(Bloomberg) — Saudi Arabia and Taiwan’s Foxconn Technology Group are in talks to form a joint venture to make electric vehicles, a move that could help accelerate plans by the oil-dependent kingdom to diversify its economy, according to people familiar with the matter.

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Saudi Arabia’s Public Investment Fund, which manages about $450 billion of assets, will create a new entity named Velocity to be the majority stakeholder of the joint venture, said two of the people, who asked not to be named because the effort is not yet public. Foxconn will provide software, electronics and the electrical architecture for the new EVs and will be a minority stakeholder in the collaboration, according to one of people. The arrangement will help the country gain experience in manufacturing cars, another person said.

The joint venture is looking to assemble EVs on a chassis licensed from BMW AG, two people said. The parties aim to sign a deal by the end of this year, according to one of the people, although no final decisions have been made and the plans could still change.

Saudi Arabia has had ambitions for years to develop a domestic carmaking industry as part of its attempts to wean the economy off a reliance on oil sales. Those efforts have mostly failed. Now the kingdom is trying a different tactic, with the PIF leading investments into the industry. It took a majority stake in EV startup Lucid Motors Inc. in 2018 to encourage the firm to develop a manufacturing site inside the kingdom. Earlier this year, Saudi Arabia hired advisers including Boston Consulting Group to explore establishing its own domestic electric carmaker, Bloomberg News has reported.

Saudi-backed Lucid Motors has been in talks for EV factory near Jeddah

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The sovereign wealth fund is also looking to develop a battery manufacturing plant with a target of producing 15GWh storage capacity per year by 2028, some of the people said. That project would be designed to provide the batteries for Lucid and other EV makers that establish a presence in the kingdom. The Saudi government is in talks with several automakers to get them to set up manufacturing facilities at a site on the country’s west coast, Industry and Mineral Resources Minister Bandar Alkhorayef told Bloomberg in October.

Foxconn, the Public Investment Fund and BMW all declined to comment.

Learn more about Saudi Arabia’s talks with carmakers

Foxconn, a key Apple Inc. assembly partner, has been branching out into EV development and production over the past year, seeing the rising interest in the category as a potent growth driver. In its most notable EV move to date, the Taiwanese company agreed in October to acquire Lordstown Motors Corp.’s pickup manufacturing facility in Ohio as part of a $280 million deal. The iPhone assembler unveiled its first electric cars two weeks later, boosting its credentials as a serious candidate for Apple’s secretive automotive project.

Young Liu, chairman of Foxconn’s flagship unit Hon Hai Precision Industry Co., said in November that the company is planning to launch an EV project in the Middle East focused on software for passenger cars.

BMW has previously licensed older versions of its vehicle platforms to automaking startups. Vietnam’s VinFast has manufactured an SUV using a platform BMW developed for a previous version of its popular X5 SUV.

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