BMW’s joint project with Great Wall Motor to build the new electric Mini model in China has reportedly hit the rocks due to “big cultural differences,” the latest case of collaborative difficulties between global auto giants and Chinese OEMs.
Why it matters: Global automakers have rushed to tap China’s booming electric vehicle industry by partnering local firms after the government brought out its first NEV mandate policy in September 2016. However, they may have underestimated cultural differences in the local market when attempting to bring over their tried-and-tested methods.
- Effective April 2018, the policy specified that all automakers with annual sales above 30,000 units in China must make or import a certain number of NEVs to receive credits.
- In some cases, EVs account for more than one-fifth of a company’s total car output.
Details: German media Sueddeutsche Zeitung reported that Spotlight Automotive, BMW’s first all-electric vehicle project with global partners outside Europe, has reached an impasse due to some fundamental differences in opinions.
- BMW reportedly intends to maintain its high-end market strategy with an emphasis on quality and safety standards, while Great Wall is looking for more cost-effective ways of manufacturing. BMW engineers have canceled long-planned trips to China for the project.
- Both sides are struggling to pour in new funding, given their recent weak business results, according to the German media report
- There have also been rumors in Munich that the collaboration could be a “complete failure” and “every month of delay is problematic.”
- A spokeswoman from Great Wall Motor denied the rumor when contacted by TechNode on Tuesday, saying the collaboration is working out well and both parties will move forward as planned. BMW declined to comment on the rumored diversion.
- BMW agreed to form a 50-50 joint venture with Great Wall Motor in Jiangsu province last year as part of a plan to launch its first electric Mini model in the first half of 2021.
- The two companies promised to invest a total amount of RMB 20.2 billion ($2.86 billion) on a new plant with a production capacity of around 160,000 electric cars per year.
Context: Global automakers have increased their EV efforts amid growing demand in China. However, after Beijing laid out plans to remove foreign ownership limits in the sector last year, some earlier-established JVs have been left in an awkward situation.