ZHENJIANG, Jiangsu – Magna’s first investment in a complete vehicle manufacturing facility outside Europe took another step forward on July 24 when the world’s No. 3 automotive supplier and partner BAIC Group signed a framework agreement here governing their electric vehicle manufacturing joint venture.
The transaction, which is pending regulatory approval and other closing conditions, is expected to close in the fourth quarter of 2019.
This JV, which is to be controlled by BAIC BluePark New Energy Technology Co., Ltd., an affiliate of BAIC Group, will begin production of BAIC’s high-end electric-only brand ARCFOX, unveiled earlier this year, in late 2020. It will have capacity of up to 180,000 vehicles per year.
More importantly, the JV will also be capable of offering EV contract manufacturing services to other potential customers. It combines Magna’s unique complete vehicle engineering and manufacturing expertise and BAIC’s local manufacturing, marketing and distribution footprint to support electric mobility in China.
“Magna has proven experience building complete vehicles for customers,” said Günther Apfalter, President of Magna Europe and Magna Steyr. “We are excited to work with BAIC to further strengthen Magna’s e-mobility capability in the largest global market for new energy vehicles.”
“BAIC’s long-term strategy, an open and sharing philosophy, and a collaborative and innovative mindset leads us toward the top partners like Magna,” said Zhang Xiyong, president of BAIC Group.
The JV becomes the first of its kind in China formed by a global supplier and a Chinese OEM, and the fact that it’s open to contract manufacturing vehicles from other Chinese smart EV startup brands reflects the further opening up of the market and relaxation of industry regulations to allow new and innovative business models.
The milestone comes a little over a year after Magna and BAIC Group announced in June 2018 that they would jointly engineer and build premium EV in China. In January 2019, the two sides celebrated the opening of a new engineering center and announced the groundbreaking of a new NEV test center in Zhenjiang.
The JV will be based on the manufacturing assets of the former BAIC (Zhenjiang) Automobile Co., Ltd. It has a total investment of about ¥2 billion, with investment coming from BJEV, a subsidiary of BAIC BluePark, and Magna International Autolaunch Ireland Ltd., according to a statement from the domestic-listed BAIC BluePark.
The first model to be produced at the JV is most likely an SUV based on the ARCFOX ECF Concept unveiled earlier this year at the Geneva Motor Show and Shanghai Auto Show.
Once it begins production late next year, the model will join the Mercedes-Benz G-Class, Jaguar E-Pace and I-Pace, BMW 5 Series and Z4 as well as the Toyota Supra as models and brands contract manufactured by Magna. These five models are made at Magna Steyr’s manufacturing facility in Graz, Austria.