China’s social network giant Tencent Holdings Ltd. has teamed up with Taiwan’s Hon Hai Precision Industry Co. Ltd. for an electric car business venture, marking another partnership that focuses on developing smart cars.
According to the contract manufacturer, Tencent, Hon Hai and luxury car dealer China Harmony Auto Holding Ltd. inked an agreement where they will work together in Zhengzhou City in Henan Province.
The recently sealed deal serves as Tencent’s move to be at par with its other online peers such as Baidu, Inc. and Alibaba Group Holding Ltd. in terms of entering the smart car market via partnerships with auto-making firms.
What sets the Hon Hai-Tencent-China Harmony Auto coalition is the absence of a carmaker, as opposed to the strategies of Alibaba and Baidu.
In this venture, Hon Hai will lend its manufacturing capabilities, while Tencent and China Harmony Auto will explore commercial possibilities for the electronic vehicles.
Though Hon Hai is widely known for assembling majority of Apple’s iPhones, it is already experienced in manufacturing e-vehicles. The firm has manufactured U.S. automaker Tesla Motors Inc.'s mobile touch screens.
Hon Hai has been doing manufacturing operations in China for years now. Recently, it has stepped up its move to expand from the competitive, low-margin contract business. Last year, the Taiwan-based company bought 10 percent of China Harmony Auto.
The market of electronic vehicles has not been faring well in China, amid the government’s efforts to give the market subsidies and support. Part of these efforts are setting aggressive emission standards and renewing tax breaks.