Japan's Mitsubishi Electric and Taiwan's Hon Hai Precision Industry, known as Foxconn, will set up a joint venture to produce core electric vehicle components, combining their strengths to take on fast-rising Chinese rivals.
Foxconn will acquire a 50% stake in Mitsubishi Electric Mobility, a Mitsubishi Electric subsidiary, for 115 billion yen (about 966 billion won) and convert it into a joint venture, Japan's Nikkei reported on the 19th. The two companies will each hold half, with the share transfer to be completed in October next year.
Kazunori Tanaka will remain president of Mitsubishi Electric Mobility, while Kuan Lun, chief strategy officer of Foxconn's EV business, will join the company's board.
Through the venture, the two companies will jointly develop an electric drive unit, or EDU, that integrates a motor, an inverter and control software. The plan is to secure a competitive edge by pairing Mitsubishi Electric's motor control technology with Foxconn's rapid development know-how. Mitsubishi Electric has a strength in inverter technology that uses its own power semiconductors to improve power efficiency.
Foxconn, the world's largest electronics manufacturing services provider, entered the EV business in 2019. In that business, Foxconn develops not only manufacturing but also chassis — a vehicle's underlying frame structure — and model vehicles on its own. Because the work requires technical expertise in core components and software, the company invested in a subsidiary of German auto parts maker ZF in 2024.
Japan is home to a cluster of automakers that are potential customers, as well as parts suppliers that could become partners. The venture is seen as part of Foxconn's strategy to widen its customer base in the Japanese market. "We want to use Mitsubishi Electric as our base in Japan and work with other parts makers and automakers," Kuan said. Foxconn also disclosed a plan to apply Mitsubishi Electric's core technology to advanced driver assistance systems.
For Mitsubishi Electric, which has struggled with a prolonged slump in its auto parts business, running the operation jointly with Foxconn is seen as a way to share the management burden and cultivate EV components as a new growth driver. The company is expected to shift its focus from an existing business centered on internal combustion engine vehicles toward electrification parts, responding to the rise of Chinese players.
The joint venture plans to target revenue of 1 trillion yen by 2030. Mitsubishi Electric Mobility posted revenue of 875.6 billion yen (about 7.35 trillion won) for the fiscal year ended March. To reach its goal, the company plans to wind down businesses such as car navigation systems and lift its adjusted operating margin to 9.3% for the fiscal year ending March 2027, from 5.7% this year.
The move extends a wave of restructuring in auto parts operations among Japan's large electrical and electronics companies. Hitachi spun off its parts business in 2021, merged it with three Honda-affiliated parts makers and then sold down its stake in stages. Panasonic Holdings last year sold Panasonic Automotive Systems, its automotive electronics subsidiary, to a U.S. private equity fund.