IPhone manufacturer gets into electric cars via Fiat venture

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The collaboration with Foxconn will also help Fiat gain a solid footing in the Chinese market.

It was unclear what impact Fiat Chrysler's proposed joint venture with Foxconn, formally known as Hon Hai Precision Ind. Co., Ltd., would have on the wider merger, which is expected to be completed in the next year or so. Previously, the contract smartphone manufacturer has invested in ventures dealing with electric vehicles, but this will be the first as the company will actually develop and manufacture its own products.

Hon Hai is the parent of Foxconn, the Chinese assembler of Apple iPhones.

The company would employ its expertise in precision manufacturing and supply-chain management to grow the automotive business to 10 percent of its revenue over the long term, Liu told Bloomberg News.

According to Liu, Hon Hai and FCA are focusing on China due to the sheer scale of the market. Both Fiat Chrysler and Peugeot have experienced delays in the development of electric drives and have had problems increasing sales in China, the world's largest vehicle market.

Fiat Chrysler has struggled to crack the Chinese market for years, and tightening fuel-economy standards and electric-vehicle mandates makes the task even more challenging.

Fiat Chrysler shares were trading down 0.5% at $13.82 at the time of publication Friday.

CEO Mike Manley is trying to reboot Fiat Chrysler's money-losing Chinese operations.

He restructured the automaker's decade-old joint venture with Guangzhou Automobile Group in April, calling the shakeup an attempt to "more rapidly respond to changes in the Chinese market".

While Hon Hai has limited automotive experience, it does bring other things to the table, said Michael Dunne, a China expert and CEO of consultant ZoZo Go.

Hon Hai relies on Apple for about half of sales. But these vehicles could be exported at a later date, according to Foxconn. In further evidence of how traditional carmakers are accelerating their electric push into the world's largest auto market, Germany's Volkswagen is set to take a 20% stake in Chinese electric vehicle battery maker Guoxuan High-tech Co, two sources told Reuters.

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