Saudi Arabia and Hon Hai Precision Industry Co (鴻海精密) are in talks to form a joint venture to make electric vehicles (EVs), a move that could help accelerate plans by the oil-dependent kingdom to diversify its economy, people familiar with the matter have said.
Saudi Arabia’s Public Investment Fund, which manages about US$450 billion of assets, would create a new entity named Velocity to be the majority stakeholder of the joint venture, said two of the people, who asked not to be named.
Hon Hai would provide software, electronics and the electrical architecture for the new EVs, and would be a minority shareholder in the collaboration, one of the people said.
Photo: CNA
The arrangement would help the country gain experience in manufacturing vehicles, another person said.
The joint venture is looking to assemble EVs on a chassis licensed from BMW AG, sources said.
The parties aim to sign a deal by the end of this year, although no final decisions have been made and the plans could still change, one of the people said.
Saudi Arabia has had ambitions for years to develop a domestic vehicle industry as part of its attempts to wean the economy off a reliance on oil sales. Those efforts have mostly failed.
The kingdom is trying a new tactic, with the fund leading investments into the industry. In 2018, it took a majority stake in EV start-up Lucid Motors Inc to encourage the firm to develop a manufacturing site in the kingdom.
Earlier this year, Saudi Arabia hired advisers including Boston Consulting Group to explore establishing its own domestic electric automaker.
Hon Hai, the fund and BMW all declined to comment.
Hon Hai, a key Apple Inc assembly partner, has been branching out into EV development and production over the past year, seeing the rising interest in the sector as a potent growth driver.
In its most notable EV move to date, the company in October agreed to acquire Lordstown Motors Corp’s pickup manufacturing facility in Ohio as part of a US$280 million deal.
The iPhone assembler unveiled its first EVs two weeks later, boosting its credentials as a serious candidate for Apple’s secretive vehicle project.
Hon Hai chairman Young Liu (劉揚偉) last month said that the company is planning to launch an EV project in the Middle East focused on software for passenger cars.
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