TAIPEI (Taiwan News) — Foxconn’s plan to buy into ZF Group’s powertrain division has collapsed after due diligence found the unit’s value far lower than expected and its equity in the red, Reuters reported Wednesday.

The electronics maker had spent nearly two years pursuing a deal for the unit, known as Division E, which makes electric, hybrid, and conventional drive systems. However, a JPMorgan report for Foxconn valued the unit between NT$53.6 billion (US$1.75 billion) and NT$89.24 billion, far below a previous NT$124.94 billion estimate.

The review also found Division E’s equity value had turned negative and that its net debt reached NT$149.3 billion, almost 90% higher than expected, due largely to NT$33.74 billion in additional pension liabilities. A note in the JPMorgan document read, “No deal if equity value is negative.”

ZF has since opened talks with Foxconn and other interested parties about product-based collaborations instead of an equity deal, a company insider said. The findings surfaced just before ZF canceled its plan to spin off Division E earlier this month.

Foxconn has sought to expand into the electric vehicle sector but has faced setbacks. Its US pickup truck project and a joint venture with China’s Geely have struggled to gain traction.

Despite the stalled talks, Foxconn continues to pursue partnerships. In May, its subsidiary Foxtron signed an MOU with Mitsubishi Motors to supply an EV model for Oceania by next year, and in August it agreed with Mitsubishi Fuso to develop zero-emission buses.