⚡ Another major turning point has arrived for Japan's automotive supply chain.

On April 24, 2026, Mitsubishi Electric announced it has begun discussions to transfer up to 50% of the shares of its automotive parts subsidiary, Mitsubishi Electric Mobility, to Taiwan's Hon Hai Precision Industry (Foxconn). The Japanese giant is steering toward joint operation of a business with annual sales of ¥919.2 billion (approximately $5.78 billion) alongside the company best known for manufacturing iPhones.

With a final agreement targeted by May 2026, this partnership carries meaning that goes beyond mere capital ties. The decision by a Japanese company to entrust "half" of its auto parts business to a Taiwanese EMS giant highlights the structural turning point Japan's auto industry faces — at a time when BYD commands 19% of the global EV market.

The Deal: Saving a Business That Almost Got Axed

The subject of negotiations is Mitsubishi Electric Mobility (Chiyoda, Tokyo), a wholly-owned subsidiary of Mitsubishi Electric. It serves as the core of Mitsubishi Electric's automotive equipment business, with alternators and starters as flagship products. Sales for the fiscal year ending March 2025 reached ¥919.2 billion ($5.78 billion) — making it one of Mitsubishi Electric's major business units.

But profitability is tough. The auto parts business posted an operating margin of just 5.4% during April–December 2025, the lowest among Mitsubishi Electric's major segments.

In fact, Mitsubishi Electric had been considering a complete exit from this business. According to reports, options including outright sale or transfer were on the table. In the end, the company chose a third path: joint operation with Foxconn. Mitsubishi Electric emphasizes this is a forward-looking move, with a representative stating that the business itself is healthy and this is not a sale or transfer.

The talks envision Foxconn taking a 50% stake, with the goal of forming an equally-owned joint venture. By moving to joint operation, Mitsubishi Electric plans to redirect management resources to growth areas such as defense and factory digitalization support.

Why Foxconn? "The Speed to Build EVs Cheap and Fast"

Mitsubishi Electric's reasons for choosing Foxconn are clear. The company explained the partnership aims to enhance the agility of its auto parts business by partnering with a company that, like Foxconn, can build EVs cheaply and quickly.

The global EV market has transformed dramatically. In 2025, BYD sold 3.97 million EVs, capturing 19% of the global market and emerging as the top maker. Tesla, with 1.64 million units (7.8% share), surrendered the top spot to BYD for the first time. Within a structure where the top 5 Chinese automakers account for 43% of the global market, the presence of Japanese makers has faded.

Surviving in this fierce competition requires both cost competitiveness and development speed. Foxconn possesses mass-production know-how cultivated through iPhone EMS (electronics manufacturing services) and a global supplier network. By absorbing this "speed," Mitsubishi Electric Mobility seeks to recover competitiveness in the global market that has become difficult to achieve alone.

The collaboration spans broad areas: electrification, autonomous driving, and SDV (software-defined vehicles). Mitsubishi Electric Mobility aims to leverage Foxconn's expertise and network to provide a "Japan-originated EV platform" including powertrains and autonomous driving technology, with global market expansion in its longer-term sights.

Foxconn's Japan Strategy: From "Acquisition" to "Networked Presence"

This partnership represents the latest chapter in Foxconn's "networked strategy" toward Japan's auto industry.

Foxconn entered the EV business in 2019 and brought in Jun Seki (former Nissan COO, former Nidec president) to lead its EV strategy. Since April 2024, Seki has also served as CEO of MIH, Foxconn's open EV development consortium. MIH counts more than 2,700 member companies — including 100 Japanese firms — aiming to be the "Android of EVs."

Foxconn's original strategy was ambitious: by 2025, capture 5% of the global EV market with $33 billion in revenue, and long-term, manufacture nearly half the world's EVs. But it has hit walls repeatedly — the failed Lordstown Motors partnership, struggles at the Ohio plant, and the failed Nissan acquisition attempt in early 2025.

When the "direct hit" of acquisition didn't work, Foxconn pivoted. Its new approach: building a web of partial partnerships across the Japanese market.

  • January 2025: Announced EV bus joint venture with Mitsubishi Fuso Truck and Bus
  • During 2025: Announced EV supply to Mitsubishi Motors
  • November 2025: Partnered with Mitsubishi Electric on AI data centers
  • April 2026: Began talks for 50% stake in Mitsubishi Electric Mobility

Beyond components, Foxconn and Mitsubishi are also co-developing a battery EV SUV based on the MIH platform, with initial sales targeting Australia and New Zealand. This is a derivative of the Foxtron "Bria" (formerly Model B) already on sale in Taiwan.

Instead of acquiring an entire automaker's "shell," Foxconn is quietly but steadily embedding itself into Japan's auto supply chain through component businesses and commercial vehicle ventures. As one industry analyst put it, this represents financial logic that's harder to refuse than direct acquisition, while being less intrusive.

Japan's Auto Parts Industry: Wave of Structural Reform

Mitsubishi Electric's decision symbolizes the structural pressure facing Japan's entire auto parts industry.

Japanese auto parts manufacturers built world-leading positions during the internal combustion engine era. Engines, transmissions, fuel injection systems — companies like Denso, Aisin, and Mitsubishi Electric dominated global markets in these precision components.

But in the EV era, many engine-related parts become unnecessary. What's needed instead are batteries, motors, inverters, and software and sensors that support SDVs. In these new areas, Chinese makers and emerging players are rapidly rising.

Mitsubishi Electric has already announced exit from car navigation systems, with a broader restructuring of its auto parts business underway. Meanwhile, existing technologies like alternators are being evolved into EV drive systems (jointly developed with Aisin).

The momentum extends industry-wide. Behind Denso's withdrawal of its acquisition proposal for ROHM lay merger talks among ROHM, Toshiba, and Mitsubishi Electric in power semiconductors. Japan's auto-related companies are now exposed to waves of restructuring on all fronts.

Geopolitical Risk: Reducing China Dependence, but Taiwan Strait is Another Risk

The Foxconn partnership carries geopolitical implications too.

Concerns about dependence on China in EV supply chains — particularly batteries and rare earths — are rising globally. In the global EV battery market, China's CATL holds 39.2% and BYD 16.4%, totaling an overwhelming 55.6% share (2025). Dependence on the Chinese economic sphere is also high in semiconductors and components.

Against this backdrop, partnership with a Taiwanese company makes sense as a step toward supply chain diversification. Taiwan is a leading-edge semiconductor hub, with strong ties to the U.S., EU, and Japan under the free trade system.

That said, another concern exists: the geopolitical risk of the Taiwan Strait. If cross-strait tensions escalate, scenarios where Taiwan-routed supply chains are severed become realistic. Simply increasing Taiwan dependence to reduce Chinese dependence may not be true risk diversification.

Closing Question: How About Your Country?

The world's auto industry is in the midst of major restructuring. Electrification, software-defined vehicles, supply chain reconfiguration — as these advance simultaneously, even "national champion" companies are increasingly choosing partnerships and joint ventures with foreign capital.

Germany's VW has teamed up with Chinese companies, and U.S. GM formed an EV joint venture with Korea's LG. Mitsubishi Electric × Foxconn is the Japanese version.

How is your country's auto industry doing right now? How do people react to foreign capital partnerships and investment? Should the priority be protecting "national treasures" or pursuing "global competitiveness"? We'd love to hear your thoughts.

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