BMW plans to build electric Minis in China

Self-driving buses tested in China
Self-driving buses tested in China

Mini production is moving out east.

BMW (BMWYY), which makes the famed British Mini car, wants to start producing the new electric version in China.

The company said Friday it planned to team up with China's Great Wall Motor and start looking for the best place to set up a factory to meet strong local demand.

China is BMW's biggest market. The German company sold 560,000 cars there last year -- more than the US and Germany combined -- including 35,000 Minis. China is also a fast growing market for electric vehicles.

"Production follows the market," BMW said in a statement. "This signals a ... clear commitment to the electrified future of the Mini brand." It did not say when production in China would begin.

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BMW said last year that it would start to produce the electric Mini in 2019 at the model's main factory in the UK.

But that production run is expected to be small, and Friday's news could revive worries over the future of thousands of jobs at the UK plant.

"There is always a degree of 'paranoia' following announcements like this -- especially with everything so politically charged in the UK," said Justin Cox, a director and auto production expert at LMC Automotive.

"Some suggest that Mini's future direction is to be an 'all-electric' brand. If that is the case, the Oxford plant will need be part of this transition to survive."

The looming threat of Brexit in 2019 has become a major concern for the British auto sector, which would suffer if leaving the European Union results in new trade barriers. Investment in the industry fell by 34% last year, with the slump blamed on uncertainty about the outcome of Brexit negotiations between the UK and the EU.

Big decision still to come

Ian Fletcher, a principal autos analyst at IHS Automotive, warned last year that the most important production decision regarding the Mini would come when BMW chooses where to build the next generation, starting in 2022. At that point, the company could opt to move production away from the UK.

BMW said it was committed to making cars in the UK.

"The company has made significant investments over the years to step up its involvement in the country," it said.

And Cox said BMW's push into China could ultimately be good for the Mini brand by broadening its appeal and ensuring its longer term survival.

BMW also reassured its German workers about the China move.

"Expansion of the BMW brand in its largest markets, such as China, has not led to a decrease in production at the company's German plants. On the contrary, between 2007 and 2017, production in Germany increased by close to a quarter," it said.

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