German car giant BMW is in talks with the government over a £75m financing scheme to secure an electric Mini at its Oxfordshire factory.
Sky News has learned that BMW is in talks with officials from the Department for Business, Energy and Industrial Strategy (BEIS) over funding for the Whitehall Automotive Transformation Fund.
Industry sources said the government and the company could finalize a deal within weeks.
The package, worth up to £75m, appears to have the backing of business secretary Grant Shapps and chancellor Jeremy Hunt, one person added.
It was unclear on Saturday when the funds would be disbursed and when the factories would be used.
If a deal is finally reached, it would boost Britain’s car industry, which came weeks after it was revealed that production conditions in the sector were the worst since the 1950s.
Automakers will produce just 775,000 vehicles in 2022, a drop of nearly 10%, according to the Society of Motor Manufacturers and Traders (SMMT).
Supply chain issues such as parts bottlenecks have been a major factor in the drop, but the recent collapse of fledgling EV battery maker Britishvolt has added to the gloom hanging over the industry.
The Financial Times reported on Friday that Australian company Recharge Industries had been selected by managers as the preferred bidder for Britishvolt.
Cowley’s Mini production dates back to the 1950s and returned to BMW ownership in the early 2000s.
Oxford produces about 200,000 Minis a year, about 80 percent of which are destined for the export market.
The factory employs around 4,000 people and is one of the most important factories in the UK.
Nissan and Ford both announced new investments in UK factories last year, with the latter saying in December it would spend £150m to expand production of electric car components at Liverpool’s Halewood plant.
BMW announced in 2021 that it would stop making the electric Mini in Oxford, adding last October that the British plant would switch to making the Mini Cooper three-door and five-door hatchback.
“Additionally, the Mini Convertible will return to Oxford in 2025 – one of our most important cars and a global bestseller,” it said at the time.
“The electric MINI – hatchback and small SUV – will start production in China through our partnership with Great Wall, and the electric Countryman will be produced in Leipzig [in Germany].
“Other than that, we can’t go now.
“Future production plans will be announced in due course.
“Oxford, with its high level of flexibility, competence and expertise, plays an important role in the BMW Group’s production strategy and will continue to be at the heart of Mini production.
A BMW spokesman declined to comment this weekend on its funding talks with the government.
A BEIS spokesman said: “The UK is one of the best places in the world for car manufacturing.
“Investment through the Automotive Transformation Fund will develop a high-value end-to-end electric vehicle supply chain in the UK, including unlocking private investment in gigafactories.
“We’re also working with industry through the Automotive Council’s Skills Working Group to ensure the UK auto industry can support and develop the skills it needs to succeed sustainably.”
The government has not commented directly on the talks with BMW.