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?
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.)
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.
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:
Did I miss something? Any more thoughts on these matters?