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Autonomous Vehicles

Published on July 17th, 2016 | by Zachary Shahan


Why Did BMW Pull The Plug On Quick, Big Leadership On Electric Cars?

July 17th, 2016 by  

Originally published on EV Obsession.

One of the more disheartening electric vehicle stories of the year was BMW pulling back on its plans to be an EV leader, rather than announcing a knockout, Tesla-Model-3-competing BMW i5 or other fully electric car. It was a bit of a shock since BMW made some exciting, gung-ho presentations about electric vehicles in the past few years as it rolled out its first i-brand cars, and it has been a leading seller of plug-in electrics. In fact, plug-in electric cars accounted for 15% of BMW’s passenger cars in North America last I checked.

So, where did BMW go wrong? Why is it shifting away from its plug-in leadership goals?

BMW i3 protonic blue 8

Option #1: It’s The Batteries, Stupid!

One of the most obvious guesses would be on the battery side of things. I just published an article highlighting some of BMW’s reported battery advantages over Tesla, but the key factor seems to be that BMW’s batteries (with cells coming from Samsung SDI) are considerably more expensive than Tesla’s (with battery cells coming from Panasonic, but specs coming from Tesla), as well as LG Chem batteries, which many automakers use. BMW may use the best batteries on the market (a very big maybe), but it seems the battery choice also prices the company out of the market (that’s the assumption, anyway).

Aside from simply choice of vendor, as far as we know, BMW hasn’t partnered with Samsung or any other major battery supplier to ramp up battery production to the scale that will be even more necessary in the coming years to compete with the top cars in the EV or overall car market. That is a key to Tesla’s leadership, Volkswagen seems to be in hot pursuit with its own potential $11 billion battery factory in Germany, and LG Chem has been ramping up production via several battery factories around the world. BMW & Samsung SDI? Well, if they’re doing anything big, we haven’t heard about it.

It could really be as simply as this: 1) without low-cost batteries, BMW can’t compete in the EV market, 2) without having laid the groundwork with a battery partner to massively ramp up battery production, BMW can’t get low-cost batteries. (And, possibly: 3) Samsung SDI simply isn’t set up or eager to move into the low-cost battery competition … but that seems to be counter to its reported move to invest $450 million into BYD in a big battery/EV move.)

Battery Prices

Here’s more info on Tesla’s sub-$190/kWh battery pack price.

Battery Prices and EV Domination Tesla

Option #2: Where Are The Gas Stations?

The other big advantage Tesla has, at least as a selling point for the people who dream about cross-country or cross-continent drives (spare me that time waster!), is a well integrated, reliable network of super-fast charging stations. Tesla is building this by itself, even though it has invited the major automakers to partner on it. Everyone else seems to be a decade behind, presuming they get started soon! However, for the most part, it seems OEMs are considering this aspect of things unimportant (very counter to what consumers think). There are no known plans in place to build a single non-Tesla super-fast charging station anywhere in the world, and no companies have come out and accepted Tesla’s offer to partner on the Supercharging network.

Assuming this is all true and there isn’t massive work going on behind the scenes to develop a comparable network, BMW would have a very hard time competing even if it built a cost-competitive, compelling electric car.

Supercharging Importance

Option #3: Dealers Will Be Dealers … Or Not

Conventional auto dealership reticence to electric cars is infamous and has been for a long time. This could also have harmed BMW’s electric car sales and prospects to a considerable degree. It seems BMW could come up with solutions to the challenge, but that is either more difficult than it seems or BMW just isn’t keen to put in the effort. In either case, the challenge of getting dealers to enthusiastically and informatively push BMW’s electric cars could be at least one of the core stumbling blocks.

Option #4: BMW Doesn’t Want The Transition To Happen Fast

Whether it puts BMW in a camp of masochists or not, the matter may be as simple as: slow this EV revolution down ASAP! As I’ve discussed at length elsewhere, so won’t do again here, a quick transition to electric cars threatens BMW’s (and other conventional automakers’) IP, competitive advantages, ICE-related sunk costs, and overall financial sustainability. Through a combination of the three things above; a focus on plug-in hybrids with very little electric range; and/or delayed releases of compelling, fully electric, cost-competitive cars; BMW may be trying to draw out the transition to EVs … just to keep its balance sheet in the black.

For more on that topic, see:

Why Tesla Model 3 Will Upend The Global Auto Industry (Cleantech Revolution Tour Video)

What’s Actually New In The Electric Car World?

Sergio Marchionne Admits EV Revolution Would Crush Automakers

Co-Founder Of Tesla About Starting Tesla (VIDEO)

Did I miss something? Any more thoughts on these matters?

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About the Author

is tryin' to help society help itself (and other species) with the power of the word. He spends most of his time here on CleanTechnica as its director and chief editor, but he's also the president of Important Media and the director/founder of EV Obsession and Solar Love. Zach is recognized globally as a solar energy, electric car, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, and Canada. Zach has long-term investments in TSLA, FSLR, SPWR, SEDG, & ABB — after years of covering solar and EVs, he simply has a lot of faith in these particular companies and feels like they are good cleantech companies to invest in. But he offers no professional investment advice and would rather not be responsible for you losing money, so don't jump to conclusions.

  • Eric Lukac-Kuruc

    The reaction of BMW and many others is indeed strange. It’s like they think/hope that pesky Tesla will go away and disappear so that they can continue their business as usual.

  • IndyX

    I think this is simply part of a greater decision with regards to overall emission compliance… BMW sells lots of diesels which most likely skirt emissons laws like every other auto manufacture that sells them… I say everyone is guilty and cheting due to all of the diesels blowing multiple times the limit in real world driving… I think they are focusing more on plug in hybrids as a result of the absurdly large penalities VW had put down on them… I dont agree with what VW did but the EPA should have followed Elons advise instead of their econmic warfare on VW…

    • Bob_Wallace

      It takes a few years to develop and launch a new model. A few years back I don’t think anyone saw battery prices dropping this fast. At most Panasonic and Tesla may have been figuring out the route but few would have taken them serious.

      I suspect car companies saw an interim period in which personal transportation would be partially electric but liquid fuel would be needed for long range travel due to battery cost and recharging time. So they launched PHEV programs which are just now producing the PHEV generation.
      In the meantime Tesla went straight for the finish line and started producing long range EVs and rapid charging. That has likely cut short the PHEV window and companies are going to have to tool up quickly to produce long range EVs or surrender market share.

      Losing market share is dangerous. Buyers tend to display brand loyalty. If buyers have a good experience with Tesla, GM or any other ‘first to market’ EV builders are likely to keep those buyers and ‘late to market’ EV builders will have to struggle to grow their sales numbers.

      • JamesWimberley

        Yes. I think you have their perspective right. I’d just add that launching a BEV should take longer than a new ICE model, as it’s a radical shift in technology and supply chains. The news that confirmed VW have become serious was the announcement of new electric platforms, on which models are riffs.

    • Bob_Wallace

      Part of the agreement between VW and the US government is that VW will spend some number of billions on developing EVs.

      There wouldn’t have been any real punishment for VW’s fraud had they only been required what they are going to have to do anyway.

  • Modok EvilMastermind

    “a decade behind”? You mean at most 1/2 a decade behind right? I actually think another entity could build out a network like this faster than Tesla has if they had less capital constraints than Tesla and they were motivated.

    The supercharger network is a good selling point for Tesla today (and for the next few years) but I think as EVs are inevitable we will see lots of players jump into this game.

  • JamesWimberley

    Samsung’s high battery prices suggest that in the BYD deal they are the suitor. BYD is doing well in the price-sensitive Chinese EV market, which indicates that they do not have a problem.with battery costs.

  • JamesWimberley

    No one car company can.possibly stop or even slow down the electric revolution by itself, and I doubt if BMW’s management are dumb enough to think so. More likely, it’s a power struggle between incumbent ICE and upstart EV factions within the company. VW is changing because the ICE gang following Winterkorn discredited themselves. Ghosn has shown leadership at Renault-Nissan, but not enough to change the culture entirely.

  • Peter

    “Tesla is building this by itself, even though it has invited the major automakers to partner on it. Everyone else seems to be a decade behind, presuming they get started soon!”

    How can they be a decade behind when Tesla itself opened its first supercharger only four years ago?

    I don’t really see the supercharger network as being such a significant competitive advantage for Tesla. I agree that it’s crucial to have one for major EV adoption, but if a big automaker got really serious about EVs and decided to create their own network they should be able to catch up with Tesla in about a year or so since building one is such an easily parallelizable process.

  • Anthony C

    I’d have put #4 up to 1 or 2. They won’t announce anything until they wake up to Bolt and Model 3 sales figures. I think they’re all prepping EVs in stealth, or at least they will be if their execs aren’t idiots. But when they wake-up, they’ll realize that the restrictions they put on themselves so that they could stay in stealth, and not give credence to the EV revolution, hindered them in preparing for where they’ll need to be in couple years.

  • MaartenV

    It looks like BMW, Honda, Toyota, FCA and Ford think they can sit this one out.
    And go back to real car making with real fuel when HFC comes of age.

    I think they are wrong.

    • Ross

      No question about them being wrong. The transition to EVs is a simple function of battery price and energy density.

      • jeffhre

        Folks we’re not seeing the forest for the trees here. BMW wants to be a leader in autonomous cars. Ford is growing it’s mobility division with ride-hailing, more electrification and invested in Zip car plus its own aps. Toyota invested in Uber, GM in Lyft, VW in Gett.

        What is greener, every person that ever has to drive, owning a car, or several people sharing a car only when it’s needed? Autonomous tech plus ridesharing can completely change transport solutions into something we can’t even recognize today. If five people are sharing an autonomous vehicle that is five times fewer vehicles which need to be electrified.

        The transport choices can evolve in ways never thought of before. Mass transit was electric trains or diesel buses, will it be autonomous pods that take thousands to their destinations and taking those with longer commutes to trains?

        BMW made an earlier commitment to EVs knowing full well what battery prices were. Now they are making a commitment to autonomy, knowing that it changes everything, whether it is based on EV, hybrid, plug-in-hybrid , biofuel, NG or even, ULEV high mileage gas cars, it’s effects will be profound and are inevitable.

        • JamesWimberley

          Self-driving cars don’t reduce the number and length of trips or the number of vehicles on the road at any time, and will probably increase them by removing barriers to access.So unless the vehicles are electric, they won’t reduce emissions from driving. They will reduce the size if the car fleet, and annual car production. That’s an envurinmental

  • I think this move will hurt BMW in the medium-long term. They are simply too small alone to block the EV revolution themselves and all of their big competitors seem to be transitioning faster than they are.

    Tesla is in the premium segment too and will simply take up their sales together with other brands. Other premium brands (like Mercedes-Benz and Porsche) are releasing pure EVs and PHEVs faster than BMW.

    • I agree that an “On again – Off again” sales approach will raise unnecessary concern and caution in consumers. There are many EV enthusiasts that refuse to look at the Bolt EV because of what GM did with the EV1 in the early 90’s.

      They would have been better off ticking along best they could until a clear path forward became apparent.

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