BMW Considering Joint Electric Vehicle Venture in China

Matt Posky
by Matt Posky

German luxury automaker BMW is seeking to establish a joint venture with China’s Great Wall Motor. The prospective deal focuses specifically on electric vehicles, according to sources familiar with the matter. A cooperative relationship with Great Wall would be BMW’s second in the world’s largest auto market – and a necessary one, as China forces all foreign automakers to team up with local partners in order to do business within the country.

Great Wall Motor Co. is China’s largest SUV maker by volume, and witnessed a nearly 20-percent rise in its share price on Wednesday after Asian media outlets reported it was in talks to partner with BMW.

Reported by Reuters, Bernstein analysts said that, given China’s aggressive push toward electrification and BMW’s pre-existing internal combustion sales, it’s believed any new venture would have to sell exclusively electric vehicles. It wouldn’t make much sense to bring in another gas-burning brand. Instead, experts claim BMW will sell EVs under the Mini badge.

“If an agreement were to be reached, we’d expect an arrangement like Denza (Mercedes-BYD), or VW-JAC, Ford-Zotye to be the most plausible outcome, whereby a new brand is used to sell EVs,” the analysts elaborated.

BMW already has a foot in the door with China. Working with Brilliance China Automotive Holdings, the German brand has two facilities in the Shenyang province already. A spokesman for the company confirmed it will continue working with Brilliance but was unwilling to discuss any plans with Great Wall.

However, an unnamed BMW executive already spilled the beans, saying, “We are in discussions with Great Wall about setting up a joint venture to produce cars in Changshu.”

BMW’s China sales grew 11.3 percent last year and it is currently the country’s second-largest premium brand. It’s currently trying to compete with Mercedes-Benz, which sells fewer vehicles overall but achieved 26.6 percent sales growth in China in 2016 — narrowing the gap. But BMW also wants mainstream success and EVs will play a major role in that.

The country wants electric and hybrid cars to comprise over one-fifth of its total auto sales by 2025. It’s so serious about this that it’s even considering loosening regulations on foreign automakers to achieve this goal. As a result, Tesla, General Motors, Ford Motor Co., and Daimler AG have all announced plans to build EVs in China.

“I don’t know how far along we have gone nailing this deal,” the BMW executive said. But Great Wall has already purchased a glut of lithium so that it can produce the batteries necessary to power upcoming models. It might not deal with BMW specifically but it’s clearly gearing up for battery-electric vehicles.

[Image: BMW]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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  • Threeer Threeer on Oct 12, 2017

    By "forces" you also mean "give up all technological know-how." For a country that stands in front of the world's stage and has its leader lecture everybody else on free trade, they're not quick to actually practice it in their own country. And if you don't comply and attempt to actually sell something in China made in another country, prepare for steep tariffs. GBMW-> Great Bayerische Motor Wall...doesn't quite roll off the tongue...

  • 3-On-The-Tree I don’t think Toyotas going down.
  • ToolGuy Random thoughts (bulleted list because it should work on this page):• Carlos Tavares is a very smart individual.• I get the sense that the western hemisphere portion of Stellantis was even more messed up than he originally believed (I have no data), which is why the plan (old plan, original plan) has taken longer than expected (longer than I expected).• All the OEMs who have taken a serious look at what is happening with EVs in China have had to take a step back and reassess (oversimplification: they were thinking mostly business-as-usual with some tweaks here and there, and now realize they have bigger issues, much bigger, really big).• You (dear TTAC reader) aren't ready to hear this yet, but the EV thing is a tsunami (the thing has already done the thing, just hasn't reached you yet). I hesitate to even tell you, but it is the truth.
  • ToolGuy ¶ I have kicked around doing an engine rebuild at some point (I never have on an automobile); right now my interest level in that is pretty low, say 2/5.¶ It could be interesting to do an engine swap at some point (also haven't done that), call that 2/5 as well.¶ Building a kit car would be interesting but a big commitment, let's say 1/5 realistically.¶ Frame-up restoration, very little interest, 1/5.¶ I have repainted a vehicle (down to bare metal) and that was interesting/engaging (didn't have the right facilities, but made it work, sort of lol).¶ Taking a vehicle which I like where the ICE has given out and converting it to EV sounds engaging and appealing. Would not do it anytime soon, maybe 3 to 5 years out. Current interest level 4/5.¶ Building my own car (from scratch) would have some significant hurdles. Unless I started my own car company, which might involve other hurdles. 😉
  • Rover Sig "Value" is what people perceive as its worth. What is the worth or value of an EV somebody creates out of a used car? People value different things, but for a vehicle, people generally ascribe worth in terms of reliability, maintainability, safety, appearance and style, utility (payload, range, etc.), convenience, operating cost, projected life, support network, etc. "Value for money" means how much worth would people think it had compared to competing vehicles on the market, in other words, would it be a good deal to buy one, compared to other vehicles one could get? Consider what price you would have to ask for it, including the parts and labor you put into it, because that would affect the “for the money” part of the “value for money” calculation. An indicator of whether people think an EV-built-in-a-used-car would provide "value for money" is the current level of demand for used cars turned into EVs. Are there a lot of people looking for these on the market? Or would building one just be a hobby? Repairing an existing EV, bringing it back into spec, might create better value for the money. Although demand for EVs is reportedly down recently.
  • ToolGuy Those of you who aren't listening to the TTAC Podcast, you really don't know what you are missing.
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