Foxconn, the Taiwanese electronics manufacturing heavyweight, has agreed to buy a 50 percent stake in Mitsubishi Electric’s automotive-components business for ¥115 billion ($727 million), according to published reports. The deal would allow Foxconn to build its presence in the electric-vehicle space and help transform the automotive-components venture into a ¥1-trillion-sales business.
The acquisition will enable Foxconn Group to leverage its momentum in the electric-vehicle space and Mitsubishi Electric to build upon its experience in automotive technologies as both seek to benefit from the industry’s rapid evolution.
The two companies announced the transaction in Tokyo on Monday, outlining plans to team up their respective resources and expertise to achieve their aspirations in the quickly changing automotive sector.shi Technologies in Electric-Vehicle Platforms
The Japanese conglomerate will provide technologies in the areas of electric powertrain, autonomous driving and in-car intelligence to support the electric-vehicle platforms that Foxconn — also known as Hon Hai Precision Industry Co. — is building, according to Reuters.
The deal would enable the electronics manufacturing giant to accelerate its efforts to establish itself as a major supplier of powertrain technologies and related automotive electronics to automakers.
Foxconn, which provides manufacturing and related services to technology companies around the globe, has been seeking to diversify away from its traditional customer base and enter the automotive arena, where demand for its electronics is rising.
According to the Reuters report, by acquiring a majority in the automotive-parts business, Foxconn will benefit from the local technologies and expertise that Mitsubishi Electric has accumulated in the industry through the years.
Its investment in its supposed key partner would strengthen Foxconn’s electric-vehicle platform strategy, which focuses on creating modular architectures and technologies that automakers can use to develop and produce electric vehicles faster and more efficiently.
Foxconn has been targeting various segments along the value chain, from vehicle architecture and electronics to manufacturing partnerships, where it can add its technologies to support automakers’ electric-vehicle strategies.
Foxconn’s electric-vehicle platforms approach, including its in-house technologies, is aimed at enabling automakers to launch electric vehicles without having to develop every single aspect, technology and system on their own, according to Reuters.
Meanwhile, the agreement with Mitsubishi would strengthen Foxconn’s ability to support automakers beyond the vehicle architecture, including its core technologies, in its reported push to invest more than the ¥1 trillion goal by 2030.
Mitsubishi Electric Corp, one of Japan’s largest electronics manufacturers, has been partnering with various automotive companies to supply its technologies in power electronics, motors and control systems to automakers.
The company can supply technologies to make electric cars perform consistently and efficiently, while Foxconn can provide end-to-end automotive systems, Foxconn Chairman Young Liu said on Monday, according to Reuters.
Mitsubishi’s technologies can be used to produce electric powertrain devices, while Foxconn can help automakers build electric vehicles using its in-house developed electric-vehicle platforms.
The electric powertrain includes all the technologies needed to deliver the torque and rotational energy that makes a vehicle move, from batteries, to batteries, power modules, motors, and more. It plays a crucial role in the performance and efficiency of an electric vehicle. The combination of technologies from both companies would allow automakers to develop next-generation electric cars.
Meanwhile, the technologies in connected and autonomous driving — including those related to artificial intelligence and vehicle intelligence — are also critical, as automakers look to make their products more intelligent.
Besides partnering with automakers, the new venture would help both companies develop new vehicle architectures by providing a wide range of technologies, including electric powertrain, autonomous driving and in-car automobile intelligence.
With the electric vehicle architectures, automakers can develop various class vehicles, instead of having to redesign all the systems and architecture per vehicle.
According to the Reuters report, Young Liu, Foxconn’s chairman, said that the companies could collaborate to develop car architecture and electrification. He added that the partners were expecting to create an industry that generates more than ¥1 trillion — the size of a major automotive company. The two sides will work together to bring in additional technologies to meet market demands.
The companies will combine their capabilities and expertise, with the aim to target the booming electric-vehicle market and generate significant revenue.
Looking ahead, Mitsubishi Electric’s automotive technologies and expertise will play a key role in helping Foxconn realize its electric vehicle ambitions. And at the same time, its partnership with a technology-focused company like Foxconn gives it the needed push to achieve its own aspirations in the automotive sector.