BMW has not yet confirmed if the plant will churn out BMW-only products or if the agreement involves adding a second production facility for the upcoming electric Mini, which is now only slated for production at the brand's Oxford plant in the UK.
Bernstein analysts said they believed that any new venture of BMW and Great Wall would have to sell exclusively electric vehicles (EVs), given China's moratorium on approvals for new gasoline auto businesses.
The talks are in a preliminary stage, Great Wall said in a statement to the Hong Kong stock exchange Friday.
John Zeng, managing director of LMC Automotive Shanghai, said the possible partnership might be dedicated to electric Mini cars. But China's state planner has said that in principal it will not approve any new foreign joint ventures involving traditional gas-powered cars because the market is already oversupplied. "But producing electric cars will help BMW to meet its quota now that China demands every carmaker in the country. produce a certain number of such cars starting from 2019". It added that both companies signed an agreement in April 2016 to study the feasibility of developing electric vehicles and traditional power vehicles in China.
A Great Wall official declined to comment. Local media speculation of a tie-up with BMW sent its shares soaring 14% Wednesday, prompting suspension in trading.
Brokerage Jefferies said in a note that it was "understandable that BMW needs a new partner to defend its market share in a more competitive market", and expected that the move would hit current partner Brilliance.