BMW moved electric MINI production to its Chinese JV, will other automakers follow the path?
Rebbeca Ren
posted on October 20, 2022 8:55 pmEditor : Wang Boyuan
Given its Chinese partner’s extensive experience in large-scale EV production, BMW is likely to scale up production capacity and increase efficiency.
More international automakers are betting on China’s electric vehicle production prowess. The Times reported on Saturday that BMW will cut all electric MINI production in the UK by next year and move them to China.
The first battery-powered MINI, introduced in 2019, was more popular than anticipated, accounting for one-third of all vehicles manufactured at the Oxford plant.
The newspaper cited Stefanie Wurst, the new head of MINI, saying that it was inefficient to make electric and petrol cars on the same assembly line at the Oxford plant. The CEO stated, “Oxford is not prepared for electric vehicles and will require refurbishment and investment.”
In fact, the proposal for the transfer was made years ago. BMW announced, shortly after unveiling the electric MINI, that Spotlight Automotive, a joint venture with privately-owned Great Wall Motors, will begin manufacturing and exporting the updated battery-powered version in 2024.
The JV was founded in 2018 with the intention of producing electric MINIs in China. Once operational, the facility, with a total investment of approximately 5.1 billion yuan ($708.21 million), will be able to produce up to 160,000 automobiles annually.
BMW’s previous partnership with the state-owned automaker Brilliance Auto helped the brand establish a solid foothold in China’s premium oil-powered vehicle market. As the automotive industry advances toward electrification, it has secured an alliance with Great Wall, a manufacturer with greater expertise in EVs. In 2021, the Hebei-headquartered company ranked as the third-largest plug-in EV manufacturer in China, with a 4% market share.
In addition, Great Wall has its own retro-style electric model, the Ora, which is doing well in domestic and Thai markets. Due to Great Wall’s extensive experience in large-scale EV production, the JV may be able to successfully scale up MINI’s production capacity, thereby improving efficiency and reducing costs.
“The JV with Great Wall enables us to produce a larger number of MINI-brand-fully electric vehicles at attractive conditions for the world market,” Nicolas Peter, a member of the BMW Management Board, said, speaking at the 2019 inauguration of Spotlight.
The transfer of production lines is a testament to China’s leadership in global EV production. International automakers can benefit from localized manufacturing because of the country’s comprehensive and robust supply chain, which encompasses everything from power batteries to components, as well as its large pool of highly qualified skilled workers and more cost-advantaged raw materials.
Due to these strengths, China already produces 60% of the world’s EVs. In the first nine months of 2022, production of new energy vehicles (NEVs), which include pure EVs, plug-in hybrids, and hydrogen fuel-cell vehicles, in the country increased by 1.2 times year on year to 4.717 million units, per the China Association of Automobile Manufacturers (CAAM).
In addition to being a prime manufacturing location, China boasts a rapidly increasing EV consumer market. According to Canalys, the country is currently the largest EV market, accounting for 57% of global EV sales.
In the first half of the year, sales of NEVs increased by 120% year-over-year to 2.6 million units. BMW also contributed to the triple-digit growth: In the first three quarters of 2022, the German automaker delivered more than 592,000 BMW and MINI vehicles to the Chinese market, of which the sales of fully-electric models increased by 65% year-on-year.
There may be more room for electric MINIs to expand in China, where compact EVs are favored. In January last year, the Wuling Hongguang Mini EV, a compact car priced under $10,000, dethroned Tesla’s Model 3 as the world’s best seller.
However, when it comes to the premium compact EV sector, the competition is just getting started. Besides BMW, its rival Mercedes-Benz also sees an opportunity to cut into the market. In 2021, it announced that it would partner with Geely to construct a facility in China dedicated to the production of electric Smart.
It may be hard to find an alternative market like China that combines more cost-effective production capacity with huge consumption potential – which explains why global EV makers are eager to jump on board.
A few weeks ago, another German automaker, Audi, said it’s speeding up the construction of a new production base with its Chinese partner, state-owned automaker FAW Group, in Changchun. The plant, which is designed to produce EVs, is expected to start production in 2024.
US electric car juggernaut Tesla has also been ramping up production at its Shanghai Gigafactory, with the most recent capacity expansion work having just been completed in September. Although the company’s production was disrupted by the COVID-19 lockdown starting in March, it has managed to restore capacity. In September, it delivered 83,135 Chinese-made electric vehicles, smashing a monthly record, according to the China Passenger Car Association (CPCA).
On the policy front, as part of its aim to foster a more conducive environment for the industry, China lifted equity caps for international carmakers in electric car JVs in 2018. Previously, the size of the stake a non-Chinese company could hold in a JV was limited to less than 50%. Spotlight Automotive was created under the new policy.
For Great Wall, BMW’s new partner in China, the partnership will also fuel its global expansion plans. As “going overseas” has become the “new norm” among Chinese automakers, competition is heating up, and anyone who gets the know-how from well-established brands is likely to gain a first-mover advantage. Currently, the Chinese company has already landed in overseas markets such as Australia, South Africa, Saudi Arabia, Chile, Thailand, and Pakistan.
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