Rumor: Could MINI Expand Production to Mexico to Avoid Chinese Tariffs?

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Could MINI begin building the forthcoming electric MINI Cooper and MINI Aceman in Mexico at the BMW Group Plant San Luis Potosi. It’s an idea we’ve floated for a few years and one that has now being publicly mentioned by an owner of a prominent MINI dealer. But how real is this rumor and would it even be possible?

We’ve been reporting since last year that MINI was actively looking at alternatives for its Chinese production strategy for the J01 electric MINI Cooper and J05 electric MINI Aceman. And recently there’s been very strong indications that MINI is indeed expanding production to the UK as a way to get bring production closer to its largest markets and avoid Chinese tariffs that affect the US market.

In the latest Automotive News, Nicholas Alexander, president of Nick Alexander MINI in Los Angeles, said the China-made EVs are “desperately needed here.” But the import tariff “would make those models unsellable here,” he added, noting it would tack nearly $7,000 onto the sticker price. “China production immediately puts us from having a well-equipped, well-priced, well-loved car into something that’s just out of people’s price range,” Alexander said. “So if they could move that production to North America, I’m all for it.“

That comment has set the MINI internet a blaze. But there’s one problem. It’s a theoretical comment by a dealer principle and not a statement from MINI. Nor does it reveal any official discussions or plans. In fact it’s a statement that any one of us could make and one we even hypothesized last year.

However this feels a little different. For one it’s coming from Alexander MINI, a huge dealer for the brand over the years and if anyone might be in the know, Nicholas Alexander might. Could this suggestion be a thinly veiled confirmation that plans are underway?

Why Did MINI Decide to Produce Cars in China?

The J01 MINI Cooper and J05 MINI Aceman represent the fully electric future of the brand. While the current F56 electric MINI Cooper has been received well, it was always meant to be a stop-gap while BMW designed and built a new one from the ground up. However to make the economics work, BMW had to find a company to partner to help defray the enormous costs associated with creating a new vehicle from scratch. That company, Great Wall Motors seemed to be the perfect choice having quickly become an expert of electrified vehicles thanks to China’s stringent laws mandating their sales.

However just months after the agreement was signed, US/Chinese relations began to implode. One thing led to another and tariffs on goods were announced on both sides. For electric cars that meant a 25% tariff on any Chinese car imported to the US. For a small car with equally small profit margins, those tariffs have proven impossible for MINI USA to solve for. 

And now things are getting even more complex. According to ‘Manager Magazin’, a German monthly business magazine, talks are ongoing between BMW, GWM and Chinese officials about exactly what will be built at the Chinese plant in Zhangjiagang, Jiangsu province, with an annual capacity of 160,000 cars and production set to start this year. There is, however, a problem.

The essential NEV (New Electric Vehicle) production license for China has yet to be signed by the authorities. The papers will now be handed over at the China Development Forum at the end of March. However, Spotlight Automotive has yet to receive the go-ahead for the already complete Jiangsu factory.

How could this be happening? Given the push towards electric vehicles in China, there’s been a massive amount of start-ups over the last few years. That has created huge overcapacities, reportedly making MINI wait until one of these shoe-string budget operation fails and its precious license made available to the next inline.

With MINI’s volume target rising from 293,000 to 500,000 annual sales this decade, other plants were invited to make a case for investment. As we now know, Plant Oxford put forward the winning argument and so BMW will be refitting the factory to assemble the new generation ICE and EV models side by side.

A Mexican Built MINI Could Qualify for the $7,500 Tax Credit

The Inflation Reduction Act stipulates that not only the car be made in North America, but a large percentage of its components as well. Just producing the MINI Cooper and Aceman in BMW Group Plant San Luis Potosi doesn’t make it qualify for the tax credits. MINI would have to source other components like batteries and electric motors from plans in North America as well. In other words the investment isn’t trivial – especially since they’re likely going through the same process in the UK and the Oxford Plant.

The BMW Group Plant San Luis Potosi has been designed from the ground up to be flexible in what it produces but currently its focused on the 2 and 3 series line-up for the BMW brand.

But one thing that does make this rumor interesting is the pricing advantage that Mexico brings. Costs are dramatically lower than the UK. You could imagine the total savings for building and shipping the J01 and J05 to the rest of North America would be dramatically lower. In other words, the idea must be compelling enough that BMW and MINI have thought about the concept.

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