The automobile industry has entered a new era, not only because of the emergence of vehicle electrification and self-driving technology, but also because of great changes in the mode of production.

Many new car companies have adopted the light-asset model, instead of spending billions of dollars to build new factories and equipment, these upstarts rely on others to make their own products. In other industries, this model is very effective, but there is no guarantee that the light asset model will be successful in the automotive business.

For Henry Fod and his successors, the idea that car companies do not produce their own products on their own assembly lines is heresy. Car companies have never given up manufacturing control of engines, for which engines were, and still are, a huge source of differentiation.

Car companies want to maintain strict control over their suppliers in order to control the quality of parts and negotiate pricing "from the position of strength", as it was and still is. The idea of putting a contract manufacturer between a car company and a supplier doesn't work.

But a new idea is emerging. Apple Inc (AAPL) is rumored to be considering producing a car. The consensus on Wall Street is that the company will design the car and the software it uses, but will not build its own vehicles.

Fisker Ocean SUV, the first product planned by electric car startup FSR, is being built by established auto parts giant Magna International (MGA). Fisk also said that the second car will be built by Foxconn, which makes the iPhone. Nikola (NKLA) chose heavy truck maker Iveco to build its first battery-powered car.

Not everyone is a convert to the new paradigm. Lucid Motors, an electric car start-up, wants to control manufacturing. "the manufacturing process is too important to entrust to a third party," Peter Rawlinson, the company's founder, told Barron Weekly.

He said, "someone has to pay for it. "Rawlinson is referring toSomeone has to fund and run a factory that produces cars. This view is well founded. Every asset-light business model must have a corresponding asset-heavy business model.。

Rawlinson said, "if you use a third party. You have to pay part of it. Third-party manufacturing of light assets is just an illusion. "

Rawlinson admits that third-party manufacturing applies to the mobile phone industry, but the car industry is different. 16-year-olds are generally able to operate their phones without posing any risk to others, but driving is different, so the regulations are stricter. The participation of a third party may slow down the speed of approval by regulators.

In addition, a car tends to cost tens of thousands of dollars and can last as long as a decade, while mobile phones are cheaper and are replaced more frequently. A separate car platform can be used for at least a few years, and the parts needed to build the car have been selected before the model goes into production. So if something goes wrong, the risk will be even greater.

Most of the value of mobile phones lies in software and operating systems, not hardware. Although cars are becoming more software-oriented, for now, consumers are still buying hardware.

But Henryk Henrik Fisker, founder of Fisk, believes there is room for change, and it will benefit the industry as a whole.

"does the operation of the car company really have to be exactly the same as it has been for the past 100 years? "he said. Fisk believes that the slow change in the auto industry is partly due to the large amount of money that car companies have invested in their factories over time. If future car companies focus on design and share the risk of capital investment with other companies, they can accelerate the pace of innovation, he said.

He understands that not every company can build cars. For example, while Magna International, which makes cars for Fisk, is a mature car assembly company, the partnership between Fisk and Foxconn is somewhat different. Foxconn is not as experienced as Magna International in cars, but it hopes to take over a task similar to that of making the first-generation iPhone, "thus bringing about a change", Mr Fisk said.

Change is the common goal of the two companies. Fisk said the design of the car co-operated by the two companies had been determined, and that the unusual car was "different from anything you've seen before," he said.

Car buyers may like the word "change", but it is not easy to sell the idea to suppliers. Component manufacturers invest billions of dollars, and they have their own risks. However, Fisk's assets of nearly $1 billion by 2020 should reassure suppliers about the company's car-building plans with Magna International and Foxconn.

Any supplier worried about the risks of working with Foxconn, which has never produced cars, should not forget that the company, with a market capitalization of more than $60 billion, generates billions of dollars of free cash flow each year and is a stable partner.

Foxconn didn't immediately respond to a request for comment.

When assessing partner risk, you should not underestimate the impact of the other party having sufficient cash. Thomas Healy, chief executive of Hyliion, told Barron Weekly that financial soundness helps on all fronts. "A sound financial position can accelerate progress, suppliers, fleets, original equipment manufacturers. With financial support, things will go more smoothly, "he said."

Original equipment manufacturer (OEM) is a term for companies such as General Motors Co in the automobile industry.

However, it is unclear whether outsourcing will be successful. Rawlinson said, "at present, there is only one super-successful electric car company. What is its approach?" It's vertical integration, 100% internal integration. "

The company is Tesla, Inc.. Musk, like Rawlinson, is a believer in vertical integration.

"I think manufacturing is underestimated," Musk said at the company's annual general meeting and Battery Technology Day last September. "it's much more difficult to design a machine that can make a machine than to make a machine." A prototype is nothing compared to the factory in which it was designed and manufactured. "

Musk even said that becoming the best car company on earth is the most important thing for Tesla, Inc. 's long-term success. "at the end of the day, every car company will have a remote electric car business," he said. "I think every company will have self-driving business, but not every company is good at building cars. "

The debate about the asset-light / asset-heavy business model is not academic. As it becomes increasingly clear whether car companies can outsource car manufacturing, the valuations of their shares will also change.

Lucid Motors is currently the most valuable electric car startup for a number of reasons, including founder Rawlinson himself. As the chief engineer of Tesla, Inc. Model S, Rawlinson helped Tesla, Inc. achieve great success for the first time.

Lucid Motors will issue 1.6 billion shares after its merger with special purpose acquisition firm Churchill Capital acquisition Corp. IV (CCIV), valuing it at approximately $42 billion.

By contrast, Fisk's market capitalization is about $6 billion based on 294 million outstanding shares. The number of shares in both companies includes warrants that may be converted into shares.

Fisk's Fisker Ocean will be available in 2022, Lucid Air is expected to start shipping by the end of 2021, and Fisk and Foxconn will start production by the end of 2023. As these cars hit the market one after another, investors will have a clearer understanding of whether car manufacturing outsourcing is feasible.