BMW counters Tesla offensive in China with new EV plant

SHENYANG, China — Grey partitions stretch into the gap about an hour’s drive from the middle of Shenyang in northeast China. Behind the limitations is Plant Lydia, a 15 billion yuan ($2.24 billion) manufacturing facility constructed by BMW Brilliance, a three way partnership between BMW and Brilliance China Automotive Holdings.

The large construction represents an accelerated push into electrical autos by BMW Group in China as EV specialists like Tesla and Nio eat into the nation’s all-important luxurious automobile market.

In an internet ceremony to open the plant on Thursday, BMW highlighted the usage of synthetic intelligence and knowledge analytics on the new plant.

“Plant Lydia is able to producing as much as 100% electrical autos, in keeping with market demand,” mentioned Jochen Goller, president and CEO of BMW Group Area China. “Along with our Tiexi and Dadong crops, Lydia will play an necessary position in additional accelerating our electrification transformation in China.”

All of BMW’s Chinese language crops are positioned in Shenyang. The group started manufacturing at Dadong in 2004 and Tiexi in 2012. It additionally introduced a battery manufacturing facility on-line in 2017.

Lydia will deliver annual manufacturing capability in Shenyang to 830,000 autos from 760,000. The plant may additional enhance output, with a most annual capability of 400,000 autos, in keeping with reference supplies from the Liaoning Province authorities.

“We hope to extend deliveries to BMW by 30% in 2022,” mentioned an govt at a provider primarily based in Dalian.

The brand new plant is a key driver for BMW’s EV technique in China. The automaker plans to supply 5 electrical fashions in China by the top of the 12 months, and 13 in 2023.

Electrics made up 3% of its Chinese language gross sales in 2021, in keeping with knowledge from the China Passenger Automobile Affiliation and different sources. Its aim is to hit the 25% mark by 2025.

BMW just isn’t alone. Audi, part of the Volkswagen Group, goals to complete constructing its first devoted EV plant in China on the finish of 2024. Toyota Motor this winter will launch the RZ 450e, the primary EV below its Lexus model, with plans to ultimately attain 50 markets worldwide together with China.

Though China’s auto market has cooled total, the luxurious sector — autos priced at 300,000 yuan or extra — continues to develop. About 3.47 million luxurious autos have been offered in China in 2021, making up 16% of passenger automobile gross sales, in keeping with the China Affiliation of Car Producers (CAAM).

BMW has expanded unit gross sales in China yearly since 2009, when comparable knowledge turned obtainable. China is now its most necessary market, accounting for 34% of worldwide gross sales in 2021.

Plant Lydia may doubtlessly develop its annual manufacturing capability to 400,000 autos, in keeping with authorities paperwork. (Picture by Shin Watanabe)

BMW, Mercedes-Benz, Audi and Lexus collectively management over 70% of China’s luxurious auto market. Gross sales have remained brisk all through the coronavirus pandemic, as rich customers, unable to journey, spend extra on automobiles.

However they’re dealing with rising competitors. “Excessive-end EVs are consuming into the market share of those international luxurious carmakers,” mentioned Tang Jin at Mizuho Financial institution.

Tesla offered round 320,000 autos in China in 2021, whereas homegrown manufacturers Nio, Li Auto and Xpeng collectively offered about 280,000 autos — each over double the determine from the 12 months earlier than. The development has continued this 12 months, with Tesla and the three Chinese language gamers logging development starting from 10% to roughly doubling on the 12 months in January-Might, at the same time as BMW noticed a 16% drop.

One among their strengths is their means to include cutting-edge digital options into their autos. “Along with a quiet inside, their automobiles have superior connectivity capabilities, like voice-activated GPS and home windows,” mentioned an govt at an automotive electronics maker.

In the meantime, luxurious manufacturers have been sluggish to make inroads into EVs. “When speaking about EVs, many Chinese language individuals now consider Tesla or one of many Chinese language manufacturers,” mentioned one Dalian resident.

EVs and plug-in hybrids made up 26% of latest passenger automobiles offered in Might, in keeping with CAAM. However “luxurious automakers, excluding these specializing in EVs, have solely electrified round 1% of gross sales,” Tang mentioned.

“It is unclear how a lot EV gross sales BMW and related gamers can obtain,” he mentioned.

One main change in China’s auto market this 12 months is that the federal government scrapped its international possession restrictions for passenger automobile ventures. Beforehand, international firms may solely come clean with 50% of a three way partnership, and will set up a most of two joint ventures. Beijing had already abolished these guidelines for new-energy autos in 2018 and for business autos in 2020.

In February, BMW elevated its possession of BMW Brilliance to 75% from 50% for 27.9 billion yuan. Volkswagen in 2020 expanded its stake in an EV three way partnership to 75% from 50%.

“Higher possession will enable automakers to make quicker choices concerning new merchandise and amenities,” mentioned Zhang Hongzhuo, chair of the Automotive Working Group on the European Union Chamber of Commerce in China.

“Many European firms are already getting ready to extend their stakes, and can begin searching for vital approvals,” he mentioned, although he added that it remained to be seen whether or not the Chinese language authorities will greenlight such plans.

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