Taiwan-based electronics giant Hon Hai Precision Industry Company, better known as Foxconn, this week announced it has signed a strategic agreement with China's Zhejiang Geely Holding Group to produce electric vehicles, components and advanced systems for third-party companies.

Each partner will hold a 50% stake in the joint venture, which will produce electric vehicles and provide components and services for third-party companies looking to outsource production. Details of the location of the new company and when it will begin providing these services were not disclosed.

Foxconn said in a statement the two companies would establish a joint venture company to provide "OEM and customised consulting services relating to whole vehicles, parts, intelligent drive systems, automotive ecosystem platforms to global automotive enterprises and ridesharing companies". 

The company elaborated "the new joint venture will revolutionise the automotive industry model by introducing the Information and Communication Technology (ICT) division of labour to help automakers accelerate their transition to new innovative and efficient manufacturing processes and business models based on CASE (Connected, Autonomous, Shared and Electrified) technologies".

Young-way Liu, Chairman of Foxconn Technology Group, said "this alliance between Geely Holding and Foxconn represents a milestone in cooperation between the automotive industry and ICT industry. With Foxconn's globally leading R&D technologies, intelligent manufacturing and hardware-software integration capabilities, the two parties will form a highly complementary partnership that will allow us to better serve and meet the diverse needs of different customers and offer the most advanced, fastest and the most cost-effective full value-chain vehicle production service platform".

Geely CEO Daniel Donghui Li added "the global automotive industry is undergoing profound changes. We must actively embrace change, build alliances and synergise global resources to create greater value for our end users". He added that Geely Holding Group would provide its "expertise in automotive design, engineering, R&D, intelligent manufacturing, supply chain management and quality control" to help "transform, improve and achieve high quality development of the manufacturing industry".

Analysts believe the joint venture would be in a strong position to respond to the growing number of tech companies, such as Baidu and Apple, which are looking to enter the smart electric vehicle segment. The outsourcing of production of smart EVs, advanced systems and design/engineering services could become a significant growth segment this decade.

Earlier this month, Foxconn agreed to provide support to Chinese EV startup Byton to help it launch production of its first battery powered car in the first quarter of 2022. Last year it announced a partnership with Fiat Chrysler to develop and make electric vehicles in China.

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