Tech giants venture into China smart car market

"Electric Car recharging" by Michael Movchin via Wikimedia Commons
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The China smart car market is proving to be an enticing sector for major technology companies. The latest addition to the crowd is a new entity created by a strategic arrangement between Tencent Holdings, Hon Hai Precision Industry Co., and China Harmony Auto Holding.

Hon Hai said in a statement it intends to integrate its design and manufacturing capabilities for mobile devices and smart electric vehicles with Tencent’s online platform and China Harmony Auto’s after-sale services to provide a “feasible business model” for Internet-based smart electric cars.

Hon Hai, which trades as Foxconn Technology Group, made a strategic move towards its electric car manufacturing vision when it invested HK$609 million (US$78 million) in late December to acquire a 10.53% stake in China Harmony Auto. The Taiwanese company and is now the second-largest shareholder in China’s largest automobile dealership group.

No financial or other details regarding the agreement were disclosed.

The agreement will leverage Tencent’s Internet platform, Hon Hai’s manufacturing capabilities and China Harmony Auto’s dealership network. Tencent is China’s biggest social network and online firm, known for its widely used instant messaging app WeChat, Hon Hai is the world’s largest contract electronics maker and China Harmony Auto is China’s largest automobile dealership.

Just prior to the Tencent agreement, China’s e-commerce giant Alibaba Group Holding and state-controlled SAIC Motor Corp announced their partnering to develop internet-connected vehicles. The two companies jointly made a 1 billion yuan commitment to an Internet car fund with the aim to roll out China’s first “car on the Internet” in 2016.

Even earlier, in December 2014, the South China Morning Post reported that Leshi Internet Information and Technology plans to build electric cars for the Chinese market to support the fight against smog and congestion.

Technology billionaire Jia Yueting, chair and founder of Leshi Internet Information & Technology, a company that manufactures Internet televisions and set-top video boxes, told Clean Technica that his firm has spent the past year developing connected electric vehicles.

These Internet companies have the express support of the Chinese government to develop electric vehicles as the country struggles with toxic city skies. China also wants to reduce its dependence on imported oil. Although Internet companies are outside the traditional manufacturing industries, they can come up with innovative models that can disrupt the automobile industry completely.

In the meantime, while all this money and effort is being spent on smart Internet-connected cars, elsewhere huge funds and equal efforts are going into smart cars that will drive themselves – forecasted to be on our roads within two to five years.

Image: “Electric Car recharging” by Michael Movchin via Wikimedia Commons