It was difficult to determine if BMW automobiles in Munich would be powered by fuel-burning engines, batteries, or both as the car bodywork moved smoothly down an assembly line, splattered with sparks from robotic welders. Many analysts believe that to be a bad thing.
The German automaker’s electric cars share an exterior design with its gasoline-powered counterparts, and they are produced on the same assembly line. In an attempt to compete with Tesla and the up-and-coming Chinese automakers who make cars exclusively for battery power, some established automakers have adopted an awkward and inefficient compromise strategy that involves using the same basic body for gasoline, diesel, hybrid, and electric vehicles.
Confusing the analysts, however, BMW’s approach has proven effective. The business sold 376,000 electric cars last year, up 75% from the year before, some of which were sold under the Mini brand. With 1.8 million vehicles, Tesla continued to lead the premium market, with BMW coming in second. BMW sold 15% more electric cars in 2023 than they did the year before, up from 9%.
The company’s expansion coincides with a slower global increase in the overall sales of electric automobiles. Even more astonishing is the fact that BMW turned a profit on its electric car sales, something that neither General Motors nor Ford Motor did.
Based on BMW’s experience, it appears that there is hope for some established automakers, at least, as Chinese automakers, such as BYD, begin to sell their vehicles to Europe, Latin America, and other Asian countries. The popularity of BMW vehicles indicates that many consumers value the reputation and craftsmanship of established automakers and are leery of newcomer companies as electric vehicles become more widely used.
If so, other automakers who have been producing cars for decades but have not made much progress in switching to battery-powered vehicles may find inspiration in BMW’s strategy.
BMW’s approach gave the business more time to become an expert in battery technology and create a range of electric vehicles. The Munich-based company has found it easier to adjust the manufacturing of various car models, which has helped them deal with variations in demand.
Additionally, the strategy helps BMW hold onto customers who are intrigued by electric propulsion but aren’t yet ready to make a radical departure from the norm. The business claims that customers should have the same ease selecting a car’s propulsion system as selecting its color, hence it offers hybrid versions of several of its most popular models.
If you told our regular clients, “You are a part of the old world,” we would lose them. In an interview, BMW CEO Oliver Zipse referred to those who continued to choose cars with internal combustion engines. “They would quit right away.”
BMW is going to start offering a new range of battery-only automobiles next year. Prototypes of a sedan and a crossover sport-utility vehicle are part of what the business calls the
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Neue Klasse or New Class was displayed by Mr. Zipse last month at an event held at a location overlooking a rocky, wave-battered stretch of coastline north of Lisbon.
Compared to current versions, these vehicles will have substantial enhancements, such as batteries that hold 20% more energy per pound and non-Tesla features like a digital display that extends to the bottom border of the windshield.
Customizable, the display replaces the instrument cluster in front of the steering wheel and provides drivers with information regarding speed, range, weather, and navigation without requiring them to take their eyes off the road. Maps and other information must be viewed from the side of the dashboard because the majority of Teslas only have one huge display in the middle. Many of the car’s controls are also located on that screen.
Furthermore, autonomous driving technology—which enables drivers to change lanes and take their hands off the wheel on freeways—will be available for the new BMWs. All it takes is a glance in the side mirror to accomplish this. This function poses a direct threat to Tesla’s lauded autonomous driving technology.
Which automakers will dominate the market has been up for debate ever since Tesla demonstrated in the last ten years that electric cars could be both fun and useful. With its roots in Silicon Valley, Tesla has led the way in battery and software technologies but has had difficulty with production and new model introduction. The well-known automakers had a challenging learning curve when it came to software and batteries, despite their decades of manufacturing experience.
Because of its strong brand, engineering know-how, and profit margins that have enabled the company to invest in new technology, BMW is likely to weather this difficult transition to electric vehicles, according to Matthew Fine, a portfolio manager at Third Avenue Management, an investment firm that owns BMW shares.
Mr. Fine stated, “We felt that would give them a very good fighting chance.” “And thus far, it appears to have been true.”
With certain benefits, the luxury automaker led the way in the transition to electric vehicles. For the second consecutive year, the brand was ranked highest among automakers of the greatest vehicles by Consumer Reports. Out of 34 brands, Tesla came in at number 18.
However, Tesla offers a lot of benefits. The Environmental Protection Agency reports that a Tesla Model S, which starts at $75,000, can travel over 400 miles on a single charge, whereas a BMW i7, which starts at well over $100,000, can only go approximately 320 miles.
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According to BMW, the upcoming generation of cars could do more than makeup for this shortfall thanks to smaller batteries that offer a 30% increase in range.
Tesla may be susceptible in some ways. Since reaching its peak in 2021, Elon Musk’s company’s shares have lost more than half of their value. The value of BMW shares has increased by almost 17% throughout that time. Tesla is still valued by Wall Street at a premium of over eight times BMW’s stock market value.
Tesla’s lineup is becoming outdated in terms of automobiles. Although the business hasn’t released a fully revamped sedan or SUV since 2020, it did start selling an enhanced Model 3 in the US recently. Limited quantities of Tesla’s newest model, the Cybertruck, were produced and sold last year.
Without addressing Tesla, Mr. Zipse remarked, “If they’re not careful, newcomers might get old before they grow up.”
An experience in the electric version of BMW’s flagship sedan, the i7, which is well-liked by politicians and business leaders, provides insight into the creature amenities that are essential to the brand’s appeal. Even when traveling at high speeds, the car is remarkably silent, sharing virtually no external differences with its internal combustion equivalent. A sizable video screen that folds down from the ceiling is included with the vehicle.
BMW, according to Mr. Zipse, is more than just a carmaker. “Yes, BMW is a car company,” he affirmed. However, he went on, “To put it simply, it’s a technology company that can combine a wide range of technologies into one product.”
BMW is demolishing facilities in Munich that housed internal combustion engine production to create room for the assembly lines that will assemble Neue Klasse automobiles. Last year, the last V-8 was taken off the assembly line.
The majority of the batteries that BMW purchases are from Chinese companies like CATL, which also supplies Tesla but produces its technology. BMW runs a mini-factory in the Parsdorf area of Munich, with walls made of corrugated metal that are blue and gray, where it tests new battery designs and manufacturing techniques.
One modification is to permit continuous mixing of a slurry including lithium and other active chemicals instead of batch mixing, which is now the standard procedure. It is a less expensive and speedier process. While it will still make models with internal combustion engines at other facilities, BMW will only create electric vehicles in Munich as of 2027. Large plants for the corporation are located in Spartanburg, South Carolina; Shenyang, China; and various sites in Europe. BMW has stated that before the end of the decade, it will start producing electric cars in the US.
Environmental organizations have criticized Mr. Zipse for not putting an expiration date on internal combustion engines, unlike Audi and other Rivals.
According to an email from Benjamin Stephan, a transportation specialist at Greenpeace in Germany, “BMW could lead the European auto industry in the electric vehicle transition if it would make a clear commitment to ending production of internal combustion engines that damage the climate.”
The future of the sector, according to Mr. Zipse, is undoubtedly electric. He pointed out that sales of BMWs with engines have stabilized. According to Mr. Zipse, “the fastest growing segment is electromobility.” He went on to say that electric cars “will be a dominant market force.”