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BMW will invest more than £600mn to produce electric Mini cars in Oxford, safeguarding the historic plant and delivering a vote of confidence in the UK’s auto industry.
The investment by the German carmaker at the site in Cowley will be backed by about £75mn of taxpayer funds, according to people familiar with the matter. Production of two new models will begin in 2026, though BMW plans to import batteries for the cars from Europe or China.
The plant’s future has been under threat since BMW said last year that it would cease production of the first electric Mini model there, leaving the factory reliant on petrol cars, which the German group has promised to phase out by 2030.
Under the plan, BMW will manufacture two new electric models, the 3-door Mini Cooper and the new, smaller Mini Aceman at Oxford.
“With this new investment we will develop the Oxford plant for the production of the new generation of electric Minis and set the path for purely electric car manufacturing in the future,” said BMW’s head of production Milan Nedeljković.
The two models are based on a system developed by BMW and China’s Great Wall Motor, and will be produced in China at a new jointly owned plant from next year. Despite using Great Wall technology, BMW had “no plans” to manufacture the Chinese brand’s cars at the UK plant in the future, Nedeljković said.
Prime Minister Rishi Sunak hailed the decision by BMW as “another shining example of how the UK is the best place to build cars of the future”.
The move by BMW is a much-needed fillip for Britain’s car industry. Production has fallen 40 per cent since the start of the coronavirus pandemic, following plant closures, global parts shortages and decisions by some manufacturers to shift models overseas, though electric production has increased because of rising demand.
The government has set aside £1bn to try to spur investment in battery technology and to attract new manufacturers such as Tesla. Despite recent investments from Jaguar Land Rover and its owner Tata Motors, as well as Nissan, Stellantis and now BMW, none of the new major entrants has decided to build in the UK.
China’s BYD said this year that Brexit meant the UK was not even in the top 10 locations as it considered a site for a European plant.
The fresh investment will also allay fears over the strategic importance of Cowley to BMW. As well as making the same electric Mini models in China with Great Wall, BMW will make the Mini Countryman, its high-riding version, in Leipzig, Germany.
“Oxford is and remains the heart of the brand,” said Mini head Stefanie Wurst.
Nedeljković said that the Oxford plant would still export globally, even though the Chinese plant that will also build electric Minis benefits from lower manufacturing costs.
Business secretary Kemi Badenoch said that the car industry was “one which is very critical to the UK economy and which is facing a lot of headwinds”.
She said there was “no point” having net zero targets if they were impossible to meet, and said the government would remain “flexible” towards its goals.
“At the moment, China is leading this technology, we wouldn’t be able to get to where we want to on net zero by stopping or banning Chinese products, that’s certainly not where we are on it,” she said.
“We are ensuring that we can keep the commitments that we made on net zero, but we are also looking as much as possible to diversify our supply chain.”
Ministers are finalising plans for a China-style EV sales quota scheme that will come into force in January. The industry has asked that the rules, which are set to require 22 per cent of car sales to be zero emission next year, rising every year in this decade, be delayed.
Badenoch said the government realised the transition would not be easy. “What we are working on is how we can be as flexible as possible in order to make it easier for people to adjust.”
Alongside the Oxford plant, BMW also owns an engine factory in Hams Hall, a metalworks plant in Swindon and the luxury car brand Rolls-Royce.
The move by BMW comes as the UK’s car plants seek investment to build electric models as the industry shifts from traditional combustion engines.
Last week, Vauxhall owner Stellantis began producing electric vans at Ellesmere Port, following an investment of about £100mn that saved the site from closure.
JLR is investing about £15bn in new electric models to be built in the UK, while parent group Tata this summer announced a £4bn investment into a new battery plant, which will use Chinese technology at first, to support JLR’s electric models.
Nissan, which runs the UK’s largest car plant, has invested about £1bn with its battery partner AESC, which is owned by China’s Envision. The Japanese group has committed to producing at least one new electric model in Sunderland. The Financial Times reported earlier this year that the company was looking at future models for the site as well.
Additional reporting by Jim Pickard