ZF Signs Largest-Ever Deal With BMW

Last month, industry sources reported that BMW was looking to formulate an agreement for future transmission supplies. Many familiar with BMW’s current platforms and models defaulted to thinking of ZF, who manufactures the 8HP eight-speed torque converter automatic, which can be found in cars and trucks from the likes of Alfa Romeo to Volkswagen. On Friday, April 5, 2019, separate statements from BMW and ZF confirmed that a deal had been struck, and that in the near future, the transmission manufacturer will be supplying the automaker with their newest eight-speed auto, which is designed to work with both gasoline and electric vehicles. Additionally, the ZF facility in Gray Court, South Carolina, is expected to be one of the main origination points, with completed transmissions able to shipped the short 28 mile journey to nearby Spartanburg, where BMW has built its latest factory.

ZF Transmission Gray Court (ZFTG) in Gray Court, South Carolina.

The ZF factory in Laurens County, South Carolina opened in 2013, but has been expanded in the years since. The facility, dubbed ZFTG (ZF Transmission Gray Court), which currently supplies the likes of Chrysler and Land Rover, produces both 8HP and 9HP units, and has yearly output capacity of 1,200,000 units. Investment in the facility has totaled $600,000,000, while other statistics include over 2,400,000 square feet of space and a staff of 1,650 back in 2016.

The new transmission model, which will be adaptable, thanks to a modular design, between gas and electric vehicles, will first be produced at the ZF factory in Saarsbrücken, Germany, starting in 2022. However, it won’t be long until other global sites, such as ZFTG, and another in China, will join the supply chain.

BMW Plant Spartanburg in 2016. The facility has since grown significantly.

The news comes not long after speculation of BMW considering engine production in the U.S. arose, a story we covered back in December. The same advantages to domestic engine production apply to the economics of transmissions. Either component can rank among the most expensive line items when it comes to building a vehicle, and betting on the U.S. dollar and its advantage as the global reserve currency is one way to hedge investments during times of protectionist trade policy.

No further developments have come regarding the potential for an American BMW engine factory, but the agreement with ZF—the largest in the transmission maker’s history—bodes well for the notion. The move, when it comes to fruition, will also be another win for South Carolina, with the ZF factory less than a 30 mile drive from BMW’s largest global production facility.—Alex Tock

[Photos courtesy BMW AG, ZF Friedrichshafen AG.]

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