BMW announces that it will invest 10 billion yuan, around $1.386 billion to expand its voltage battery production. The expansion is for the production is the one located in Shenyang in Northeast China’s Liaoning Province. It is likely the company’s third complete power battery center globally. It is also the first one outside of Germany.
The confirmation about the expansion came from BMW as it was set to axe all UK production and relocate to China for its electric MINI. According to a Times report, BMW makes 40,000 electric MINI cars a year at its Cowley factory on the outskirts of Oxford. Production will end next year as part of plans to reshape the carmaker’s line-up from 2024. However, the company stated to Global Times that the BMW plant based in Oxford will continue to manufacture MINI models. The Oxford plant plays an important role in BMW Group’s production strategy. It has a high degree of flexibility, expertise, and competitiveness.
According to the secretary general of the China Passenger Car Association (CPCA), BMW might have made the decision to cut MINI models productions costs. As the UK is not an ideal place for making high costs and fractured supply chains.
BMW set up a joint venture company with Great Wall Motors as early as 2018 to develop new-generation MINI electric cars. The joint venture, named Spotlight Automotive Ltd, is located in Zhangjiagang port in East China’s Jiangsu Province.
A representative of Spotlight Automotive Ltd also told the Global Times that the company’s plant is now completing its trial production stage.
BMW is one example of overseas car companies’ recent moves to expand investment in China’s new-energy vehicle (NEV) market. For instance, German carmaker Volkswagen recently announced that its software unit will establish a joint venture with Chinese technology firm Horizon Robotics, as the company aims to strengthen its tech presence in China, its biggest market. Daimler Greater China, a subsidiary of Mercedes-Benz Group, also signed a memorandum of cooperation with Tencent Cloud Computing Beijing to jointly develop self-driving technology in China.
“Take BMW for example, if it runs factories in other countries but exports most of its products to China, that would increase costs like shipment costs, customs tariffs, and so forth, thus slashing their products’ price competitiveness,” Zhang told. On the other hand, many overseas markets lack complete car supply chains, which means that their local car factories have to import car parts from countries like Germany or even China. That would not only increase costs but prolong the car production cycle, Zhang said.