Foxconn buys 50% stake in Mitsubishi's EV unit for $727M
What's the story
Taiwanese tech giant Foxconn has announced its plan to acquire a 50% stake in Mitsubishi Electric Corp's automotive-components business. The deal, worth JPY 115 billion (roughly $727 million), is part of Foxconn's strategy to expand its electric vehicle (EV) contract manufacturing capabilities. The acquisition values the business, Mitsubishi Electric Mobility, at an enterprise value of JPY 320 billion.
Fiscal implications
Mitsubishi Electric Mobility's financials
Mitsubishi Electric expects an impairment of some JPY 100 billion in the current fiscal year due to this deal.
Mitsubishi Electric Mobility's latest annual results for the year ending March showed an operating profit of JPY 54 billion on revenue of JPY 876 billion.
For the fiscal year ending March 2027, Mitsubishi Electric Mobility expects revenue of JPY 820 billion and an adjusted operating margin of 9.3%.
Sales target
Stake sale expected to be completed by October 2027
The partners are targeting to build a business with over JPY 1 trillion in sales.
Mitsubishi Electric will revise its full-year earnings guidance on October 30, while the stake sale is expected to be completed by October 2027, subject to regulatory approvals.
At a Tokyo press briefing on Monday, the companies announced plans to integrate Mitsubishi Electric's electric-powertrain, autonomous-driving and in-car intelligence technologies into Foxconn's EV platforms.
Strategic alliance
Foxconn's EV strategy
Jun Seki, head of EV strategy at Foxconn, said the partnership would combine their operational scale and execution speed with Mitsubishi Electric's engineering and production expertise.
The deal gives Mitsubishi Electric a partner to grow its automotive-parts business while giving Foxconn a bigger stake in the industry as it looks to apply its contract-production model on electric vehicles.
The deal comes amid rising competition from Chinese EV makers, who are challenging a market dominated by Japanese and German carmakers.
Future prospects
Plans for the future
Mitsubishi Electric Mobility, fully owned by Mitsubishi Electric, will keep its name for now.
Equal ownership may not last forever. Seki said the partners could reassess their stakes as the venture develops.
He also expressed hope that if successful, the business could eventually be self-sufficient and pursue a stock market listing.