Oxford Mini plant to benefit from £600mn UK investment in electric cars

BMW will invest over £600mn in Oxford to produce electric Minis, preserving the historic plant. This is a vote for confidence in the UK auto industry.

According to sources familiar with the situation, the German automaker’s investment at the Cowley site will be backed up by taxpayer funds of about £75mn. The production of two new cars will start in 2026. BMW intends to import the batteries for these vehicles from Europe or China.

BMW announced last year that the production of its first electric Mini would be stopped at the plant, leaving it reliant upon petrol cars. The German group has committed to phase out petrol vehicles by 2030.

BMW plans to manufacture two new electric vehicles at Oxford, the 3-door Mini Cooper, and the smaller Mini Aceman.

Milan Nedeljkovic, BMW’s director of production, said: “With this investment we will develop Oxford for the production the new generation electric Minis. We will set the path for pure electric car manufacturing for the future.”

The two models will be manufactured in China, at a newly built joint-owned plant, starting next year. They are based upon a system that was developed by BMW and China’s Great Wall Motor. BMW has “no plans” in the future to produce the Chinese brand’s vehicles at its UK plant, Nedeljkovic stated.

Rishi Sunak, the Prime Minister of UK, praised BMW’s decision as “another shining instance of why the UK is the most suitable place to manufacture cars of the future”.

BMW’s move is much needed for the British car industry. The production of cars has dropped by 40 percent since the outbreak of the coronavirus, due to plant closures, parts shortages worldwide and the decision of some manufacturers, who have decided to move models overseas. However, electric production has increased as a result of increased demand.

The government has allocated PS1bn in order to encourage investment in battery technologies and attract new manufacturers like Tesla. Nissan, Stellantis, BMW and Jaguar Land Rover, owned by Tata Motors have all invested in recent years.

BYD, a Chinese company, said that Brexit had meant the UK did not even make the top ten locations when it was looking for a location to build a European factory.

This new investment will also ease concerns about the strategic importance Cowley has for BMW. BMW will also produce the high-riding Mini Countryman in Leipzig Germany, as well as the electric Mini models made in China by Great Wall.

Stefanie Würst, Mini’s head of marketing, said: “Oxford remains at the heart and soul of the brand.”

Nedeljkovic stated that the Oxford plant will still export worldwide, despite the fact that the Chinese plant which will also be building electric Minis has lower manufacturing costs.

Kemi Badenoch, the UK’s business secretary, said the automotive industry is “very critical” to the UK’s economy. It also faces a number of challenges.

She said that having net-zero targets was “not worth it” if they are impossible to achieve, and the government will remain “flexible”.

She said: “At this moment, China leads in technology. We wouldn’t get where we want on net zero if we stopped or banned Chinese products. That’s definitely not where we’re at on it.”

We are working to diversify as much of our supply chain as we can, while also ensuring we keep the net zero commitments we made.

The government is finalising plans to implement a quota system for EVs in the style of China that will be implemented in January. The auto industry wants the rules to be delayed. They are expected to increase every year by a factor of two to twenty percent in order to meet the target for zero-emission cars next year.

Badenoch stated that the government understood the transition would be difficult. We are trying to be as flexible as we can to help people adjust.

BMW owns the Oxford plant as well as an engine factory at Hams Hall, Swindon’s metalworks, and Rolls-Royce, the luxury auto brand.

BMW’s move comes at a time when UK car plants are seeking investment in order to build electric cars as the industry moves away from combustion engines.

Stellantis, the owner of Vauxhall, began production of electric vans in Ellesmere Port last week. The investment, which was around £100mn, saved the site from closing.

JLR will invest around £15bn into new electric models that will be built in the UK. Tata, JLR’s parent company, announced this summer a £4bn commitment to a new battery factory, initially using Chinese technology, to support JLR electric models.

Nissan, the UK’s biggest car manufacturer, has invested around PS1bn in its battery partner AESC. AESC is owned by China-based Envision. The Japanese group has pledged to produce at least one new model of electric vehicle in Sunderland. It was reported earlier this summer that the company is also looking at future models.