From 2020, the fully-electric BMW iX3 will also roll off the production line at Plant Dadong, its sole production location, and be exported from China to markets worldwide.
BMW is one of the biggest exporters of vehicles from the United States to China, putting the carmaker firmly in the crosshairs of a trade war which has seen both sides raise tariffs on a multitude of goods, including automobiles.
The German auto manufacturer and its Chinese partner, Brilliance China Automotive, announced on Thursday a landmark deal to change the balance of equity in their joint venture.
The deal will see BMW increase its stake in the partnership to 75 per cent from 50 per cent and makes it the first company in China's vehicle sector to take advantage of Beijing's removal of foreign-ownership limits.
The filing on Thursday said the new agreement has received support from the Chinese government.
The joint venture plans to add a new plant, spending over 3 billion euros on a large-scale expansion of the existing production facility, Krueger said.
Yale Zhang, head of Shanghai-based consultancy Automotive Foresight, said: "Others will follow over time, but the divorce schedule depends on how strong or capable the local partner is".
News of the deal has alarmed investors, who fear Brilliance Auto will be left with a smaller share of future earnings from the joint venture.
China imposed the ownership restrictions in 1994, limiting foreign carmakers to owning no more than half of any local venture.
Brilliance Auto is not the only Chinese partner of BMW.
The firm's shares were suspended on Thursday, but plunged as much as 30 percent on Friday to a 28-month low, with analysts saying the deal would substantially decrease Brilliance's long-term value.
The joint-venture "is the cornerstone of the BMW brand's sustained success in its largest single market", said Harald Kruger, BMW's chairman.
"We are consistently following our growth strategy for China".