Industry Trend Analysis - Autos Investment Round-Up: Luxury Electrification Dominates Western Europe - DEC 2017

BMI View: Electrification remains the most dominant theme in Western Europe this quarter with German luxury brands leading the way in turning their vague promises of fleet electrification into tangible projects actually being implemented at their major plants.

In BMI's regular round-up of production investments, we track the latest projects from the production side of the industry and analyse regional trends that we see developing. In doing so, we hope to build a picture of any potential hubs that may be developing, as well as company strategy in terms of production bases and export programmes.

Western Europe Autos Production Investment
Date Announced Country City/ State/ Region Company Value Brief Description Date Onstream
na = not available. Source: BMI
Jul-17 France Florange ArcelorMittal USD77.7mn Converting a production line to a new line for Usibor production (a relatively new type of steel). 2019
Jul-17 France Dunkirk ArcelorMittal USD34.2mn Upgrading steel manufacturing facilities including ramping up Usibor production Q418
Jul-17 UK Oxford BMW na Establishing assembly of new MINI-branded electric city car. Powertrain/drivetrain will be sourced from BMW's German Dingolfing and Landshut plants 2019
Jul-17 Germany Augsburg Kuka USD 117.7mn Expansion of headquarters including a new robotics production workshop 2025
Jul-17 Austria Graz Magna Steyr na Will establish contract manufacturing of Jaguar Land Rover's E-PACE electric crossover. Q417
Jul-17 Germany Dusseldorf Mercedes-Benz USD 541mn Upgrading plant to incorporate production of new Sprinter van models including new electric Sprinter and Vito vans with USD343mn investment and a further USD151mn invested into developing the electrified versions of the vans 2018
Jul-17 Germany Unter-tuerkheim Mercedes-Benz na Will add new electric vehicle battery production site as well as assembly of electric modules for front and rear axles.
Jul-17 Germany Sindelfingen Mercedes-Benz na Began production of the new S-Class sedan Jul-17
Jul-17 Germany Berlin Osram na Adding production of autonomous driving technologies alongside xenon headlight production na
Jul-17 Germany Schwab-munchen Osram na Adding production of light emitting diodes na
Jul-17 UK Sinfin Rolls Royce USD 118.7mn Construction of new engine testing centre 2020
Jul-17 Finland Uusikaupunki Valmet Automotive na Added third shift for contract assembly of Mercedes-Benz models Jul-17
Aug-17 Spain Figueruelas Opel na Began production of the Citroen C3 Aircross compact SUV. Expected yearly output of model is 120,000 units. Aug-17
Aug-17 Germany Friedrich-shafen ZF USD 82.4mn Production of new transmission test centre 2019
Sep-17 Germany Liepzig BMW USD 353.3mn Expansion of paint shop and assembly line and retooling for introduction of new models 2020
Sep-17 Germany Munich BMW na Introducing series production of BMW I-Vision Dynamics model (concept) na
Sep-17 Portugal Tondela Eberspaecher na Inaugurated new exhaust technology plant Sep-17
Sep-17 Luxembourg Colmar-Berg Goodyear USD 77mn Construction of new highly automated tyre plant with capacity of up to 500,000 tyres 2019
Sep-17 Spain Vitoria Mercedes-Benz USD 40mn Adding electric variants of the Vito and V-Class vans at the plant. 2019
Sep-17 Germany Neu-Ulm Mercedes-Benz na Reorganisation of production lines and adding fitting activities for autonomous driving and modern safety systems.
Sep-17 France Joue-les-Tours Michelin USD 40mn Inaugurated its renovated production plant manufacturing utility, bicycle, agricultural, air and truck tyre ranges Sep-17
Sep-17 UK Sunderland Nissan Motor na Beginning production of new Leaf electric car end 2017
Sep-17 Spain Soria Panasonic na In partnership with Spanish firm Ficosa, began mass-production of electronic rear-view mirrors Sep-17
Sep-17 UK Bedwas Sapa USD 12.7mn Renovation and reopening of plant providing aluminium components for vehicle bodies. Sep-17
Sep-17 Spain Liria SRG Global na Expansion of exterior and interior plastic trim component plant Sep-17
Sep-17 Denmark Helsingor Trelleborg USD 14.7mn Construction of new manufacturing facility for sealing solutions 2020
Sep-17 UK Ebbw Vale TVR na Beginning production of new Griffith sports car. Late 2018
Sep-17 Austria Kapfenberg Voestalpine USD 400.3mn Construction of new special steel plant producing high performance steel 2021

In BMI's latest investment round-up of the Western European sub-region, we have identified 28 new investment projects that were either announced or inaugurated in Q317. This represents a big increase compared to the 9 projects identified in Q316. Of the 28 projects announced in Q317, the investment values for 13 of these projects was also made public, adding up to a total of USD1.91bn worth of investment, well above the USD941mn announced in Q316.

Across all these investments in Q317, three key themes stand out: plans to establish broader electrification of models are becoming more tangible; new technologies are now beginning mass production and displacing old technologies; and upstream investments are still flowing into Europe.

Electrification Plans Taking Visible Shape

In Q317, we have seen German luxury automakers provide more visibility on how their strategies to electrify more of their product range will actually be achieved. We have previously recognized that most Western European carmakers have announced bold and far reaching plans to electrifying a high portion of their fleets over the next five years ( see 'Product And Manufacturing Strategies Respond To Low Carbon Policies ' , September 5). However, these broader electrification strategies often involved vague promises of new electric vehicle (EV) models without much detail as to where they will be built and if components for these vehicles will be outsourced or manufactured in-house.

These details are now slowly coming to light; most obviously in Germany and for luxury vehicle manufacturers in particular. Daimler's luxury and commercial vehicle subsidiary, Mercedes-Benz, is one good example after it committed to its fourth battery pack production plant globally in Untertuerkheim and electric van production in Dusseldorf and Vitoria. The announcements paint a very positive picture of Mercedes' strategies when combined with its earlier announcements about EV and battery production in Rastatt and Mannheim ( see ' Autos Investment Round-Up: Boom Time For Future Tech In Western Europe ' August 9) as well as Bremen ( see ' Autos Investment Round-Up: Brexit Effects Not Visible, Electrification Takes Shape ' , January 30).

BMW is also close behind with commitments to EV production in Oxford, UK as well as Munich while Tata Motor's luxury subsidiary, Jaguar Land Rover, has also committed to a contract assembly deal for its first electric model, the E-Pace.

Future Tech Now On The Mass-Market Production Line

A number of the latest technologies aimed at driver safety now also appear to be in mass production, often displacing older tech. For example, Panasonic, with its Spanish partner Ficosa, has begun mass production of its new electronic rear-view mirrors using cameras and a display screen instead of standard mirrors. At the same time, Osram has felt the need to update its dated xenon headlight and halogen headlight production activities with the addition of new autonomous driving tech and LED headlights to their Western European production lines. Finally, Mercedes-Benz has reorganised its bus production lines in Neu-Ulm to incorporate the fitting of autonomous driving and other advanced safety systems and has begun mass production of its S-Class model, which utilises more autonomous driving features than any other Mercedes model to date.

Automotive Steel Production Not Dead In Europe

With cheap steel available on global markets, investments into automotive steel production continue to pour into Western Europe, despite its relatively higher cost base for steel production. To justify investments like those above from ArcelorMittal and Voestalpine, these projects are aimed at the higher value-added and higher tech automotive steel products and utilise Europe's strong labour skill set and strength in research and development. By investing in this space, these producers are hoping to tap into the auto industry's need to find lighter materials that help meet stricter emissions standards while also meeting tough safety standards.