BMW's Oxford factory is the favoured location for building an electric version of the Mini, sources have claimed.
Two sources told Reuters the company is leaning towards the UK plant, where it has invested heavily in recent years.
The company makes about 60% of its approximately 360,000 compact cars at the Cowley factory.
A BMW spokeswoman said: "A final decision has not been taken."
As well as Oxford, the company has built up an alternative manufacturing base in the Netherlands amid concerns about Brexit.
Reuters said its sources were "familiar with the company's thinking" and a final decision is due in September.
'Lose its relevance'
Between 2012 and 2015, BMW Group invested £750m to upgrade manufacturing sites in Oxford, Hams Hall and Swindon.
One source said: "If Mini became a fully electric brand in the long run, and Oxford only knew how to build combustion-engine variants, the plant would lose its relevance."
In March, the head of BMW in the UK, Ian Robertson, said the UK was "in a strong position but it's not the only production facility we have".
The company said it could also build the vehicle at a plant in the Netherlands, where a plug-in hybrid version of the Mini is already being built, or a plant in Regensburg, Germany.
The threat of further strikes at the Oxford plant ended last month when Unite members accepted a revised offer over the closure of their final salary pension scheme.