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BMW, EVs and China: risky investment or opportunity?

New BMW EV batteries for China

In September 14th, BMW inaugurated a new factory in China to produce high voltage batteries for EVs. It is the first BMW factory in the world able to provide such products.
It is important to understand why BMW chose China, and why produce components for EVs. China is currently the biggest market for electric vehicles. China accounts for 50% of the electric vehicles sold worldwide.
EVs are getting common: in 2019, almost 1 car every 25 was electric, in China.

But why the Chinese market is so important?

The famous Chinese infrastructure involves investing to support EVs. China is already the country with the biggest EV power network, with the plan to expand it by 4 times its 2019 size by the end of 2020. Chinese government provides subsidies to purchase electric vehicles, supporting local production as well. Furthermore, the various cities of China often provide a free license plate to EVs. That’s a huge advantage since a plate in some cities can cost even more than 100.000 RMB. Of course, it is not only a matter of price. An EV won’t ever get the same restrictions of a petrol or diesel vehicle. It also will often be able to drive inside a city center. Those factors are game changers for taxi drivers, including DiDi drivers.
China also is the country with most electric buses, as well as the biggest producer of the category.
Such huge investments and state decisions make it clear that the future of China will be electric.

Why producing EVs in China?

In a period of crisis, BMW decided to make a strong investment in new technologies and chose to do it in Shenyang, the capital of Liaoning. BMW also owns factories in other parts of China. Still, the one in Shenyang is rather particular, because it began operations during a critical period of the global economy. Time, in this case, was even more important than usual. Production had to start as quickly as possible and the team involved had to be as efficient as possible to avoid time losses.

Thanks to the help of the Chinese government and the efforts of BMW team in China, it was possible to get into production after just two weeks of halt. An incredible result for such a difficult step forward.

Why China is BMW’s most important market

The Chinese market is considered the most important by the firm, especially during this period of recovery. As a matter of fact, BMW believes that the luxury and premium markets will recover in the second half of 2020, and China already shows the signs that it is time to provide more products for those market shares. A result clearly shown by the online sales growth in China in 2020 and the results of the luxury market.
The combination of China’s market size, the approach of the government to aid foreign and local businesses grow and the quick recovery out of the coronavirus crisis make it an ideal investment choice in such an unstable year.
BMW is a powerful brand in China: as of 2019, 5 cars every 200 are estimated to be sold by the Bavarian firm.

In 2019, China was the destination of more than 1 every 4 cars sold by BMW. China sales doubled the second and third classified, USA and Germany. Source: Statista

The growth of BMW in China, since 2016, has been in double digits, with year on year peaks even above 20%.
In 2020, only the month of February registered a dramatic loss of sales. Sales managed to recover almost to 2019’s levels in March. After that, the growth (if compared with the same month in 2019) was around an astonishing 20%. The original source of the news is from Xinhua, through New China TV. You can check the original video in english here.

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