Taipei-Taiwan-based manufacturing giant Hon Hai Precision Industrial Co. and China's leading e-commerce operator Alibaba Group Holding Ltd. are injecting funds into a Chinese electric car maker, the Wall Street Journal has reported.
In a report dated Jan. 28, the Wall Street Journal said Hon Hai, also known as Foxconn internationally, and Alibaba are participating in a 2.2 billion Chinese yuan (US$348 million) funding round initiated by Xiaopeng Motor.
The report said Beijing-headquartered venture capital firm IDG Capital has also taken a stake in Xiaopeng Motor's latest fundraising gambit.
The proceeds will be used by the Chinese electric car maker to support research and development expenses and production costs, the report said.
Two other Chinese Internet giants -- Baidu Inc. and Tencent Holding Co. -- participated in a separate 2.5 billion yuan funding round previously launched by Xiaopeng Motor.
The Guangzhou-headquartered company has set up design, R&D, production and marketing bases in Beijing, Zhaoqing in Guangdong province and Silicon Valley in California, the car maker's website showed.
It has a workforce of more than 700, and the number is expected to grow to 3,000 in 2019, according to the website.
While the report did not disclose the actual amount invested by Hon Hai in the company's latest funding round, analysts said the move reflected the Taiwanese company's ambitions to extend its reach to the electric car business with an eye toward diversifying its product mix.
Hon Hai, a major iPhone assembler, has taken several steps to become less reliant on its core contract manufacturing business by investing in both hardware production and software development.
Hon Hai Chairman Terry Gou (???) said in an interview in December 2017 that his group was supplying components to U.S.-based electric car maker Tesla.
The company also invested NT$1 billion in Fujian-based electric car battery maker Contemporary Amperex Technology Ltd. in March of last year through a subsidiary in China.
In another recent move, Hon Hai signed an agreement with Tencent and China Harmony Auto Holding Ltd. to form a joint venture to develop smart cars and internet-related businesses, Chinese media reported.
Source: Focus Taiwan News Channel