February 23, 2018 / 9:58 AM / a year ago

BMW, Great Wall sign letter of intent for electric Mini JV in China

FRANKFURT (Reuters) - German premium carmaker BMW (BMWG.DE) and China’s Great Wall Motor Co (601633.SS) have signed a letter of intent to jointly produce electric Mini vehicles in China, BMW said on Friday.

FILE PHOTO: The BMW booth displays the company logo at the North American International Auto Show in Detroit, Michigan, U.S. January 16, 2018. REUTERS/Jonathan Ernst/Files

If successfully concluded, the BMW-Great Wall talks could yield a first foreign manufacturing partner for Great Wall and a first Mini assembly site outside Europe for the German group.

“Next steps will be to agree on the details of a possible joint venture and cooperation agreement and clarify aspects such as the choice of production location and concrete investments,” BMW said on Friday.

Great Wall said in a separate statement a joint venture with BMW would greatly improve its technology level and brand premium, better meet the needs of consumers and further tap into the new energy vehicle market at home and abroad.

Automakers and suppliers are scrambling to meet tough new Chinese quotas for less polluting cars, which call for electric and rechargeable hybrid vehicles to account for a fifth of total sales by 2025.

According to analysts at Bernstein, the Chinese electric Mini will be built on a new platform to be developed by the joint venture rather than on the same basis as the battery-powered Mini that will enter production at BMW’s British plant in Oxford from 2019.

The Chinese venture could start making the electric Mini around 2021 or 2022, they said, adding it would also produce models under an own brand.

But they were “puzzled” why BMW would have only a minority stake in the venture, less than the 50 percent it holds in its existing Chinese manufacturing venture with Brilliance (1114.HK), as that would give Great Wall rights to the intellectual property the two companies develop together.

Neither BMW nor Great Wall commented on the details of the planned venture, saying details still needed to be worked out.

BMW also said it would further expand its venture with Brilliance, and that it had no plans to set up an additional sales organization in China.

Rival Audi (VOWG_p.DE) last year grappled with a dispute with dealers in China who were worried they could lose business to Audi’s local partner, SAIC Motor Corp (600104.SS).

Reporting by Maria Sheahan; Editing by Tom Sims and Mark Potter

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