China is the largest market for electric vehicles in the world: during the first quarter of the year, manufacturers have sold 396,300 battery models in the Asian country, almost four times more than in the United States, the second on the list. But being at the top of the ranking is just the tip of the iceberg of the strategy it has drawn up to position itself as a powerhouse that produces electric vehicles.
The Asian giant launched a Medium and Long-Term Car Development Plan in 2017, which aims to become a “strong” automotive powerhouse in ten years. In this strategy, the development of electric and autonomous vehicles stands out as an opportunity for China to dominate these emerging technologies.
Since then, it has worked to develop a supply chain that allows it to be an attractive investment platform to manufacture the next generations of electric vehicles. And it is succeeding.
Both BMW and Daimler have signed alliances with Chinese manufacturers to develop new electric platforms for Mini and Smart, so the next generation of battery-powered models from the two premium brands is sure to come from Chinese plants.
The joint venture between BMW and Great Wall Motor is scheduled to begin production of two fully electric Mini for China and global markets in 2023. The German manufacturer anticipates that the plant will have a capacity of up to 160,000 vehicles per year, which will require around 3,000 employees.
In the summer of 2018, both companies signed an agreement in Berlin to create a joint venture, to develop battery electric vehicles for China and the production of future Mini electric vehicles, as well as various models and brands for Great Wall Motor. To achieve this, both partners agreed to invest around 650 million euros (about 773,922 million dollars).
In addition to the size of the market, BMW said it chose China as its location because of “its strong supplier network, skilled workforce and good infrastructure.”
Daimler has also decided to develop the new generation of electric vehicles for its Smart brand at the hands of a Chinese manufacturer. The new generation of Smart electric vehicles will be designed by the Mercedes-Benz global network and developed by Geely’s global engineering network, with which it entered into an alliance in 2020. Future production will be located in China.
“The joint venture will bring the next generation of zero-emission Smart electric cars to the Chinese and global markets,” said Ola Källenius, Chairman of the Board of Directors of Daimler AG and Mercedes-Benz AG, in a statement in early 2020.
Why do automakers choose China?
Virtually all manufacturers have set ambitious goals for half or even all of their vehicle portfolio to be electrified models by the end of the decade. Achieving this will not be easy: it requires millionaire investments for the development of new platforms and the reconversion of production plants.
“Developing an electric vehicle requires a minimum of two years of development, 400 engineers and more than 500 million dollars,” calculates Jorge Vallejo, president of Mitsubishi Motors in Mexico, another manufacturer that has set the goal that 50% of its sales for 2030 come from electrified cars.
China is positioning itself as a platform that, due to its market size and production structures, allows vehicle manufacturers to make economies of scale. The plants that both BMW and Daimler are building in that country will produce models of their brands, but also of their local partners.
“This joint venture will enable us to produce a greater number of Mini brand fully electric vehicles under attractive conditions for the global market,” said Nicolas Peter, member of the Board of Management of BMW AG and Head of Finance, during the subsequent press conference. at the signing of the alliance with Great Wall.
