accelerate production for Byton's first M-Byte SUV by the first quarter of 2022.
Under the pact, Foxconn would give supply chain management and operational support to Byton, helping it get its production back on track after it suspended operations in July 2020 amid financial difficulties.
Byton blamed the COVID-19 pandemic for its financial woes and embarked on a six-month restructuring plan trying to turn its business around. As part of the plan, FAW and Nanjing city government formed a new company in September 2020, dubbed Shengteng Automobile Technology, to raise new funds for the production of the M-Byte, the sources said.
Byton was originally set to gradually resume volume production starting July this year, but FAW's sudden move to install a new chairman at the company has highlighted its determination to thoroughly adjust the EV maker's management strategy and product roadmaps, the sources continued.
FAW has yet to unveil future development directions for Byton, but may have some options to handle the matter, the sources said. It can choose to maintain cooperation with Foxconn based on the original pact with Byton, continue volume production of the planned battery-powered SUV on its own, or dispose of Byton's plant equipment and technology assets, the sources added.
At the moment, there is no need for Foxconn to get involved in the event and all it can do is to wait for the issue to settle down, the sources stressed. Foxconn has not injected any sum in its cooperation deal with Byton and therefore would not incur any financial loss should FAW finally decide to drop the deal, but it may lose an opportunity to accumulate EV manufacturing experience and expertise, the sources added.
