MILAN -- Stellantis and iPhone assembler Foxconn plan to create a joint-venture that will supply in-car and connected-car technologies.
The companies said they have signed a non-binding memorandum of understanding to form Mobile Drive, a 50-50 joint venture based in the Netherlands.
Mobile Drive will operate as an automotive supplier, and take part in tenders to provide software solutions and related hardware for Stellantis and other interested automakers, the companies said in a joint statement on Tuesday.
The software developed will include artificial intelligence-based applications, 5G communication, upgraded over-the-air services, e-commerce opportunities and smart cockpit integrations, they added.
Stellantis CEO Carlos Tavares said the partnership was one of the bricks in the automaker's business plan, which is expected to be announced between the end of this year and the beginning of 2022.
"It is a 'must' of our future strategic direction," he said.
Stellantis Chief Software Officer Yves Bonnefont said the decision to enter a joint venture with Foxconn was mainly driven by the need to move fast and to access the best expertise available.
No financial details of the tie-up were disclosed.
The partnership is less extensive than the market had expected after Fiat Chrysler, now part of Stellantis, said last year it was planning to set up a joint venture with Hon Hai Precision Industry, Foxconn's parent company, to build electric cars and develop internet-connected vehicles in China.
Finalization of that deal was delayed by merger talks between Fiat Chrysler and Peugeot maker PSA Group, which led to the creation of Stellantis, the world's fourth-largest automaker, at the start of this year.
The tie-up has the potential to become one of the more significant alliances in the rapidly converging worlds of tech and autos. Hon Hai also has ambitions to supply underpinnings for electric vehicles and has signed deals with Chinese startup Byton and U.S.-based Fisker.
Whereas Byton are Fisker are just trying to get off the ground, Stellantis sold roughly 6 million vehicles last year. That amount of scale presents an opportunity for Foxconn to diversify a business dependent on Apple for much of its revenue.
Hon Hai’s massive presence in China could help improve Stellantis’s weak position in the world’s largest auto market. The car manufacturer generated less than 3 percent of its revenue from the Asia-Pacific region last year.
Tavares expressed openness to having Stellantis partner with tech giants -- including even Apple, which has been exploring a potential entry into the auto industry for several years -- during a post-merger press conference in January.
“Stellantis is open for business always as long as it creates win-win situations and as long as it does not create any technology dependence that would penalize the future of the company,” Tavares said.
Bloomberg contributed to this report