Fiat Chrysler & Foxconn plan electric vehicle joint venture
Fiat Chrysler wants to set up a joint venture with Foxconn, known primarily as an iPhone contract manufacturer, for the production of electric cars for the Chinese market. Both groups confirmed the plan while details are still being negotiated.
According to Reuters, Fiat Chrysler confirmed on Friday it was in talks with Hon Hai alias Foxconn on the potential creation of a 50-50 joint venture. The new company would look to develop and manufacture battery-electric vehicles in China and also enter in the ‘Internet of Vehicles’ (IOV) business.
The news comes amid the Italian-American carmaker looking to catch up in the e-mobility space. It is set to (re-)launch its first fully electric model, the Fiat 500 this year on an entirely new EV platform. Besides, FCA last year managed to strike a binding agreement to merge with France’s PSA. This will create the world’s fourth-largest carmaker in terms of sales after Volkswagen, Toyota and Renault-Nissan. However, the electric vehicle strategy remains unclear. Both FCA and PSA with the e-CMP are currently rolling out their new e-platforms (or in case of PSA a multi-energy platform for several drive technologies). Stopping one of the platforms shortly after its launch (and converting the plants to the other platform) is a disaster from a business point of view. The parallel operation of two similar platforms also makes little sense – when one wanted to create synergies quickly.
And now FCA is adding a new joint venture to the game that looks like it would create new vehicles again, depending on how they will share the workload. The new agreement, however, is to focus on the Chinese market, a market where PSA is currently underrepresented.
In terms of sharing the work, Nikkei quotes Foxconn saying “our initial plan is to manufacture in China for the local market first,” with exports possible later. Foxconn’s EV business will be handled mainly by group subsidiaries FIT Hon Teng, which makes automobile components, and FIH Mobile, Foxconn’s Android smartphone assembly arm, according to Nikkei. FIH Mobile will provide software solutions for automotive systems in electric cars, Foxconn said.
Foxconn has been an active investor in the electric vehicle market for some time. The company holds stakes in Chinese EV start-ups such as Xiaopeng/Xpeng and Byton for example as well as China’s battery giant CATL.
FCA said it was in the process of signing a preliminary agreement with Hon Hai, aiming to reach final binding contracts in the next few months. However, the company added there was no assurance that definitive binding contracts would be completed in that timeframe. Once binding, Fiat Chrysler will hold 50% of the venture, while Foxconn will own no more than 40% directly.
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