Tariff Threats Prompt BMW to Reconsider Chinese EV Production

News | March 9th, 2019 by 0
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BMW and other car makers have been complaining about the complicated economic environment these days, that is causing their business to take a hit. Washington …

BMW and other car makers have been complaining about the complicated economic environment these days, that is causing their business to take a hit. Washington and Beijing don’t see eye to eye on a number of topics and threats about trade tariffs are flying around these days, causing a lot of headaches. The Bavarians have been planning on creating a huge hub in China for electric car production, but it looks like things might have to wait a bit longer.

No definitive decision has been made yet as to how the business will be conducted. The reason? U.S. President Donald Trump is threatening to impose a 25 percent import tariff for Chinese goods worth around $200 billion. As the two sides have yet to reach a deal, car makers have to wait and ponder a bit longer whether certain investments still make sense. For BMW, investing in China would make sense, considering the lower labor costs and the support it would get from the government which is encouraging zero-emissions cars.

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“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,” BMW CEO, Harald Krueger told journalists at the Geneva auto show, about the topic. The company plans to build its iX3 model there as well as the MINI electric, and have the two models shipped worldwide afterwards. While for the MINI, production could also take place in Oxford, the Germans have yet to announce an alternative for the iX3 as well.

“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,” said Peter Schwarzenbauer, BMW’s board member responsible for MINI about the situation the British brand is finding itself in. Things aren’t easy for the electric MINI either as Brexit is still an uncertainty at this time.

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