GENEVA (Reuters) – BMW’s ambitions to establish China as a hub for exporting electric cars are in limbo because of uncertainty over potential trade tariffs between China and the United States, company executives told Reuters.
FILE PHOTO: A BMW logo is displayed at the 89th Geneva International Motor Show in Geneva, Switzerland March 5, 2019. REUTERS/Denis Balibouse
BMW has factories in Europe, China and the United States and plans to establish China, the world’s largest market for electric cars, as an export hub for such vehicles, given its lower labor costs and support for zero-emission cars.
But Washington and Beijing are locked in a trade dispute, with U.S. President Donald Trump threatening to increase tariffs to 25 percent from 10 percent on $200 billion of Chinese goods if the two sides can’t reach a deal.
The uncertainty is making it hard for BMW to take a decision about exports, chief executive Harald Krueger said.
“We have no basis for taking a decision at the moment. Whether this is financially viable and whether it makes sense needs to be evaluated,” Krueger told journalists at the Geneva car show.
BMW bought a majority stake in its Chinese joint venture partner Brilliance last year and announced plans to build an electric version of its X3 sport-utility vehicle at the venture’s plant in China.
So far, BMW has no other plans to produce the electric X3 in other markets, so that it can ramp up economies of scale in a technology that has so far proven to be a low margin business.
BMW has also signed a memorandum of understanding with China’s Great Wall to build an electric version of the Mini.
Whether an electric Mini could be exported from China is an open question, Peter Schwarzenbauer, BMW’s board member responsible for Mini told Reuters in an interview.
“That’s probably the most strategic question we discussed over the past two or three years. With all the uncertainty around tariffs. I wouldn’t be able to give you a good answer of what will happen. The only option is to put yourself in a situation where you can react.”
China’s size and government regulations favoring locally produced electric cars make it worthwhile for BMW to pursue the alliance with Great Wall to build a Mini in China.
But BMW is still undecided where to have Mini’s export hub for electric cars. It has the option of building electric Mini’s in Oxford, England, Born the Netherlands and in China, Schwarzenbauer said.
“If China export is something that can be done easily, we could export much more out of China. If this becomes difficult, we have to balance it with Oxford and Born.”
Reporting by Edward Taylor and Costas Pitas; Editing by Mark Potter