BMW Group has confirmed that production of the first Mini electric vehicle will take place at its Oxford plant in the United Kingdom.
IHS Markit perspective
- Significance: BMW Group confirmed yesterday (25 July) that production of the first Mini electric vehicle would take place at its Oxford plant in the United Kingdom.
- Implications: Although this is positive news in the wake of the various doubts related to Brexit, what will be more telling for the Oxford plant is whether it secures production of the electric model's replacement.
- Outlook: IHS Markit currently forecasts that production of this first-generation electric Mini will peak at around 4,000 units per annum during 2020–21.
BMW Group has confirmed that production of the first Mini electric vehicle (EV) will take place at its Oxford plant in the United Kingdom. The automaker said in a statement yesterday (25 July) that the EV would be a variant of the Mini brand's three-door hatchback, and that production of the model would begin at the Oxford site in 2019. The company added that the powertrain for this vehicle would be manufactured at BMW Group's e-mobility centres in Dingolfing and Landshut (both Germany).
Following the announcement, UK secretary of state for business, energy, and industrial strategy Greg Clark was quoted by BBC News as saying that the move was a "vote of confidence" for the government's plans to make the United Kingdom "the go-to place in the world for the next generation of vehicles". The assistant general secretary of the Unite union, Tony Burke, said that it would "certainly underpin existing employment".
Outlook and implications
An electric Mini is part of the BMW Group's "NUMBER ONE > NEXT" corporate strategy, under which it is planning for some degree of electrification for all its brands and models, whether that be battery electric or a plug-in hybrid electric vehicle (PHEV) option alongside more conventional powertrains. Although demand for these types of vehicles currently remains comparatively low, BMW has placed a great deal of emphasis on ensuring that its production footprint has the flexibility to switch towards greater electrification as market demand grows. Indeed, it has publicly stated its expectation that by 2025, between 15% and 25% of its sales will come from electrified vehicles.
There had been a great deal of speculation as to where production of the battery-electric Mini would be located. Although the Oxford site was the obvious choice, fears over the impact of Brexit and a dispute over pensions, which has only recently been resolved, had led to reports that other sites were being considered. Among these included the Regensburg and Leipzig (both Germany) facilities, which build BMW models based on the same architecture as the Mini. The VDL contract manufacturing plant in Netherlands, which also produces a number of variants of the Mini, was also mentioned. However, if BMW had chosen one of the German sites, it would most likely have had to ship various body components to these locations from the UK, while it would also have had to make some adjustment to the current manufacturing organisation for a relatively small number of cars. Furthermore, although the three-door Mini is currently produced in the Netherlands, this is due to end in 2018 as demand eases, making it viable for production of the model to occur solely at Oxford.
Politicians and unions in the UK have been quick to portray BMW's decision as a victory, but it should be made clear that the electric powertrain will be installed in the current F56-generation Mini based on the LU architecture. At the point when production starts in 2019, this will be around five years old and will have only two to three years left to run before replacement. Although this will help Mini's efforts to ensure the successful integration of the electric driveline in an already proven vehicle and manufacturing process, it does little to indicate whether BMW Group plans to continue building the electric variant of the Mini in the UK in the long term. Indeed, the move could be seen as giving BMW Group some breathing space before making a full commitment to the plant with its next-generation EV in around 2022. By the time BMW Group needs to make a decision on where it will build this new model, the two-year Brexit negotiating process should have come to a close, BMW's decision on the next-generation EV should provide a better indication as to the future of production in the UK in terms of imports and exports. Even if it were to chose to continue to produce this vehicle in the UK, for now it seems more likely than not that the key powertrain would continue to be shipped from outside of the United Kingdom, just like the diesel engines Mini currently uses.
IHS Markit currently forecasts that production of the first-generation electric Mini will peak at around 4,000 units per annum during 2020–21. However, production of the second-generation EV is expected to escalate over the following years and will capture an increasing share of the brand's sales.
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