Foxconn’s Bid for ZF Group’s EV Unit Stalls Amid Valuation and Debt Concerns

Foxconn’s two-year pursuit of a stake in ZF Group’s powertrain technology unit, Division E, has hit a roadblock due to conflicting valuation expectations and unexpectedly high debt levels, according to documents reviewed by Reuters. The Taiwanese tech giant’s due diligence revealed a stark contrast between earlier optimistic projections and the unit’s true financial state, leading to the suspension of deal talks in September.

The internal report prepared by JPMorgan valued Division E between €1.5 billion and €2.5 billion—well below the initial €3.5 billion estimate. Even more critically, the analysis found the unit’s equity value to be negative, contradicting earlier projections of €1.3 billion. One margin note on the report stated bluntly: “no deal if equity value is negative.” These findings emerged just before ZF Group announced in October that it would abandon plans to spin off Division E.

Division E, which produces electric, hybrid, and conventional powertrain systems, was originally viewed as a strategic gateway for Foxconn to expand its electric vehicle (EV) ambitions. However, the due diligence also uncovered a net debt figure of €4.177 billion—almost 90% higher than expected—driven by €944.7 million in additional pension liabilities.

While Foxconn and ZF have not commented publicly, sources indicate that discussions have shifted toward potential product-specific partnerships rather than an equity stake. ZF Group is also restructuring Division E, planning to cut about 25% of its workforce by 2030.

Foxconn, officially known as Hon Hai Precision Industry, continues to pursue growth in the EV market despite previous setbacks, including failed ventures in the U.S. and China. Recent collaborations with Mitsubishi Motors and Mitsubishi Fuso in Japan suggest the company remains committed to electric mobility and zero-emission vehicle technologies.