BMW to take it slow with electric cars in short term, focus on profitability

BMW i, News | March 8th, 2017 by 18
2016 BMW i3 94Ah Protonic Blue 33 kWh Elektroauto 21 750x500

In 2014, BMW made two big splashes in the electric vehicle world, with the BMW i3 and i8. Those two, carbon fiber-intensive, highly technological cars …

In 2014, BMW made two big splashes in the electric vehicle world, with the BMW i3 and i8. Those two, carbon fiber-intensive, highly technological cars made big waves in the automotive world. Yet, despite the buzz they created, demand wasn’t where BMW had hoped. This hurt profitability, as those cars were extremely expensive to develop but didn’t sell as BMW had hoped. This has caused BMW to use a more reserved approach to the world of EVs.

At this year’s 2017 Geneva Motor Show, BMW merely debuted updated variants of current models, with some new body styles sprinkled in. The biggest news on the BMW stand actually came from ALPINA, with the B5 Biturbo stealing hearts. So it’s been pretty quite on the EV front for BMW this year. But the reason for that is that BMW is investing in a change. A change from a car company to an automotive technology company and, as unsexy as it may be, profits need to be there to do so.

2017 BMW i8 Crossfade Edition Garage Italia Genf Autosalon Live11 750x497

“We’re transforming BMW from a carmaker into a tech company and a mobility-service provider,” BMW CEO Harald Krueger told Bloomberg. “During this transformation, there’s one constant factor — a rigorous focus on what helps our customers and what they desire.”

So BMW will be focused on creating vehicles that customers can buy right now, thus increasing current profitability. All the while, its competitors like Mercedes-Benz, Volkswagen and Audi have been putting out very impressive concept EVs. This makes it seem as though those brands are miles ahead of BMW, in terms of EV tech. But BMW is adamant that focusing on battery and electric technology in the background is the way to go.

BMW also feels that it’s necessary to create plug-in hybrids and EVs for right now, such as the 330e and 530e iPerformance plug-ins. The cars cars that will get the mainstream customer into the electric space. Many fans criticize this move, using Tesla as an example of the right way to do things. However, the Bavarians feel that battery technology simply isn’t where it needs to be at the moment and wants to further invest in that before developing new electric vehicles. And they feel as if they can manage both quite successfully, bringing customers plug-ins for right now while investing in the future in the background.

Volkswagen I.D. Concept4 750x438

“BMW is large enough to master the investment demands for future technologies and keep profitability up,” said Krueger.

There are some, though, who believe that BMW is going to be left behind by other more innovative automakers. “The danger is that these new vehicles like Mercedes’ EQ and Volkswagen’s I.D. are a huge success, leaving BMW wrong-footed,” Harald Hendrikse, a London-based analyst with Morgan Stanley, to Bloomberg. “The push for electric cars does feel more real this time.”

Though, Hendrikse does go on to say that it’s possible for BMW’s approach is a safe one. “BMW’s decision to go for a gradual approach feels like the safer one in terms of investment outlay,” he said. “There’s no evidence to suggest people need a special-looking electric car and won’t buy a 3-Series with a good battery range.”

While Tesla, Mercedes, VW and Audi are all boasting about their current tech, which will likely be obsolete in three to five years time, BMW is waiting for the tech to be there first. If BMW’s right, by the time the level of battery technology advances to the point where electric cars are a viable option for the masses, BMW should have the funds and tech to be ahead of the game.

[Source: Bloomberg]

18 responses to “BMW to take it slow with electric cars in short term, focus on profitability”

  1. seancorr says:

    The hybrid models from BMW will continue to roll out for the next 5 years at least. Battery tech isn’t progressing as quickly as we liked it to be. As of today it’s still too large and heavy to be implemented into vehicles. There’s a strong case I will be replacing my F30 with a hybrid G20 instead of going full EV in 2020 but if u ask me I’d still go the gasoline way if I had the opportunity to do so but my country’s government is giving a huge tax cut for hyrbid models and that makes the price tag for a 330e to be very tempting compared to a 330i. I’m talking a rebate of up to USD15k between the 330e and 330i!

  2. Giom says:

    It’s a new game in the automotive industry – new, as in, it’s changing constantly. I’m glad I’m not in charge of what to do next. There’s also no point in criticizing the auto companies for their direction choices now… cause no one knows how it will be looking in five years time. But going from an auto maker to a tech company seems a little drastic, especially if said company is known for their cars. Time will tell… soon.

  3. CDspeed says:

    This is a common excuse, to stall for time. Audi, Jaguar, Mercedes, and Porsche will have something to sell in 1 to 3 years. They could lure customers away while BMW sits on the sidelines. After buying an i3 I decided I wanted an electric car that’s more like BMW’s regular lineup, so I traded my 5-Series in for a Tesla. I thought why wait when I could just go buy it now, even if new tech hits the market it doesn’t mean my new car is going to loose any capability. And I can trade it just like I’ve done in the past so I’m not stuck with it.

  4. Pictor says:

    You don’t develop new technology by sitting on the sideline. You also don’t develop good technology using a waterfall model. You win through iteration. In this space BMW will need to iterate quickly on the technology front while also realizing that chemical engineering (battery tech) doesn’t follow Moore’s Law.

    The problem I see with BMWs electric strategy is that there is not enough focus on the technology. It’s the Z1 all over again. The CFP body on the i cars is a cool platform but there aren’t any autonomous capabilities (for the US Market). Any autonomous capability is pushed out on the 7 and 5 series and the i3 and i8 don’t even have TJA. The Tesla buzz isn’t just the batteries it’s the perception that you get “auto pilot” capability.

    • CDspeed says:

      Speaking of the technology you get in a Tesla, my i3 beyond the CFRP, and the fact that it’s electric. And even though I got it fully equipped minus the REx, it has none of the new technologies you see even in other modern BMWs. I like the fact that it feels like a lightweight sports car, but my configuration costing me just over 50 thousand USD, I couldn’t at least have power sport seats? Or power seats at all? And that’s all they’re going to build facing several new, and more substantial competitors……..

      • M98987 says:

        Leadership requires faster upgrade cycles. Not just electric motor tuning, performance, but the AI systems, there should be Yearly upgrades for those.

        And yes, it’s expensive, it should be across the board because of the expense.

    • Max says:

      The i3 and i8 where started to develop almost 10 years ago. How would you know at that time that everything changes so fast? And u cant just put some sensors in a car and make it “autonomous”!
      Actually TESLA KILLED PEOPLE with that!!!! Ok, lets forget about them, they where just unlucky betatesters right?
      Teslas technology isnt any better than BMWs (or others), they just take more risk for peoples lifes and dont get any hates on that, unfortunately people dont see that. They rather hate on some VW CO2 emmissions garbage created by US government to protect their auto industry.
      Established automakers have much more too loose thany any new one – you should not forget that.
      Also, Teslas 80k cars/year is nothing against 2mio BMW or 10mio VWs etc. lets wait and see how they can perform on a long term. Then we will see how good their technology rly is. Just put a nail in the battery of an i3 and a Tesla, u will be wondering ;)

      • M98987 says:

        Tesla has the lowest accident rate right now.
        So, Mercedes/BMW Killed People WITHOUT that, is a more accurate argument.

      • M98987 says:

        Tesla’s tech is the best in the industry. With the most miles clocked for their AI system.
        And I still like the BMW i3 better, but, I don’t have blinders on to reality.

  5. johnbl says:

    Can we really believe that BMW finalized the i3 EV design to be so controversial? This decision is what hurt sales..sure it’s cost was high but with a more typical BMW aggressive design sales would have been stronger. My guess is they wanted the car to be less attractive than their ICEV line. And I think this is the pressure that is slowing down development.(TSLA can only be delighted with this decision).

    I love the vehicle, and at the price I paid for my second i3, the 2014 i3 CPO Tera World BEV, ..I may just forgo my Mod 3 reservation. After 15,000 mile of driving I know what a great car it is.

    • CDspeed says:

      I got that sense too, that they made the i3 so polarizing from their regular product that they wanted it to be a bit of a turn off. My i3 is the 9th BMW I’ve ever owned, and though I like it for what it is, it’s nothing like any other BMW. It’s so basic, and stripped out, a well equipped Volkswagen Golf would seem like a luxury car by comparison. Do you also find that the door arrangement causes confusion with passengers new to the car?

      • johnbl says:

        Here in PHX the choice was TSLA, Leaf, and BMW i3…for BEV design. So the BEV Tera World was perfect for us. I really like the door design and even when we had the kids visiting it actually made it easier for our 3 yr old grandchild to jump in and out of the car..It does take some getting use to and obviously it turned many off..like the regenerative brakes..that design make so much sense and yet I met a Leaf owner who purchased a Leaf cause he was uncomfortable with the i3 aggressive regeneration.

        I guess you stay middle of the road except when it come to speed, aggressive front ends, and standard designs..thus i3 low sales numbers.! And always dealers pushing back on BEVs’ success.

  6. Jan says:

    Just last week I sold my ICE for a BEV i3. Suitable for my need right now. I don’t plan on buying a ICE car again. Late this year or next year I will need a bigger longer range car. I might consider X5 iff I could get a optimized BEV version. For now I am planing on Tesla model X.

    By delaying development of BEV now I believe they will loose more in experience and customer interest. It will cost them more to claw it back later.

  7. Jose Hightower says:

    I think BMW needs to focus on improving the range of the i3 while at the same time controlling its costs. Even though I still plan on getting one, its a hard sell for most people when they see that they can get a chevy bolt with twice the range for ~$6K less than an i3. Also, they NEED to assure customers that battery upgrades will be available in the US in the future. When they get a battery pack capable of 200 mile range, customers should be able to swap out their old i3 battery for the new one without much hassle. It would be a very worthwhile upgrade for many people who love the i3, but want more range.

  8. robinspat says:

    “There’s no evidence to suggest people need a special-looking electric car and won’t buy a 3-Series with a good battery range.” – Except the 3 series is “Fugly!!”

Leave a Reply

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

This site uses Akismet to reduce spam. Learn how your comment data is processed.

NEWSLETTER