Google and Alibaba Competitor's Hon Hai and Tencent Partner in Electric Car Business

Hon Hai Precision Industry Co., the world's largest contract electronics maker, teamed up Monday with China's Tencent Holdings Ltd. and a Chinese luxury car dealer to develop Internet-connected electric vehicles.

March 23, 2015; J.R. Wu in TAIPEI; Jake Spring and Paul Carsten in BEIJING writing for Reuters reported that Taiwan's Hon Hai Precision Industry Co Ltd on Monday said it has partnered Chinese social networker Tencent Holdings Ltd to develop opportunities related to electric vehicles, marking the latest tech foray into "smart" cars.

Hon Hai, WeChat operator Tencent and luxury car dealer China Harmony Auto Holding Ltd signed an agreement to work together in the Chinese city of Zhengzhou, Henan province, the contract manufacturer said without detailing specifics.

The partnership would put Tencent on a par with online peers Alibaba Group Holding Ltd and Baidu Inc, which have already moved into the nascent market for Internet-connected cars vie tie-ups with major auto makers.

Hon Hai said the coalition would form a working team drawing on its manufacturing capabilities, Tencent's Internet platform and China Harmony Auto's dealership network, to explore commercial possibilities in smart electric vehicles.

Hon Hai, known more for assembling the bulk of Apple Inc's iPhones, already has experience with electric vehicles having manufactured the touch screens in some cars made by U.S. automaker Tesla Motors Inc.

The absence of a carmaker from its new partnership appears to put the group on a different tack to that of Alibaba or Baidu in targeting electric vehicles.

That market has largely failed to flourish in China, though the government has given it years of subsidies and support. The government has redoubled efforts to promote electric vehicles, renewing tax breaks and setting aggressive emission standards.

Hon Hai has manufacturing operations across China and has been working to diversify from the competitive, low-margin contract business. As part of that drive, it bought around 10 percent of Zhengzhou-based China Harmony Auto last year.

China Harmony Auto was not available to comment on the latest partnership. Tencent declined to provide immediate comment.

Editing by Christopher Cushing