How BMW -- with an EV focus -- saved Mini production in the U.K.

BMW Group's decision to build the new Mini Cooper on two different platforms simultaneously has presented it with a challenge: how to combine the two in the same plant while ensuring the car is profitable.

The new electric version of the Cooper three-door small car due next year will be built on a new platform developed by the Spotlight Automotive joint venture between BMW and China's Great Wall.

Meanwhile, next year Mini will also replace the gasoline engine version with a new model that uses the same design as the EV, but it will sit on the UKL platform that currently underpins the fourth-generation car, which will be discontinued.

Mini wanted to build the two cars in Oxford, England, where the automaker has produced vehicles as BMW subsidiary since 2001. Combining production would align with BMW's strategy of building EVs alongside internal combustion engine (ICE) models wherever possible.

However, adhering to BMW's preferred production strategy is a lot easier when both the full-electric and ICE cars are built on the same platform, as it does with the current Mini hatchback.

Building cars on two separate platforms on the same production line requires heavy investment, which might not be recouped given tighter margins for small cars, especially electric versions with expensive batteries. The problem only gets worse in a country such as the UK, where labor and energy costs are high.

BMW came close to shutting Oxford altogether, Milan Nedeljkovic, the group's head of production, said an event Monday to announce the company's plans, which gave new life the factory.

"To get this business case right for Oxford was a very difficult challenge based on the existing structures," Nedeljkovic told journalists.

Government money helped. Of the 600 million pounds ($748 million) BMW will invest in the plant, 75 million pounds will come from the UK government, local reports have stated.

"Without your support this transformation would not be possible," Nedeljkovic told UK business and trade secretary Kemi Badenoch at the official announcement on Monday.

To improve the business case, BMW will first build the Mini Cooper E/SE electric models at the JV's new plant in Zhangjiagang, China, alongside a new small electric SUV called the Aceman.

Those cars will be sold in China and exported to Europe and elsewhere, allowing BMW to take advantage of China's lower production costs. Batteries for those cars will come from China's Svolt.

Meanwhile BMW will ready the Oxford plant to start production in 2026 of the Cooper E/SE and Aceman using the JV's EV-only platform. Both electric models will be built alongside the combustion engine version of the three-door Cooper.

The Aceman will replace both the Clubman compact and the automaker's five-door hatchback. The UK plant will also make the combustion-engine version of the three-door Mini convertible starting next year. From 2030, the plant will only make full-electric vehicles, BMW said.  

The two-year delay in shifting the new electric Mini into Oxford will allow BMW to work on ensuring cars built in the UK have the same margin as those in China.

"Our target is to get the same profitability, that is the challenge we face," Nedeljkovic said.

BMW already imports the iX3 midsize electric SUV from China to Europe, so it understands the advantages of sourcing whole cars from the country.

The next-generation electric Mini Cooper will bring "a significant improvement in the cost point of battery" compared to the outgoing Mini, Nedeljkovic added, without naming the supplier for the UK cars.

Svolt is in the running, along with BMW battery suppliers such as Samsung, CATL and EVE, Nedeljkovic said.

Sourcing from any of those suppliers rules out BMW using a UK-based battery plant.

The new Mini Cooper with the entry 41-kilowatt-hour battery boasts a range of 305 km (190 miles) while the larger 54-kWh battery improves range to 402 km. The current electric Mini has a quoted range of just 233 km.

The biggest investment BMW will make to incorporate the new platform at Oxford will be in the body shop, Nedeljkovic said, who added that the paint and press shops will also be overhauled.

Keeping the Mini plant in Oxford helps BMW to strengthen the brand's British heritage, Nedeljkovic said, adding: "At the same time you must come with a profitable business case. It's about how much can you invest and what your return on that investment will be."