Taiwan’s Foxconn might soon join forces with Fiat Chrysler to develop electric cars.
Best known for making iPhones for Apple, Foxconn said in a statement on Friday that it is working with the Italian-American carmaker to “explore the possibility” of forming a joint venture to produce electric vehicles and develop a platform for cars that can connect to the internet.
“If the companies move forward, the plan would be to manufacture electric vehicles in China for China’s domestic market with the potential to export to other markets in the future,” Foxconn said.
Shares in Foxconn closed up 2.6% in Taiwan on Friday.
The company’s direct shareholding in the joint venture would be 40% or less, according to a filing submitted to the Taiwan Stock Exchange on Thursday.
Fiat Chrysler did not respond to a request for comment.
Foxconn has deep ties to mainland China and has been investing aggressively in prominent Chinese transportation startups, including ride hailing giant Didi Chuxing and electric carmaker XPeng.
The contract manufacturer’s plans to join forces with Fiat Chrysler come as China’s electric car market faces a few headwinds.
Beijing wants new energy vehicles, a category that includes electric and plug-in hybrid cars, to make up at least a fifth of the country’s auto sales by 2025.
But sales of these cars in China shrank by 4% to 1.21 million last year. Demand was limited by the slowing economy and the government’s decision to slash subsidies in order to thin out the country’s overcrowded field of electric car makers.
Foxconn and Fiat Chrysler would be taking on several Chinese rivals and heavyweights like Tesla, which just opened a new factory in Shanghai and is betting big on China.
Fiat Chrysler, which announced last year it would merge with Peugeot owner PSA Group, is also late to China’s electric car game. Other traditional carmakers such as Volkswagen, Ford and GM have already been pumping millions of dollars into manufacturing new energy vehicles in the country.
China is already a challenging market for Fiat Chrysler. In October, the company reported that third quarter sales in the Asia Pacific region fell 24% year on year, mainly because of weak sales by its China joint venture with GAC Group.