Foxconn partners with China's Tencent on smart electric cars

On Monday, the electronics manufacturer struck a partnership with Chinese Internet giant Tencent and luxury car dealership China Harmony Auto to develop smart electric cars. All three companies are together establishing a special team for the project, Foxconn said.

Foxconn, which is based in Taiwan, is perhaps best known for assembling Apple's iPhone.

It might sound odd to hear such a company moving into the car market, but last June, Foxconn CEO Terry Gou outlined plans to move beyond manufacturing and into other technology sectors, including robotics and electric vehicles.

Foxconn hopes to build cars priced under US$15,000, according to Gou. The contract manufacturer already develops electric car batteries, which he said were in demand.

In September, Foxconn added that it would invest at least $811 million to develop electric car manufacturing in a Chinese province.

Monday's deal with Tencent gives Foxconn an important ally on the software front. Tencent runs China's largest messaging services, in addition to a whole host of other Internet services including cloud computing.

Tencent confirmed the partnership but gave no further details. Foxconn said the partnerships would pave the way for a new business model, and bring about more product innovation.

None of the companies would say when the car might come to market.

Gas-powered vehicles still dominate in China, the world's largest car market. If the experience of U.S.-based Tesla Motors in China is anything to go by, it won't be easy for Foxconn and its partners to sell there. Tesla has underperformed in China on weak sales -- perhaps because of the price of its cars, which start at 648,000 yuan ($105,000). Chinese consumers have also complained that finding places to re-charge the vehicles can be difficult, a perception Tesla is trying to dispel.