• Renault’s alliance with Nissan, built up during the reign of former CEO Carlos Ghosn, now exists effectively only on paper. Foxconn could scoop it up as the Taiwanese contract manufacturer looks to expand into the EV market.

Taiwan’s Foxconn is in exploratory talks to purchase a 15% stake in Japan’s Nissan Motor from French carmaker Renault, it confirmed on Wednesday.

The Apple iPhone contract manufacturer has been eyeing an expansion into electric vehicles, a market Nissan helped popularize when it launched the Nissan Leaf EV back in December 2010, more than a full year before the Tesla Model S. 

“Renault happens to own some stake in Nissan, and [we] discussed the stake,” Foxconn Chairman Young Liu was quoted by AFP as saying on Wednesday during a corporate event. “Our main purpose is to talk about cooperation.” 

Nissan, whose equity is valued at a modest $9.9 billion, has been in play ever since talks to merge with healthier domestic rival Honda collapsed last week.

Liu said his company, known domestically as Hon Hai Precision Industry, was not looking to acquire Nissan, however. Foreign takeovers are extremely rare in Japan and remain a sensitive topic. Instead, Foxconn is looking mainly to team up with either Nissan or Renault, he explained.

Nissan told Fortune it was “aware of the reports,” but declined to comment further, while Renault did not respond to a request for comment. The French carmaker is unlikely to extract much strategic value out of its stake, as there are no new cross-corporate projects that could yield synergies through joint R&D, production, or purchasing, so an exit might prove useful depending on the price.

Ever since electric vehicles became the emerging technology of choice for young, tech-savvy, and increasingly affluent Chinese consumers, more and more companies, especially in Asia, have sought to break into the EV market. 

A prime example is Vietnam’s first-ever domestic carmaker, VinFast, which briefly became the industry’s third most valuable company in the world behind only Tesla and Toyota.

The switch from conventional cars defined by their mechanical hardware to electric vehicles that differentiate much more through their software has removed many of the barriers to entry that had traditionally walled off the auto industry from new competition.

Why would Foxconn want a partner?

Whether through iPhone maker Foxconn or chip foundry TSMC, Taiwan is well known for its third-party manufacturing. It wouldn’t seem like producing cars for other brands would be that different.

But building cars, even ones with much more simple mechanics and fewer moving parts like EVs, still requires considerable expertise and know-how—particularly if profitable growth is the goal. For every seemingly successful foray by a consumer electronics firm such as Xiaomi’s SU7, there is an Apple Project Titan that never gets off the ground.

The third-party approach has also been tried before. 

Whether Bertone in Italy, Karmann in Germany, Heuliez in France, or VDL Nedcar in the Netherlands, a number of cottage manufacturers called coachbuilders attempted to manufacture cars for brands. A few, like Finland’s Valmet Automotive and Magna’s Steyr facility in Austria, still manage to survive.

The problem these contract carmakers eventually encountered is the auto industry already struggles with overcapacity it cannot address, since closing down underperforming factories is extremely costly. Companies therefore first utilize any existing plants they own before they outsource work to others. Only all-new brands like Polestar without any legacy sites have shown a willingness to do so.

How does Renault factor into the equation?

The French carmaker Renault has owned a 15% direct stake in Nissan ever since the company took de facto control in 1999 when it first dispatched a budding automotive manager from Michelin called Carlos Ghosn to restructure the ailing carmaker. 

His success saw him eventually become CEO of both companies, forging an alliance between the pair that initially seemed to avoid the industry pitfalls of cross-border deals like DaimlerChrysler. 

The French state’s meddling doomed the alliance in the long run, however. Paris enshrined in legislation a rule barring Nissan from exercising so much as one share in its 15% voting stake in Renault, leading to acrimony as the Japanese carmaker grew to enjoy greater success on the world’s stage than its controlling shareholder. 

By the time the uneven nature of the alliance was finally corrected in November 2023, Ghosn—the glue holding the two carmakers together—was gone. Now the alliance only exists on paper.

This story was originally featured on Fortune.com