Research and development of the next electric Mini will take place in China, BMW board member Peter Schwarzenbauer said on Tuesday, as the British brand awaits a new alliance with Chinese carmaker Great Wall Motor Co.

BMW announced last month that it had signed a letter of intent with Great Wall, potentially giving the Chinese company its first foreign manufacturing partner and the German group’s first Mini assembly site outside Europe.

“It will be developed in China and it will be produced in China, but we don’t know where yet,” Schwarzenbauer told reporters ahead of the Geneva auto show. “The car could also be exported.” So far BMW has relied on its research and development facilities in Germany to produce the current Mini. More stringent local regulations, however, are forcing a shift of intellectual property to China.

“You have to have certain components localised. In the new energy vehicles regulation, the drivetrain and the battery technology needs to be sourced locally,” Schwarzenbauer said, adding that BMW Group would rely on its existing sales partnerships to sell the vehicle.

BMW’s own electric car, which is built and developed in Germany, is not eligible for local subsidies because it does not have components sourced in China, Schwarzenbaer said.