Carmaker BMW is preparing to invest up to £600m in its Mini plant at Cowley, near Oxford, the BBC understands.
The money is expected to be used to prepare the plant for a future building electric models.
The government has offered support worth £75m to BMW.
The first generation of electric Minis was launched at the Cowley plant in 2019. The original model was based on an existing design, converted to run with an electric motor and batteries.
But last year, the company announced production of most of its electric cars would move to China, to be built by a joint venture between BMW and Great Wall Motor.
One electric model, the Countryman, would built at Leipzig, in Germany.
At the time, BMW suggested that building both conventionally fuelled and electric cars in the same factory was inefficient.
It also insisted Oxford would remain the “home of the Mini” and no jobs would be lost.
However, with the sale of new non-hybrid petrol and diesel powered cars due to end in 2030, the factory will ultimately have to build electric cars again, if it is to continue operating.
All Minis will be electric by 2030.
In a statement, BMW said it had a “continuous and productive dialogue with UK Government”, but it declined to comment on any future production plans.
An announcement from BMW would a positive move at a time when analysts have been questioning the future prospects of the British car industry – with the sector undergoing profound change globally.
In 2022, UK production fell to its lowest level since 1956, according to figures from the Society of Motor Manufacturers and Traders.
Honda’s factory in Swindon closed in 2021, while Ford shut its engine plant in Bridgend the year before.
In January, Britishvolt, which had been planning to build a “gigafactory” battery plant near Blyth, collapsed into administration.
The company has been bought by an Australian firm, Recharge Industries – but its priority is no longer expected to be batteries for electric cars.
Some new investment is planned, however.
Ford is investing £380m in its Halewood plant, preparing it to build motors for electric vehicles. Stellantis is preparing its Ellesmere Port factory in Cheshire to build electric vans – a project backed by £100m of public money.
A similar level of government funding is also going towards the construction of a gigafactory next door to Nissan’s plant in Sunderland – where the electric Leaf is built.
But last month a senior executive at Nissan warned that ongoing government support and a reduction in manufacturing costs would be needed to justify building other electric models in this country.
Chief operating officer Ashwani Gupta told the BBC “the economics have to work”.
The government is known to be keen for the UK to secure a stake in the emerging electric car industry, as conventionally powered models are phased out.
The £75m that is being offered to BMW comes from the government’s Automotive Transformation Fund.
The government is also understood to be in talks with Jaguar Land Rover’s parent company Tata over a package of funding for a possible gigafactory here.
However, Spain is also believed to be in the running for that investment.
Source – BBC News