Mitsubishi Electric agreed on Oct. 16 to sell half of its auto unit to a Foxconn affiliate for ¥115 billion, implying a ¥320 billion valuation. The partners will jointly run the business, with a ¥100 billion impairment expected in fiscal 2027.
Mitsubishi Electric will transfer assets, liabilities, contracts and other items related to its automotive equipment business through an absorption-type company split, with wholly owned subsidiary Mitsubishi Electric Mobility as the successor. It will also sell 50% of the subsidiary's issued shares to Lin Yin International Investment. After the sale, Mitsubishi Electric and Lin Yin will each hold 50%. Lin Yin is an investment company established and wholly owned by Hon Hai Precision Industry, also known as Foxconn.
| Item | Disclosed figure |
|---|---|
| Enterprise value of the target business | ¥320 billion |
| Equity value, adjusted for changes in assets after the agreement | ¥230 billion |
| Expected price for the 50% stake | ¥115 billion |
The expected sale price is half the agreed equity value. Enterprise value and equity value are different measures and should not be treated as directly comparable with prior-period figures. The disclosure does not provide valuation comparisons with peers or industry averages. The transaction is subject to approval by relevant authorities under domestic and international competition laws, among other conditions.
Mitsubishi Electric Mobility posted sales of ¥657.565 billion in the fiscal year ended March 2026, down 4.7% from ¥690.388 billion a year earlier. Operating results swung to a profit of ¥13.183 billion from a loss of ¥1.08 billion. Ordinary profit rose to ¥29.174 billion from ¥16.247 billion, while net profit attributable to shareholders of the parent increased to ¥35.777 billion from ¥17.991 billion. No comparable figures were disclosed for the fiscal year ended March 2024 because the company had not yet been established.
| Mitsubishi Electric Mobility | Fiscal year ended March 2025 | Fiscal year ended March 2026 | Change or status |
|---|---|---|---|
| Sales | ¥690.388 billion | ¥657.565 billion | Down 4.7% |
| Operating profit (loss) | Loss of ¥1.08 billion | Profit of ¥13.183 billion | Returned to profit |
| Ordinary profit | ¥16.247 billion | ¥29.174 billion | Increased |
| Net profit | ¥17.991 billion | ¥35.777 billion | Increased |
Sales for the entire target business were ¥875.6 billion in the fiscal year ended March 2026. That figure covers operations across Mitsubishi Electric and other entities, so its scope differs from the subsidiary's standalone sales. The disclosure does not provide an industry-average comparison. Future orders and profitability will also need to be monitored to assess the business's competitiveness.
Following the share sale, Mitsubishi Electric Mobility is expected to leave the consolidated subsidiary group and become an equity-method affiliate from the fiscal year ending March 2028. Mitsubishi Electric expects to record an impairment loss of about ¥100 billion related to the transaction under “other gains and losses” in its consolidated results for the fiscal year ending March 2027. That amount is equivalent to about 23% of Mitsubishi Electric's operating profit of ¥433.095 billion in the fiscal year ended March 2026. The impairment loss and operating profit are classified differently in accounting terms, so the ratio does not directly represent the impact on earnings. The company is still assessing its fiscal 2027 consolidated earnings forecast, including other factors, and plans to disclose it on Oct. 30.
The company split agreement is scheduled to be signed and Mitsubishi Electric Mobility's shareholder resolution obtained in the first half of fiscal 2027. The split is expected to take effect and the share transfer to be completed in October 2027. The transaction is a simplified absorption-type split and will proceed without a Mitsubishi Electric shareholder resolution. As of the end of March 2026, the target business had assets of ¥727.5 billion and liabilities of ¥375.4 billion. These are unaudited figures used for internal management, and the amounts actually transferred will be adjusted for changes through the effective date.
Analyst take
The partnership does not amount to Mitsubishi Electric exiting its automotive equipment business: it will retain half ownership while bringing in Foxconn's scale and ability to reach markets. Whether the partners can develop Mitsubishi Electric's electric powertrain and control technologies into a Japan-origin EV platform will shape the business's longer-term growth. Investors will also need to watch how the shift out of consolidation changes the reported scale and profit profile, and how the roughly ¥100 billion impairment affects near-term results. The focus after closing will be on whether the partners deliver technology synergies while managing the capital burden, including through orders, profitability and concrete joint development.
