In the early years of the auto industry, the factories that produced cars and the parts for them were once confined only to the countries that the manufacturer was established in (BMW in Germany, Toyota in Japan, Ford in the USA, etc). However, as the auto industry rapidly expanded around the globe and cars were being sold in other countries as well, it made sense to produce them closer to the markets. And from the 1960s onwards, as more countries began industrialising – like Malaysia – incentives were also offered to carmakers to invest in local production.
Globalisation of the industry has led to factories being set up all over the world, some to serve a few markets and some as production hubs for regions or even the entire world. The need to have huge volumes for economies of scale that drive down costs is one reason for this approach. There are also political considerations which come into play as exports of vehicles from one country to another need to be ‘balanced’.
While the construction of new factories to make vehicles is ongoing, there is now a wave to establish factories to supply parts and systems for the coming era of electrification. The next decade will see a leap in hybrid and electric vehicles and demand will be great, so the factories must start up now in order to be able to meet that demand.
Incentives matter as well as policy clarity and stability
Choosing a country to build a new factory requires not just careful planning but also consideration of the incentives offered by the government. The investments and job opportunities as well as export potential are also attractive enough to governments to offer investments to attract carmakers. Clarity and stability of automotive policies is also important as carmakers plan over many years and they need to be assured that changes are not made just because a new minister has taken over and had other ideas about the direction.
Thailand has been good at policy stability, which is probably on reason why a number of global players built their production hubs there. Changes of government may occur but policies are maintained and that’s what matters.
BMW chooses Thailand
Following on from BMW Group Thailand’s earlier endorsement for incentives by Thailand’s Board of Investment (BoI) for a 700 million baht (about RM96 million) outlay in BMW plug-in hybrid electric vehicle (PHEV) production, the company has jointly invested with DRAXLMAIER Group in this battery assembly plant, worth 500 million baht (about RM69 million).
“This new beacon for e-mobility innovations will further unlock the competence of Thailand’s automotive industry. The incentives from BoI also symbolize the unity between the public and private sectors in this undertaking towards a sustainable future,” BMW notes.
BMW Group Thailand has thus marked another historic milestone with the inauguration of a local high-voltage battery production plant in partnership with the DRAXLMAIER Group, one of the world’s leading automotive suppliers and a partner of BMW Group since 1966. BMW Group Thailand launched the local assembly lines in July 2019 at the plant in WHA Chonburi Industrial Estate 2. The high-voltage battery assembly plant is assembling both battery modules and the battery itself.
Uwe Quaas, MD of BMW Group Manufacturing Thailand said: “One of the pillars of BMW Group’s global strategy is electrification, and BMW Group Manufacturing Thailand is underlining its commitment to this mission by taking another big step forward in our electro-mobility strategy. The start of local battery production enables us to better respond to growing domestic demand for electrified vehicles in Thailand. This new capability also strengthens the performance of Plant Rayong in fulfilling the country’s mission of sustainable mobility.”
Fully trained workforce
The high-voltage battery is a central element of partially and fully electrified vehicles and a highly sophisticated component that requires specialized skills to produce. Thanks to the advanced training and qualification programs initiated in September 2018, the staff from the DRAXLMAIER Group who have participated in the battery production training program at BMW’s Group Plant Dingolfing – the BMW Group Competence Centre for e-drive production – and the BMW Group pilot plant for e-drivetrains in Munich, are now ready for the high-tech assembly work to produce the latest generation (Gen4) of the BMW Group high-voltage batteries
This involves the use of cutting-edge production technologies onsite including laser welding, plasma activation, robotics, gluing, automated optical and electrical inline quality inspection along with end-of-line testing. The training is also focused on supporting a highly automated process, which is an important part of battery module production, as well as comprehensive quality assurance, product methodology and technology, rework, and analysis.
World-class standards and quality
Equipped with a strong grasp of battery production skills, the staff will work on battery cells provided by a supplier in the Asian region along with other imported parts – such as aluminium housing, electronics, and cables – to roll out high-voltage battery packs that meet BMW Group’s world-class standard and are in full compliance with Thailand’s local content requirement regulation.
Completed battery packs will then be transported to Plant Rayong for the production of the entire range of BMW 5-Series Plug-in Hybrid Vehicles, which has been in operation since July 2019. Since 2017, BMW Group Manufacturing Thailand has assembled four BMW plug-in hybrids at Amata City Industrial Estate, Rayong province.