Yahoo Finance BMW announces £500m upgrade for Mini plant amid race for electric cars
BMW is poised to announce a £500m upgrade of its British Mini factory after cutting a deal with ministers as the Government scrambles to electrify Britain's flagging car industry.
The German company – which has owned Mini since 1994 – has secured £75m of public money for the overhaul of its plant in Oxford, following months of speculation over its long-term future.
Although BMW has not given details of its plans for the site, the taxpayer contribution is coming out of the Government’s Automotive Transformation Fund (ATF), which can be tapped by companies that want to electrify or otherwise decarbonise their car building.
BMW said two years ago that it would stop making electric Minis in the UK, instead moving production to China.
The facility was instead converted to making petrol models putting its future in jeopardy as countries around the world are set to ban petrol and diesel cars from 2030.
Its £500m investment will trigger speculation that BMW now plans to restart electric production.
The rules of the £1bn ATF dictate that the government’s investment must be used to expand and focus on battery production, electric motors, electric drivetrains or fuel cells.
BMW declined to comment on the plan, first reported by Sky News, but said the Oxford plant is important to BMW’s future.
With the collapse of Britishvolt, the only planned independent battery maker in the UK, the electric future of British carmaking has been thrown into doubt.
Britain’s biggest car maker, Nissan, has its own supply of batteries near its plant in Sunderland, but the company has warned that Britain’s shrinking car industry is threatening its supply of parts, posing a threat to the plant in the long run.
Carmaking last year fell 10pc to 775,000 cars, with exports down 14pc. The figure is less than half the number made five years ago and the industry has struggled to recover since the end of coronavirus lockdown restrictions.
Big rival Jaguar Land Rover has yet to secure a local battery supply. It is understood to be considering the UK as a site for a gigafactory, but wants a large capital injection from the Government as well as support for its steel business.
Luxury and sports car makers such as Aston Martin and Bentley can import batteries without customs penalties. But Toyota and Mini, which together with Nissan and JLR make most of Britain's cars, have yet to unveil a local battery plant plan.
A BMW spokesman said: “With its high degree of flexibility, competitiveness and expertise, the Oxford plant plays an important role in the BMW Group's production network.
“For the next Mini generation, Oxford will produce the majority of Mini models, the Mini Cooper three-door and five-door models, as well as the Mini Convertible — one of our most important vehicles and a worldwide bestseller. Any future production plans will be announced in due course, we do not comment on media speculation.”
New electric Mini models including a hatchback and a small SUV are produced in China as part of BMW’s deal with big Chinese car firm Great Wall.
Separately, Volkswagen is understood to be pressing on with a gigafactory in the US ahead of another battery plant in Europe, since the path to subsidies is much clearer in the US.
With dozens of battery-making factories being planned around the world, access to the robots and other machinery used in them is limited and the company is sending those resources to America first, since its Inflation Reduction Act is already in action, offering tax breaks for makers of cars sold in the US.
The EU has promised a response to the battery bonanza, but the details are being ironed out still.
A Volkswagen spokesman said: “We are still evaluating suitable locations for our next cell factories in Eastern Europe and North America. No decisions have been made yet. We stick to our plan to build cell factories for about 240 GWh in Europe by 2030, but for this we need competitive framework conditions. That is why we wait and see what the so-called EU Green Deal will bring.”