Fiat-Chrysler has been slow to embrace the EV hysteria auto manufacturers are racing to enter. Companies are spending billions of dollars in EV and autonomous development while Fiat Chrysler stands mute. But now for long. Hon Hai Precision Industry Co. is establishing a joint venture with Fiat Chrysler to build electric vehicles.

The Taiwanese company is a subsidiary of giant tech manufacturer Foxconn Technology Group. They manufacturer Apple iPhones. So, let’s just say this is a huge development deal with two enormous manufacturing companies. Their plan is to sell them in China.

iPhone manufacturing is half of Hon Hai’s sales

Apple manufacturing accounts for half of Hon Hai’s sales. It has wanted to expand its manufacturing capabilities and has tied in with other EV ventures. None of them have been successful and produced any vehicles. 

So, Hon Hai’s electronics expertise is big. And Fiat Chrysler’s vehicle manufacturing expertise is strong so this looks like a great matchup. In an exchange filing, Hon Hai said it will split 50/50 the stake in the venture with Fiat Chrysler.

Fiat Chrysler/Hon Hai target China market first

Their plan is to target the Chinese market first. After that, it might start exporting around the world. Since China is the largest market for EVs this makes sense.

 “Hon Hai will be responsible for design, components, and supply chain management,” Chairman Young Liu told Bloomberg News. The company has stated previously it didn’t want to get into the actual manufacturing of vehicles. If this union bears fruit, it will give Fiat Chrysler a companion EV to its GAC Fiat Chrysler Chinese manufacturing.

Fiat Chrysler has been manufacturing vehicles in Changsha, China, since 2012. Besides sedans early in the joint venture it now manufactures Jeep Cherokee, Commander, Compass, and Renegade. In 2017 alone Jeep sold over 200,000 vehicles manufactured there. Those sales figures dropped to 125,000 in 2018. 

Fiat Chrysler already has a large footprint in China

Still, Fiat Chrysler has a large footprint in China. Consumers buy more electric vehicles in China than anywhere else in the world. Unfortunately sales have fallen since the government cut back on subsidies. The market in general has also slumped with 2020 expected to continue the slide. 

What’s unclear is how this joint venture will affect the Fiat Chrysler merger with PSA Group in France. PSA has been building vehicles in China since 1992. It announced in November it was selling its stake in Chongqing Changan Automotive. 

Peugeot and Citroen are also manufactured in China

It is also closing two of the four assembly plants it shares with China’s Dongfeng Group. Together they produce both Peugeot and Citroen vehicles for China. This comes with overall vehicle sales falling sharply in China. 

Sales of PSA vehicles hit around 300,000 both in 20014 and 2015, but tanked to only 50,000 in 2019. That is why the PSA Group has pulled in on vehicle involvement in China.

PSA sells two EVs in China under the Fukang brand. The ES500-a sedan, and e-2008-a hatchback, were developed by Dongfeng. So, all of the shuffling and positioning by PSA over the last few years may have played a hand in the Fiat Chrysler joint venture announcement today.