Suggestion that carmaker could produce vehicle in Germany instead of Oxford comes amid fears over Vauxhall’s future

The new electric Mini could be made in Germany rather than the UK because of the uncertainty caused by Brexit.

Most Minis are manufactured at its plant in Oxford, one of the biggest factories in the country, but BMW, the owner of the brand, is considering making the electric version of the car in Germany.

If BMW decides to make the Mini outside of Britain then it would be a major blow to the government. Greg Clark, the business secretary, wants to put electric vehicles and battery technology at the heart of the UK’s industrial strategy, describing the sector as an “emblematic area of focus”.

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The doubts about where the electric Mini will be built is one of a number of issues threatening to derail the revival of Britain’s car industry. The government persuaded Nissan to commit more investment for its plant in Sunderland but there are fears that jobs could be lost at Vauxhall’s factories in Ellesmere Port and Luton if PSA Group, the owner of Peugeot, completes a deal to buy General Motors’ European business, which includes Vauxhall and Opel.

BMW announced the launch of the battery-powered Mini last year and it is scheduled to go on sale in 2019. The German company says it will make a decision this year about where to produce the car. However, the German newspaper Handelsblatt has reported that BMW is considering building the Mini at its plants in Regensburg and Leipzig rather than Oxford. Another option for BMW is to produce the car in the Netherlands, where roughly one in three Minis are already made.

The German carmaker is likely to hold talks with the British government before making a decision but is concerned about the prospect of the UK leaving the single market and being charged tariffs on imports and exports.

The company insisted it was business as usual at its four sites in the UK. In a statement, it said: “The decision on where to build the full-electric Mini will be taken this year.

“As formal negotiations between the UK and the EU have not even begun yet it is too early to comment on what Brexit will mean for our business.

“The BMW group has always made clear that we believe integration of the UK into the EU single market, maintaining free movement of goods, services, capital and talent, would be best for business. What’s important for us is that the UK’s negotiations with the EU result in uncomplicated, tariff-free access to the EU single market in future.

“As a major investor and employer in the UK, the BMW group urges the government to take the concerns of international business into account. Not only free trade but also cross-border employment opportunities and unified, internationally applied regulations are of proven benefit to business, the economy and individuals.”