BMW, Tesla open factories in China, driving EV market in spite of trade-dispute

In the wake of the U.S.-China trade dispute, the Chinese government has loosened its policy on ownership caps for factory sites for foreign car brands. Previously, car companies could only retain 50% of the ownership of a factory and had to set up a joint venture with a Chinese partner. By setting up shop in China, Tesla can avoid import duties on its cars, to cater to a broader customer base.

BMW Motor Group and Great Wall Motors at the signing event in Berlin.

Image: BMW Motor Group

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Both BMW and Tesla have individually signed agreements to open car production facilities in China. The move comes amidst the ongoing trade-dispute between China and the U.S., which among other industries, also affects the EV sector.

The Chinese government has lifted restrictive ownership rules on foreign factories, to attract foreign electric vehicle (EV) brands to produce cars in China directly. The law announced in April benefits EV manufacturers, as China seeks to increase the number of EV's on its roads.

Tesla made an announcement, whereby the company signed a deal to set up a new Gigafactory, for the production of 500,000 vehicles per year in Lingang New City. According to the announcement, the new factory will reflect the production capacity of that of its main facility in Fremont, California. The Chinese factory would also be Tesla’s first manufacturing site outside of the U.S.

Both, BMW and Tesla highlight the strategic importance of the Chinese EV marke. Tesla for example ships 17% of its total sales volume to China. The Chinese EV market is the biggest in the world and is expected to further grow in the coming years.

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Meanwhile, during an event for autonomous and connected driving, held in Berlin, Germany, and attended by China’s Premier, Li Keqiang and German Chancellor, Angela Merkel, BMW Motor Group and Great Wall Motor signed an agreement whereby the two companies will set up a new joint venture “Spotlight Automotive Limited” to jointly develop and produce EV’s for the Chinese market.

The new joint venture is still pending approval by relevant authorities. Once permission is granted, the companies will build a new production facility in China's Jiangsu Province. The companies further specify that the joint venture will focus on the development and production of battery-electric MINI’s. BMW, in an earlier announcement, disclosed that it would commence the production of battery-electric in the main MINI plant in Oxford, U.K.

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