BMW has slammed the breaks on its multi-million pound investment in the Mini plant in Oxfordshire as demand for electric vehicles plummets.
The assembly plant in Cowley is one of the nation’s most vital and historic car factories, but it is facing turmoil after a £600 million investment has been halted.
BMW has done hit the brakes on its £600m investment in the Mini Plant in Oxford[/caption]
The investment would see the plant roll out electric vehicles[/caption]
BMW announced in 2023 that it would invest in the factory built in 1913 to improve its operations, allowing it to manufacture electric vehicles.
It was hoped that by next year, the plant would be pushing electric Mini Cooper’s and electric Mini Aceman SUV’s off the production line.
The deal came under Rishi Sunak‘s government which included £60 million in taxpayer subsidies.
The move by BMW saw the manufacturer invest in the UK industry after previously taking the production of its electric Mini’s to cheaper factories in China.
But now, the German car manufacturer has said that it is “reviewing” the plans as the electric market fails to take off in the UK.
Despite calling Plant Oxford “the heart of Mini production,” it may not be the right time for the investment.
The company said: “Given the multiple uncertainties facing the automotive industry, the BMW Group is currently reviewing the timing for reintroducing battery-electric Mini production in Oxford.”
It comes as carmakers face ever-increasing government quotas regarding the sale of electric vehicles.
Under the UK’s zero emissions vehicle mandate, 28 per cent of all UK sales must come from electric cars – last year it was 22 per cent.
But, ministers are looking at relaxing the strict rules as EVs made up only 21 per cent of the almost 140,000 new cars registered in the UK last month.
David Bailey, a professor of business economics at the Birmingham Business School told The Times: “What we’re seeing is the demand for electric vehicles not increasing as rapidly as had been anticipated and therefore a number of manufacturers basically going back on their pledges to go all electric and slowing down investment in electric vehicles.
“Now, that’s obviously impacting Oxford.”
Industry experts believed that demand for EVs has stalled due to the huge upfront cost compared to petrol and diesel alternatives even with a government grant to help buyers.
But, government sources have pushed the blame onto Brussels saying that BMW’s U-turn on the investment is not related to the EV mandates but rather EU tariffs.
They claim the carmaker is being hard hit by new tariffs on imports from the electric vehicles it is making in China.
On the two BMW Mini electric models, the company pays 20.7 per cent under the tariffs introduced in October.
A government source told The Times: “It makes sense for them at a group level to hold off on this investment to see if they can get any flex out of our EV mandate, and if Germany’s lobbying to the EU with respect to their EV targets is successful.”
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The move by BMW comes just two weeks after Jaguar Land Rover warned the government it would cut back on UK investments unless changes to the EV mandate were made.
Under Labour, petrol and diesel cars are set to be phased out in five years time.
LUTON CLOSURE
Earlier this month, Vauxhall confirmed it would shut its major factory in Luton in a move impacting over 1,000 jobs.
The factory will close in April 2025 with other companies like Citroen, Fiat and Peugeot also threatening the same action.
The plans were first announced in November 2024 and the company blamed the UK’s switch to electric vehicles and the ZEV Mandate.
After the closure in Luton, the machinery will be transported to Ellesmere Port in Cheshire, where electric vans are already being produced.
The decision comes months after the Vauxhall owner Stellantis, which also owns the likes of Citroen, Fiat, Jeep, Peugeot and Maserati, warned it may halt production in the UK.
The ZEV Mandate, which are the strict new rules that aim to limit the sales of new petrol and diesel vehicles in the UK ahead of a 2035 ban, have been criticised by the car giant for its proposed penalties on car-manufacturing.
Luton Council hit out against the decision, claiming they offered “numerous options to save the plant but they were rejected” by Stellantis.
The closure will put 1,100 jobs at risk.
The demand for EVs has flatlined with many highlighting the huge cost of a new EV as a key reason[/caption]
BMW said it was ‘reviewing’ the plans for the Mini Plant[/caption]
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