Chinese bike-sharing Mobike is starting the New Year with good news. Just three weeks after receiving US$215 million fresh funding, the startup announced a strategic partnership with Foxconn, the Taiwanese manufacturing giant behind Apple’s iPhone and numerous other major electronics devices.
As part of this deal, Foxconn has also become a strategic investor in Mobike. The details of the deal, however, were not disclosed.
Partnership with iPhone maker will be a strong boost for Mobike’s hardware business in terms of smart bike production, distribution, as well as enhancing its design and user experiences. A company statement disclosed that the tie-up would boost the annual production capacity for Mobike’s proprietary smart bikes to 10 million, up 5.6 million units annually.
Foxconn also intends to locate production hubs in a number of its facilities globally, in locations close to Mobike’s priority markets. Foxconn will also leverage its strengths in industrial design, R&D, and high-tech manufacturing to enhance the Mobike design, with a particular focus on optimising the user experience and ride quality, the company pointed.
Despite the fashionable designs, Mobike’s innovations in its proprietary smart bike have always been shadowed by criticisms for its exceedingly high production cost.
The cost of the company’s first generation bike is around 20 times of the RMB299 (US$43) deposit, company CEO Davis Wang once told local media. That means that a single Mobike could have cost nearly RMB6,000 (US$874) when the service was first officially launched in April last year.
The firm has managed to lower the production cost to less than RMB2,000 (US$291) and Mobike Lite, a lighter version, costs between RMB200 (US$29) and RMB500 (US$72). But this is still much higher than the per unit cost of its arch-rival Ofo, which has a per bike product cost of around RMB300 (US$43) for its bikes. Apart from that, Ofo allows users to register their own bikes on the platform in a model to connect bikes rather than make them, said Ofo representative to TechNode.
Of course, Mobike’s bikes are more sturdy and thus have a longer life cycle, but still, higher cost per unity may leave the startup capital dependent, a negative factor for a company that has been entangled in a land-grabbing battle with a mounting number of competitors.
Additionally, the high production cost makes Mobike a really asset-heavy startup given it’s now operating in 13 cities across China. These include China’s largest Tier 1 cities – Beijing, Shanghai, Guangzhou, and Shenzhen – where Mobike operates over 100,000 bikes in each location.
Taking too much effort to peddle is another problem beset the company’s smart bike. Getting the wheels rolling on an uphill is no easy feat: Mobike weighs a whopping 25kg, twice the weight of a regular bike. Non-adjustable seat and no damper were among the criticism that raised by local users.
The tie-up with Foxconn is definitely a partnership in need for the company to optimise its hardware and facilitate more quick expansion globally.
“This partnership is all about bringing more bikes to more cities around the world,” said Davis Wang, co-founder, and CEO of Mobike. “In 2017, we aim to enable residents in a hundred cities in China and internationally to enjoy our unique and convenient solution to the global challenge of last-mile travel, and Foxconn is the ideal partner to support these ambitious expansion plans. They are globally renowned for their extremely efficient, high-tech and cost-effective production, and their strengths in design and global supply chain management.”
The article Mobike to double annual bike production through partnership with iPhone maker Foxconn first appeared in Technode.