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BMW AG pledged to invest 500 million euros ($563 million) at its largest European factory as the German carmaker bolsters its electric-car manufacturing capabilities to better compete with rivals including Tesla Inc.

BMW will add eight production lines for battery modules and electric motors at the Dingolfing plant in Bavaria, with four additional lines to be added later, the company said Thursday. By 2022, the site will be able to churn out electric drives for more than 500,000 cars a year, according to Chief Executive Officer Oliver Zipse.

The upgrades are coming at a crucial time for Zipse, who’s trying to prove that his strategy of making combustion, hybrid and electric vehicles on the same production line can result in products capable of competing with those made by Elon Musk’s Tesla.

Volkswagen AG, in contrast, spent billions of euros on developing a dedicated platform for its e-cars and has switched an entire factory in Zwickau to make battery-powered vehicles based on the new technology.

BMW’s newest battery motors made in Dingolfing and elsewhere are to power the company’s EVs in the coming years. The first car produced with the new technology will be the iX3 sports utility vehicle that’s assembled in China. BMW’s flagship iNEXT SUV and its i4 electric sedan, both slated for a 2021 release, will also use the technology.

Zipse is trying to balance the investment with cost-cutting needed to survive the slump sparked by the coronavirus pandemic. Like other carmakers, BMW saw its sales crater between March and May, and is now working to reduce headcount by about 6,000 people. The company also scrapped a joint venture with Daimler AG meant to research next-generation self-driving cars.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.