Reverse Engineering The BMW i3

BMW i | January 5th, 2015 by 12
bmw i3 repair process 25 750x500

Sandy Munro, chief executive of Munro & Associates, whose firm specializes in reverse engineering for the auto industry, bought a brand new BMW i3 just …

Sandy Munro, chief executive of Munro & Associates, whose firm specializes in reverse engineering for the auto industry, bought a brand new BMW i3 just to reverse engineer what he calls “one of the most advanced cars in the world.”

The $50,000 electric car is lying in pieces in a building of Detroit suburbs where it is been dissected and analyzed by Munro’s team. The information gathered from the reverse engineering process is sold to anyone who is interested to learn about electric vehicles, and in this case, BMW’s jewel.

The goal is to offer a detailed analysis of the costs and processes involved, right down to the individual nuts and bolts used. Munro decided to study the i3 at his own expense (about $1 million), and make his findings available for general distribution — for about $500,000 for carmakers.

bmw i3 repair process 15 750x500

During a walk-around with Forbes, Munro demonstrated some of the i3′s key innovations, including a carbon fiber “life module”, car’s suspension, battery and drive system. Munro is still crunching the numbers, but he believes BMW has designed the i3 to be profitable at a volume of about 20,000 vehicles a year.

In 2014, BMW sold about 6,000 i3 models in the U.S. and the sales projections are higher in 2015.

The video can be found here.

12 responses to “Reverse Engineering The BMW i3”

  1. Mark says:

    I would take any estimate of a profit break-even point in terms of number of vehicles sold with a grain of salt. 20,000 seems on the low end, it could be 100,000. While I don’t doubt Munro’s expertise at estimating the cost of the components to estimate the net material cost, and even a reasonable estimate of the assembly costs. However, calculating the break-even number of sales to make the vehicle profitable cannot be done with this information alone.

    The big elephant in the room is (are) the development costs, which cannot be determined from a reverse engineering tear down. I’ll wager even BMW has a hard time doing it when all is said and done, and the further away anyone is from the actual data, the more difficult it is to estimate. Development costs on new technology are difficult to control even with the best of planning. This is the reason Government contractors try to get cost plus contracts on state-of-the-art development work, while the Government, of course, seeks fixed price contracts. I worked in this Government R&D environment for over twenty years in a Quality Engineering and Management role, and saw how the best laid plans, developed and implemented by physicists and engineers that were recognized leaders in their field of expertise, were seldom without hiccups or worse.

    We have no idea how many roadblocks BMW ran into in process of designing and producing this vehicle, requiring unknown hours of engineering effort. Also, how much, if any, of this cost they considered business overhead expended to expand the company’s future capabilities, thus not charged to the project.

    Development costs must certainly be factored in; otherwise if the material, assembly, and delivery costs are less than the sale price, the there would be profit from day one. The only caveat here is that assembly costs tend to decline as workers become familiar with the new processes; but for auto assembly plants, this is a relatively small factor in the overall picture.

    • Horatiu B. says:

      BMW said the i3 and i8 development cost $3B

      • Mark says:

        Well then, I guess the big elephant in the room is the estimated lifespan of the product. If five years, that works out to $30k per vehicle. 10 years, it’s still

        • Mark says:

          i8 projected production -2k this year, 5k next per BMW. Adding them in wont significantly change the above calculations.

        • Ninong says:

          I doubt BMW is all that concerned about break-even points on the i8/i3 vehicles. They’re looking at them as their entry into what they see as the future of the automotive industry.

          Just consider the millions of dollars they spent advertising the i8. It’s totally out of proportion to the limited number of units they intend to produce. They don’t look at it as advertising for that particular car. They see it as advertising the BMW brand.

          • Mark says:

            I agree, particularly on the i8. On the i3, the break-even threshold was probably an afterthought. Most likely the price-point was calculated based on the criteria of selling enough units to amortize the fuel efficiency of the balance of their product line, so as to meet California and federal rules/regulations.

            No one likes to tell their stockholders they are losing money on a product, no matter the reason. So the message is “we can make money if we sell 20k units/year”. Stockholders (outside of the Quandt family) have no way of verifying the truth of the statement. Look at Ford and Hyundai gaming the system to inflate the mileage of their high efficiency vehicles. Cheaper than pricing them lower to gain sales!

          • Horatiu B. says:

            I think the formula is far more complicated than the 20,000 units. While BMW wants to make a profit on the i cars, without a doubt there is a bigger picture in play.

          • Horatiu B. says:

            I think the formula is far more complicated than the 20,000 units. While BMW wants to make a profit on the i cars, without a doubt there is a bigger picture in play.

          • Mark says:

            Amen!

          • Mark says:

            Amen!

          • Sanjay says:

            yes, the entire 3,4,5,6,7 lineup is going to be benefitting from the i3/i8 r&d :

            http://www.bmwblog.com/2015/01/10/2022-bmw-3-series-hybrid-will-revolutionary-product/

  2. dan says:

    if BMW puts a larger gas capacity on the i3 to 6-7 gallons, the driving range would be extended over the Tesla competition and that would be something to brag about.

Leave a Reply

Your email address will not be published. Required fields are marked *

BMWBLOG

NEWSLETTER