The Taiwanese electronics manufacturer has struck a partnership with Chinese internet giant Tencent and luxury car dealership China Harmony Auto to develop the cars.
Last year, Foxconn's CEO Terry Gou revealed his plans to move outside of manufacturing and into technology sectors like robotics and electric vehicles.
The news comes as rumours one of its main contractors, Apple, is developing its own electric, and potentially driverless car in Silicon Valley.
There have been reports that a prototype Apple car has been spotted on the roads in California - without a driver behind the wheel.
Despite media attention around the tech firm's foray into the automotive space, a study of driverless car research and development revealed that Samsung could trump Apple, Tesla, Uber and Google - who are all players in the car technology space.
Manufacturer Foxconn is in a prime position as it already develops electric car batteries in its plants. On the software side, the firm has a worthy partner in Tencent, which runs China's largest messaging service, WeChat, as well as other divisions like cloud computing, which will aid in-car connectivity services.
The firms did not reveal when a car would be ready to buy, but Gou said that the cars will cost under $15,000 (£10,000).
Tesla, the US-based electric car firm run by Elon Musk, has struggled in the Chinese market, where petrol-powered cars dominate. Chinese consumers have stuck their noses up at Tesla's high prices and sparse charging stations in cities - something that Foxconn will need to overcome to be successful.