BMW is to spend £600m to upgrade its factory in Oxford to electric production of the Mini, in a U-turn that will provide a further boost to the UK car industry.
The plant will start production of the electric Mini Cooper and the new electric Mini Aceman crossover SUV from 2026, lifting a threat to the future of the model after the UK government agreed to spend about £75m in subsidies.
The German carmaker, which has owned Mini since 2000, had decided last year to move production of the electric version to China, in a move that had provoked dismay in the UK industry – particularly in a brand so determinedly British, to the point of offering an option with union jack tail-lights. The factory has been making electric Minis since 2019.
Carmakers are gradually shifting production towards electric cars before curbs on petrol and diesel sales, such as the UK’s 2035 ban. Shifting to zero emissions vehicles, which in practice mostly means electric cars, is seen as a crucial part of cutting carbon emissions to net zero.
The U-turn, which will secure 4,000 jobs at Oxford and Swindon, where BMW makes body panels, was lauded by government ministers, including the chancellor, Jeremy Hunt, who said BMW’s investment was “a huge vote of confidence in this country as a global leader in electric vehicles”.
Carmakers have pushed governments around the world for subsidies to make the shift to electric technology, and have regularly considered moving production to cheaper countries such as China. Milan Nedeljković, the BMW head of production, said there had been genuine doubts over the future of the Oxford plant.
“It was a real tipping point,” he added. “There is a certain element of heritage, of feeling, being part of the society here, but at the same time we must come with a profitable business case. To get this business case right for Oxford was a very difficult challenge.”
BMW’s move represents the latest upturn in the outlook for Britain’s electric vehicle industry, which faced uncertainty with battery supplies and post-Brexit tariffs, as well as chip shortages after the coronavirus pandemic turmoil that hit British factories particularly hard.
The investment in the Mini factory means that most of the high-volume car factories in the UK have a confirmed future in the electric car era, although there is still a question mark over the future beyond 2035 of Toyota’s factory in Burnaston, Derbyshire, which makes hybrid cars. However, Britain has failed to attract new entrants such as US and Chinese startups.
BMW said the latest investment meant its cumulative investment in UK factories in Oxford, Swindon and Hams Hall, where it produces petrol engines, had reached £3bn. BMW also owns the Rolls-Royce luxury brand and its factory at Goodwood, West Sussex. Nedeljković said the company was working on its plans for the future of Hams Hall but declined to give details.
BMW’s announcement came even though there remains uncertainty over whether UK-made electric cars will be subject to EU tariffs, and vice versa, from 1 January because of rules that require batteries to be sourced from the UK or the EU.
The UK and carmakers have been lobbying the EU to delay the start date for the rules to avoid adding costs to European electric cars, which are already facing stiff competition from keenly priced Chinese models.
“This will only benefit Chinese companies, if we are putting tariffs on each other’s products at a time,” said Kemi Badenoch, the UK business and trade secretary, speaking beside Mini’s brightly lit finishing line in Oxford, where it makes final checks on its vehicles. “The rules for those products were made at a different time, given the crisis in Ukraine, given the supply chain disruption post-pandemic.
“We need to make sure that the rules work for today … Hopefully we will get something positive.”
BMW’s investment follows a £4bn commitment from Tata to build a gigafactory in the UK supplying electric batteries, as well as £1bn from Nissan and the Chinese-owned company AESC to create an EV manufacturing hub in Sunderland.
The Vauxhall and Peugeot maker Stellantis last week began to produce electric vehicles at its factory in Ellesmere Port, after a £100m investment that made the site its first large-scale car plant in the UK to be dedicated solely to EVs.
