Automaker Fiat Chrysler prepares to set up a joint venture with the parent of iPhone assembler Foxconn to make electric cars and develop internet-connected vehicles in China, as it looks to form ground in electric mobility.
Fiat Chrysler (FCA) – which is set to release its first full-electric model, the 500 small car, this year – last month it reached a binding agreement for a $50 billion tie-up with France’s PSA to form the world’s No. 4 automaker.
The merger with PSA would help FCA to strengthen resources to fulfill strict new emissions rules and investments in electric mobility, where it has so far lagged its major rivals.
FCA confirmed on Friday it was in discussions with Hon Hai on the possible creation of a 50-50 joint venture to develop new generation battery electric vehicles and engage in the IoV, or ‘Internet of Vehicles’, business, with firstly focusing on the Chinese market.
FCA’s statement came after Taiwan’s Hon Hai – the parent of Foxconn – declared details about the potential joint venture in a separate statement.
FCA said that it would allow the parties to bring together the abilities of two established global leaders throughout the spectrum of automobile design, engineering and manufacturing and mobile software technology to dedicate themselves to the growing battery electric vehicle market.
Intesa Sanpaolo analyst Monica Bosio referred to the possible deal as “positive”, though it was not expected to have a major impact on FCA fundamentals in 2020 and 2021.
“It should help FCA and the future combined entity FCA-PSA to shorten its gap in the electric vehicles and in Asia,” Bosio stated.
In extra evidence of how traditional automakers are speeding up their electric push into the world’s largest auto market, Volkswagen is about to take a 20% stake in Chinese electric vehicle battery maker Guoxuan High-tech, two sources informed Reuters.
FCA stated it was on its way of signing a preliminary agreement with Hon Hai, wanting to reach final binding agreements in the next few months.
However, it added there was no assurance that final binding agreements would be finalized or would be finished in that timeframe.
With a share of China’s passenger car market of about 0.35%, FCA presently operates in the nation through a loss-making joint venture with Guangzhou Automobile Group (GAC).
However, the joint venture does not manufacture electric car models, raising doubts it could satisfy China’s tough emissions rules and green car quotas.
FCA Chief Executive Mike Manley in 2019 stated the group had “streamlined” the structure of its Chinese partnership and appointed new leadership to enhance its competitiveness.
Foxconn has been investing enough in a range of future transport ventures for some years, including Didi Chuxing, the Chinese ride services giant, and Chinese electric vehicle start-ups Byton and Xpeng.
Foxconn has also made investments in Chinese battery giant CATL and a range of other mostly Chinese transportation tech start-ups.
