BMW Still Hedging Bets With Electric Cars, Despite Renewed Focus
The BMW i3 was one of the pioneering vehicles of electrification. Despite having been on the market since 2013, it still holds up surprisingly well thanks to regular battery capacity upgrades along the way. However, US production ended in July, the similarly groundbreaking i8 ceased production in April last year, and for a while it has looked like BMW had really dropped the ball on the EV revolution after an early lead. Recently, the company has refocused on EVs again. But its strategy is different to even the local German competition, let alone disruptors like Tesla, and considerably more hesitant.
I talked to BMW Board Member for Purchasing and Supply, Dr Andreas Wendt, and the Vice President for Sustainability and Mobility, Dr Thomas Becker, about BMW’s plans for e-mobility and new energy vehicles over the coming decade. Although the company is clearly now putting a bigger focus on electrification again, this comes with some caveats, and it still feels like BMW is hedging its bets, unlike the bold EV strategy of the Volkswagen Group.
Some of this is a little surprising, considering that the Tesla Model 3 was already outselling all of BMW’s models combined as far back as 2019. You would think BMW would need a strong electric competitor, and the i4 still hasn’t shipped yet. But it also signals where the company sits in the market. It’s much smaller than Volkswagen, for example, valued at under $70 billion compared to the latter’s $147 billion. It’s also more finely focused. One of the things that Dr Becker stressed to me was that just four European markets make up around 70% of BMW’s sales – Germany (obviously), the UK, France, and the Netherlands. So the US is part of the remaining 30% stretched globally.
Dr Becker argues that the locations of its key markets have greatly influenced its choices, saying that the Mini will be 100% an EV by 2030, fitting the urban focus of these four countries. Unlike Volkswagen, however, BMW is also continuing to develop hydrogen-powered vehicles. According to Dr Becker, this is because South Korea is a more important market than (for example) Italy for BMW, and South Korea is investing heavily in hydrogen infrastructure. Dr Becker also doesn’t see that a 5-series car aimed at very long journeys is going to be 100% electric anytime soon, although the company has a titanic 1,000-hp electric M5 allegedly in the works.
Dr Wendt also wanted to stress that BMW’s approach to sustainability wasn’t just focused on what comes out of the tailpipe, but the greenness of the whole production process. When EV is compared to EV, the tailpipe emissions will be zero in both cases, he argues, so it will be the entire system, from ore mine, to electricity supply mix, to the full vehicle lifecycle that counts. Dr Becker argues that this will be one of the ways its forthcoming i4 will differentiate itself, with a totally transparent lifecycle. It is also what the BMW i Vision Circular concept, unveiled at the IAA Mobility 2021 event in Munich recently, is all about. BMW vehicles already use 30% recycled and reused materials. The i Vision Circular aims to raise that figure to 100%, with a mantra of “RE:THINK, RE:DUCE, RE:USE and RE:CYCLE”.
This focus on lifecycle more than purely vehicle technology helps explain BMW’s strategy with production. Where Volkswagen has transitioned whole facilities over to EVs, such as the Transparent Factory in Dresden, BMW will continue to make both internal combustion and electric vehicles on the same production lines. According to Dr Wendt, factories producing the 3-series and 4-series BMWs will also make the i4, and the iX will be made alongside the 5-series and 7-series. Dr Wendt doesn’t see this multi-skilling as being so difficult and allows the company to vary production balance to meet demand.
What is clear is that BMW is still not expecting the EV revolution to happen overnight. Dr Wendt reckons that by 2030 only 50% of new cars will be fully electric, which means the other 50% won’t be. Some of that non-EV 50% will be important markets for BMW, which might even include the USA at its current slow rate of EV adoption compared to Europe and China, although Joe Biden’s green focus could change that. Dr Becker expects plug-in hybrids to continue to play a big role for many years to come as a result. In other words, while BMW is taking EVs seriously again, it doesn’t expect them to be the sole vehicle type anytime soon, if ever. Only time will tell if this is the right strategy for continuing success.