Carmakers BMW, Honda and Volkswagen, have announced plans for new factories and expanded production in China. BMW Brilliance's Plant Lydia was officially opened in Shenyang, Liaoning province. With an investment of CNY15 billion, the plant is the biggest single investment in BMW's history in China. The opening of Plant Lydia is an important step for BMW Group's accelerated transformation to electrification. In 2023, the range of BMW Group electrified products in China will rise to 13 models, the group said. With the opening of Plant Lydia, the investment in the Shenyang Production Base totals CNY83 billion and overall production capacity is being increased to 830,000 units per year.
The opening of BMW's plant followed the groundbreaking for a new electric vehicle (EV) assembly plant of Japanese carmaker Honda in Guangdong province. Honda Motor said its joint venture with Guangzhou Automobile Group has begun building an EV plant with an initial investment of CNY3.49 billion. The goal is to have the factory in operation in 2024 with an annual production capacity of 120,000 units. Separately, Volkswagen Anhui, a EV-focused joint venture in Anhui province, saw its first car body come off the assembly line, an important sign of progress in the trial production of Volkswagen Anhui's first new-energy model. Production is expected to start in the second half of 2023.
The new factories of the joint ventures are mainly designed for the production of new-energy vehicles (NEVs), which could help the companies take advantage of a window of opportunity, build up capacity and enjoy the dividends of China's policy, Zhang Xiang, Research Fellow at the Research Center of Automobile Industry Innovation of the North China University of Technology, told the Global Times. “China is the world's largest market for NEVs with the most complete automotive industry chain in the world. For international car companies, seizing the policy dividend window to set up factories in China to expand production capacity is their best choice,” Zhang said.
China will extend the tax exemption on new-energy car purchases and promote the used car market, as part of a plan to boost car consumption. Data from the China Association of Automobile Manufacturers (CAAM) showed that the production and sales of NEVs reached 466,000 and 447,000 units respectively in May, both showing year-on-year growth of 110%. Tesla's Shanghai output more than tripled in May as supply chains rebooted, and Tesla's locally made vehicle production hit 33,544 in May, a surge of 212% from April, the China Passenger Car Association (CPCA) said, as reported by the Global Times.
