BMW starts new factory in China to increase EV output

German automaker BMW BMWYY has begun production at a new $2.24 billion electric vehicle plant in Shenyang, China, as it looks set to compete against Tesla Inc TSLA and other fast-growing local EV rivals.

What happened: The company confirmed on Thursday that its third car assembly plant in China, Lydia, was up and running to increase its annual production in the country from 70,000 in 2021 to 830,000 this year.

“The expansion of our manufacturing footprint in China shows that we are preparing for further growth in the world’s largest electric vehicle market and confident in China’s long-term prospects,” said Jochen Goller, President & CEO of BMW Group Region China.

“We are stepping up our e-mobility efforts and aim to have more than a quarter of our sales in China be fully electric by 2025.”

Lydia is BMW’s largest project in China, housing all four main production processes: a press shop, a body shop, a paint shop and an assembly shop.

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Why it matters: China is an important market for legacy players, including Volkswagen Group VWAGY seeking EV leader Tesla, as well as Chinese players such as Warren Buffett-backed BYD Co BYDDY, Nio Inc NIO.

BMW aims to reduce a vehicle’s lifecycle CO2 emissions by 40% by 2030 compared to 2019, including an 80% reduction in CO2 emissions at production level.

BMW said it began production of its new i3, an all-electric mid-size sports sedan for China in May. The $52,000 car competes with the Tesla Model 3. The German automaker aims to sell 13 electric models in the Chinese market next year.

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