Fiat Chrysler, Foxconn to partner on electric vehicles in China

Fiat Chrysler Automobiles NV wants to develop and produce electric and internet-connected vehicles in China with the main assembler of Apple Inc.'s smartphones, as the automaker looks to make up for lagging technology.

Foxconn Technology Co. Ltd. on Thursday said in a filing in Taiwan, where it is based, that it plans to establish a joint venture with Fiat Chrysler in which the automaker would own 50% of the partnership. A contract, however, has yet to be signed.

An FCA spokesman declined to comment. Foxconn did not immediately reply to an emailed request for comment.

The cooperation would mark one of the most significant steps for Fiat Chrysler into developing battery-powered vehicles in China, the largest electric vehicle market in the world where its rivals have invested large sums amid stricter carbon emission regulations. Fiat Chrysler has been less aggressive, experts have said.

"FCA definitely needs to have a partner in China, particularly in electric vehicles," said Sam Abuelsamid, a mobility analyst at Navigant Research. "If they get help from Foxconn and potentially some other Chinese battery suppliers, that would help jump-start them."

The cooperation with Foxconn would combine innovation, research, development and manufacturing efforts between the two companies "to enhance industrial advantages," Foxconn, which is known formally as Hon Hai Precision Ind. Co. Ltd., said in the filing. It would hold 40% or less of the joint venture. The companies also would establish a common office.

High-tech vehicles are desirable in the Chinese market. Having the high-volume production expertise of Foxconn as a partner for Fiat Chrysler could provide the automaker advantages in its infotainment systems, future over-the-air updates and other technologies, Abuelsamid said.

But Foxconn has developed a reputation for being slow to materialize its commitments, missing deadlines and changing plans for a massive, heavily subsidized manufacturing plant in Wisconsin for which it had competed with Michigan. A similar situation at a smaller scale happened in Pennsylvania.

Foxconn's potential tie-up comes as Fiat Chrysler continues its efforts to develop partnerships to invest in future technologies, including electrification. Most notably, it is seeking to merge with French automaker Groupe PSA of the Peugeot brand to create the scale to do so.

The Chinese market has long been a weakness for Fiat Chrysler, as its Jeep SUV brand struggled to take off in its early days there. The company last spring underwent a restructuring of its joint venture in the country with Chinese automaker Guangzhou Automobile Group Co. Ltd.

Across the industry, sales fell for a second consecutive year in 2019 in China with forecasters predicting the trend will continue, especially after much of the government's subsidies for electric vehicles expired.

General Motors Co., the country's second-larger automaker, saw sales decline 15% for the year. Ford Motor Co.'s fell 26%. Fiat Chrysler does not break out its China sales, where it holds less than 1% of market share. Lower demand in the third quarter of 2019 hurt results in the market, the company said at the time.

As a result, the Foxconn partnership would be "likely to struggle," Abuelsamid said. "It's going to be tough for FCA to break into that market and get a significant foothold in a market where you've got a lot of companies struggling for market share in a shrinking market."

But, he added, the collaboration might give it a better shot at success than going alone.

bnoble@detroitnews.com

Twitter: @BreanaCNoble