Exclusive-BMW Favours UK Plant to Build Electric Mini: Sources – New York Times

BMW has about 4,600 staff working in Oxford, while VDL currently employs around 4,500. That is set to rise to more than 5,000 after production of the BMW X1 model is added to the Dutch plant in August, a sharp rise from only 1,500 in 2012.

Carmakers have been among the most vocal critics of Brexit, warning their global supply chains will be hit hard by any resulting introduction of tariffs.

But they are also keen to have a strong position in Europe’s second-biggest car market behind Germany, particularly if they can secure government guarantees. Japan’s Nissan said in October it would build two new models in Britain after a government pledge to counter any adverse Brexit effects. [nL8N1CX405]

The electric Mini will use an electric motor, components and a battery delivered from BMW’s Dingolfing and Landshut plants in Bavaria, Germany.

BMW executives are seeking assurances from Britain that any import duties on electric motors and batteries sent from Bavaria to Oxford could be reclaimed in full for vehicles that are then sold in the EU, one of the sources said.

BMW executives believe a deal on tariffs can be struck, the source said. Britain’s department for business, energy and industrial strategy declined to comment.

The source added a formal decision about where to build the vehicle would be taken in September, with an announcement expected at the Frankfurt car show in mid-September.

Since BMW bought Mini in 1994, it has invested billions in the brand, UK production sites and developing a small car platform. Between 2012 and 2015 alone, BMW Group invested 750 million pounds ($977 million) to upgrade manufacturing sites in Oxford, Hams Hall and Swindon.

“If Mini became a fully electric brand in the long run, and Oxford only knew how to build combustion engined variants, the plant would lose its relevance,” another source said.

A UK manufacturing base is important for the brand, the second source said. The first Minis were built by the British Motor Corporation, with early models featuring in one of most famous car chases in cinema history in the 1969 film “The Italian Job”.

Demand for a fully electric Mini may not be huge to begin with, so the financial impact of tariffs and duties is seen as manageable, given the scale of investments already made in the Oxford plant, the second source said.

If production volumes increase significantly, a production location outside of Britain could be added, the first source said.

(Additional reporting by Costas Pitas; Editing by Georgina Prodhan and Mark Potter)

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