BMW, PSA/Peugeot-Citroen set up joint venture to make hybrid parts, software

Article by Christian Andrei, on February 3, 2011

In order to reduce supply costs, BMW and PSA/Peugeot-Citroen are putting up a joint venture to develop and build hybrid-power components and software.

In a joint statement, it was revealed that the 50-50 partnership will be named BMW Peugeot Citroen Electrification. Operations will start in the second quarter and production of the parts for both manufacturers' vehicles will begin in 2014.

Jean Leflour, chief of customer satisfaction at PSA, said that Wolfgang Guellich, BMW's head of purchasing strategy, will head the project.

In this statement, BMW CEO Norbert Reithofer said that with this venture, they will be able to “achieve significant economies of scale in the field of electrification.” Reithofer also said that this step is a crucial one to achieve “sustainable mobility.” Since 2006, BMW has cooperated on engines with PSA.

In February 2010, the companies said they will develop 4-cylinder gasoline engines that meet the latest European Union environmental rules.

This venture follows a memorandum of understanding on hybrid-power technology development that both parties signed in October. BMW Peugeot Citroen Electrification will ask suppliers to participate in the development process and it may offer the products to other manufacturers as well.

The management of this joint venture and the rest of its employees will be taken from the personnel of the two companies. The merger will also hire more staff from outside sources. The major management positions will be equally distributed among the companies.

Wolfgang Güllich who is in charge of BMW Group’s Purchasing Strategy, is going to be BMW Peugeot Citroën Electrification’s Chief Executive Officer while Jean Leflour, who is presently the Director of Customer Satisfaction as well as Quality Planning at PSA Peugeot Citroën, will be the Managing Director.

Norbert Reithofer says that this merger will let the company accomplish considerable economies of scale in the electrification field. In addition, it represents a crucial move on the road to continuous mobility.

Philippe Varin notes that with this joint venture, they can surely develop and expand their expertise as well as create a European leader in the area of automotive hybrid innovation. For many years now, both BMW Group and PSA Peugeot Citroën have successfully worked together on engines.

In fact, they have jointly built more than a 1.8 million units from 2006 to 2010. In February 2010, both companies made an agreement to create the next generation of the 4-cylinder petrol engine they designed together, which should meet EU 6 requirements. The jointly designed engine is presently included in some MINI, Citroën and Peugeot brand models.

Press Release

BMW Group and PSA Peugeot Citroën Create Joint Venture to Enhance Cooperation on Hybrid Technologies

The BMW Group and PSA Peugeot Citroën have decided to enter into a new phase of their collaboration, by signing an agreement to set up a 50-50 equity joint venture named BMW Peugeot Citroën Electrification. The agreement was signed on February 1st by Norbert Reithofer, Chairman of the Board of Management of BMW AG, and Philippe Varin, Chairman of the Managing Board of PSA Peugeot Citroën. In October 2010, the two companies had signed a Memorandum of Understanding designed to expand their existing cooperation to hybrid systems.

BMW Peugeot Citroën Electrification will focus on developing and producing hybrid components, including battery packs, E-machines, generators, power electronics and chargers, while also developing software for hybrid systems. Joint research and development, production and component purchasing will leverage significant economies of scale for both companies.

First and foremost, this initiative of BMW Group and PSA Peugeot Citroën aims to develop standard hybrid components for the electrification of their vehicle ranges. Its goal is also to create an open European platform on those technologies that will help the European industry to structure itself in the field of hybridization. To that extent, the joint venture will both integrate suppliers by outsourcing development work and could sell hybrid components to other companies beside its two shareholders.

Subject to approval by the relevant competition authorities, the joint venture is expected to launch its operations in the second quarter of 2011. The new hybrid components will equip both partners’ vehicles from 2014 onwards.

The joint venture’s management, as well as the rest of its workforce, will be drawn from employees of both companies. Additional external staff will also be hired. The key management positions will be equally shared among the two companies. Wolfgang Güllich, currently responsible for BMW Group’s Purchasing Strategy, will be appointed Chief Executive Officer of BMW Peugeot Citroën Electrification, and Jean Leflour, currently Director Customer Satisfaction and Quality Planning at PSA Peugeot Citroën, will be appointed Managing Director.

“This cooperative venture will enable us to achieve significant economies of scale in the field of electrification. It also represents an important step on the road to sustainable mobility,” said Norbert Reithofer. “With this joint venture, we are sure to develop and expand our expertise and to build a European leader in the field of automotive hybrid innovation,” noted Philippe Varin.

The BMW Group and PSA Peugeot Citroën have been successfully cooperating on engines for several years, building together more than 1.8 million units from 2006 to 2010. In February 2010, the two companies agreed to develop the next generation of their jointly designed 4-cylinder petrol engine, which will also meet EU 6 requirements. The joint engine is currently built into a number of MINI, Peugeot and Citroën brand models.

Topics: psa, citroen, peugeot, bmw, hybrid

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