Yulon Group and fellow Taiwan electronics manufacturer Hon Hai Precision Industry, better known as Foxconn, announced a preliminary agreement to set up a manufacturing partnership to develop automotive related products.

Hua-Chuang Automobile Information Technical Center Company (HAITEC), the Yulon chassis and electronic systems subsidiary, has agreed to take a 49% stake and contribute NT$7.6bn (US$253m) in assets and technology to a new joint venture company while Hon Hai would take the remaining 51% and invest NT$7.9bn in cash.

The two partners plan to continue negotiations ahead of a final agreement and formal project launch at a later stage. Hon Hai will contribute its information and communications technology expertise and its supply chain management while HAITEC brings its automotive specific R&D capabilities to the joint venture.

The two partners are understood to be targeting the development and production of drive systems and other electronic/chassis products for electric vehicles.

Last month Hon Hai confirmed it was in talks with Fiat Chrysler for the joint production of electric vehicles (EVs) in China.