Reached final agreement on consigned production contract from 2023
Coordinated prices, etc... To have domestic distribution rights for some volumes
A competitiveness foothold of finished vehicles base
Myoungshin recently reached a final agreement with Faraday Future (FF) of the U.S. for consigned production of electric vehicles, and it will be producing250,000 units annually from 2023. Myoungshin has even secured the domestic distribution rights for some production volumes of FF. Earlier, Myoungshin took over GM Korea's Gunsan automobile plant. It is the first case in Korea that an SME company has taken charge of manufacturing and sales of finished cars in the finished car market that has been led by large corporations so far.
Myoungshin has recently reached a final agreement with FF in the US on a contract to produce electric vehicles (model name: FF91). After agreeing on a broad framework including production volume and time, it has begun last-minute adjustments such as price negotiations.
This is the result after one year of exchanging an MOU on consigned agreement with FF in the 3Q of last year. With this contract, Myoungshin will produce up to 250,000 electric vehicles per year from 2023. It will own a portion of the production andwill be able to run the finished car business. The volume for its ownership is known to be up to 10% depending on the production volume. For its own finished car business, Myoungshin is currently in the process of taking over a rental car and car leasing company, and it is preparing to build its own website for online sales. It is also known to be planning to setup its own sales network. A high-ranking official Myoungshin said on the 6th, "I recently visited the United States and discussed with FF in a broad framework, but I cannot disclose details."
With this contract, Myoungshin's EV business that had been at a standstill will gain momentum. Itacquired the GM Korea plant in 2019 but had no mass production for several years. In the same year,Myoungshin signed a consignment contract of 50,000 units per year with Byton of China from 2021, but the business between the two companies fell through as Byton could not endure financial difficulties and went bankrupt.
Based on the contract with FF as an opportunity, Myoungshin cannow leap forward as a specialized EV company. Although it is still only consigned production, it will be able to secure the competitiveness of EVs with its own technology in the futurebased on large-scale production technology.
FF is an electric vehicle company founded in 2014 by Chinese businessman Jia Yueting. It has recently hired a manufacturing expert from Ford and General Motors (GM) and announced the plan to start production within a year. At the beginning of its founding, it received great expectations by attracting large-scale investments from China. However, the company faced a crisis once as the EV production plan failed even after receiving a cumulative investment of $2 billion (about 2.3 trillion won).After, in July of this year, FF succeeded in raising additional funds by bypassing the listing on the NASDAQ market in the U.S. through a merger with Special Purpose Acquisition company(SPAC). FF is known to have secured about $1 billion (1.15 trillion won) in funds.
FF officially announced last month that the FF91 had passed Highway 66 connecting the east and west of the United States and completed the 3653km long-distance road test.
By Tae-joon Park, staff reporter gaius@etnews.com