China’s discovery of electric cars and the Brexit are unusual bedfellows but they’re forcing BMW to rethink its production strategy – and location – for its iconic Mini sub-compact. The German carmaker is in talks with Chinese peer Great Wall about a joint venture to manufacture electric Minis in China, sources familiar with the discussions told Handelsblatt.
The plant would have enough capacity to support growing global deliveries of an electric Mini but would first supply southeast Asia and NAFTA, and ultimately the EU. The forecast growth would exceed the Mini’s main plant in Oxford, UK but the Brexit will also make the plant unviable for exports. BMW could add capacity at Dutch contract manufacturer Nedcar, but it would also be unable to deliver the necessary volume.
“Great Wall Motors could benefit greatly from this kind of a joint venture,” said Zhong Shi, editor-in-chief of trade journal Auto. “Great Wall Motors’ strengths do not lie in electric cars but in the SUV. There are better options out there.” Great Wall Friday confirmed the talks but BMW would only say it was looking for a Chinese partner to meet Mini production goals. Until now, BMW’s only Chinese joint venture was Brilliance but the duo only produce BMW-branded vehicles.
BMW Chief Executive Officer Harald Krüger had to act. The company wants the Mini to spearhead its electric strategy and unveiled an electric version of the small car at the Frankfurt IAA car show earlier this year. It plans to begin production in 2019. BMW believes that the future of the small car, which is especially popular in cities, is purely electric as consumer tastes switch. In just one example, Paris this month said internal combustion engines would be banned beginning in 2030. Mercedes has similar plans for its small-car brand Smart. China is key: One in two electric cars are currently sold there.
BMW would be a welcome partner for Great Wall. The company’s shares jumped by 20 percent when news of the talks first leaked. The automobile manufacturer, established in 1984, is trying to make a name for itself, especially with SUVs. Great Wall sold more than a million cars for the first time last year. It unveiled its luxury brand Wey, which aims to compete with companies like BMW with its well-equipped SUVs, at the IAA in Frankfurt.