BMW investment secures future of Mini factories

German automotive powerhouse BMW is poised to unveil a substantial investment strategy, amounting to hundreds of millions of pounds, earmarked for the transformation of its Mini production facility located near Oxford. This colossal undertaking aims to equip the factory for the production of a new generation of electric vehicles.

Anticipated to commence production in 2026, the Cowley plant is set to become the epicentre for the manufacture of two innovative electric Mini models. This strategic manoeuvre is not only expected to fortify the prospects of the Cowley facility but also augurs well for BMW’s Swindon factory. At present, these two manufacturing sites collectively employ over 4,000 individuals.

The proposed investment of £600 million will be directed towards an extensive overhaul of the Cowley plant. This multifaceted plan encompasses the revamping of production lines, the expansion of the body shop facilities, and the establishment of a dedicated area for battery installation. Furthermore, BMW envisions the construction of supplementary logistics infrastructure at both Cowley and the Swindon plant, which specialises in the fabrication of body panels for new vehicles.

This strategic initiative is pivotal, as it will enable the coexistence of the forthcoming electric Mini Cooper and Mini Aceman with their conventionally powered counterparts on the Cowley assembly line. Notably, the Mini Countryman, another electric model, will continue to be produced in Germany.

This substantial investment in the UK automotive sector is set to receive backing from the government’s Automotive Transformation Fund, a financial support package believed to be valued at £75 million. With the Mini brand charting a path towards full electrification by 2030, BMW’s decision holds significant implications for the continued prosperity of these two UK manufacturing facilities.

The Cowley plant made its electric debut in 2019 with the launch of the first electric Mini. However, last year, BMW announced plans to shift the production of most of its electric vehicles to China, where it forged a partnership with Great Wall Motor for the development of new models. The rationale at that time was that manufacturing both conventional and electric vehicles in the same facility was deemed inefficient. Today, this strategy appears to have evolved.

Production of the new electric Mini models is set to commence next year at Great Wall’s factory in Zhangjiagang, China, with Cowley now slated to join the production lineup in 2026. This shift underscores the UK’s pivotal role in BMW’s global electric vehicle manufacturing network.

Prime Minister Rishi Sunak lauded BMW’s investment as a testament to the UK’s status as the prime destination for future-oriented automotive production. Business and Trade Secretary Kemi Badenoch echoed this sentiment, emphasising the positive impact on the automotive sector’s vitality.

While specific details about the taxpayer funding allocation for BMW’s investment remain undisclosed, Badenoch clarified that the government’s involvement through the Automotive Transformation Fund is part of a broader strategy aimed at propelling the development of electric vehicles in the UK. This initiative is geared towards preparing for the impending ban on the sale of new petrol and diesel vehicles, scheduled for 2035.

This substantial investment by BMW aligns with a series of government-backed endeavours geared towards fostering electric vehicle development in Britain. In July, Tata, the parent company of Jaguar Land Rover, unveiled plans to establish a significant battery “gigafactory” in Somerset, bolstered by substantial taxpayer support. Other automakers, including Stellantis, Nissan, and Ford, have also embarked on ventures to expand electric vehicle production capacities in the UK.

Nonetheless, the UK’s automotive industry has encountered setbacks in recent years, marked by the closure of Ford’s Bridgend engine plant in 2020 and Honda’s Swindon factory in 2021. In January, Britishvolt, a company planning to establish a battery factory near Blyth, faced insolvency, leaving the future of the site uncertain.

David Bailey, a professor of business economics at Birmingham Business School, viewed BMW’s announcement as a significant positive development for the UK’s automotive sector. He stressed the urgency of transitioning towards electric vehicles, especially as the 2035 deadline for the ban on internal combustion engines approaches.

However, a critical unresolved question pertains to the source of batteries for the vehicles manufactured at Cowley. Beginning next year, new regulations will effectively subject cars with batteries produced outside the UK or the EU to substantial tariffs when transported across the English Channel. BMW, along with other industry stakeholders, is actively advocating for more lenient or delayed implementation of these regulations in both the EU and the UK. The resolution of this issue will be a pivotal consideration moving forward.