BMW will not begin mass production of plug-in electric vehicles until at least 2020, because the company’s current tech won’t allow for the company to generate a high enough profit margin to do so, the firm’s CEO has been quoted as saying.
In other words, BMW has pushed its electric vehicle (EV) goals back once again — seemingly proving right those who think company execs are shoveling smoke when they talk about EVs, and seemingly proving company defenders wrong.
This news isn’t too surprising, though, as BMW (and the wider German auto industry as a whole) has grown accustomed to very fat profit margins in recent years. Combining that with its lack of expertise in the EV sector and the challenge of making strong margins on electric cars, it makes sense that entering into it EV production on a mass scale would result in profits eroding on the back of high development, production, and sourcing costs. (For more on that topic, see “What Goes On In The Minds Of Auto Execs?” and “What’s Actually New In The Electric Car World?“)
Battery cells and/or battery packs, in particular, seem to be a sticking point — hence the reason that industry observers increasingly cite Tesla’s close partnership with Panasonic through Gigafactory 1 as one of the firm’s most important advantages.
BMW CEO Harald Krueger was quoted as saying: “We wanted to wait for the fifth generation to be much more cost competitive. We do not want to scale up with the fourth generation.” (4th-gen EV tech is what is being used in the most recent BMW i8 iteration, reportedly.)
“If you want to win the race, you must be the most cost competitive in the segment, otherwise you cannot scale up the volume,” Krueger noted. That’s an interesting admission in the context of the news.
Reuters provides more: “The cost advantage between BMW’s fourth and fifth generation electric vehicle technology was a ‘two digit number’ in percent terms, Krueger said. He did not offer precise figures.
“BMW is working on a sixth generation of its technology and is investing a three-digit-million euro amount in battery cell research to better understand mass production, the company said. … BMW said it wanted to add 25 new electrified models by 2025, of which 12 vehicles will be fully battery electric variants.
“Thanks to a new production method available from 2020 onwards, BMW will be able to make all its cars with pure electric, hybrid, and combustion engined variants. … In 2019 BMW will start making a fully electric Mini at its plant on the outskirts of the British city of Oxford, and will start production of a battery electric version of the X3 offroader in 2020.”
Those dates are all tentative, of course. What BMW execs will actually end up deciding in practice is something that we will have to wait to find out.
It’s very noteworthy, though, that even if BMW does meet the 2020 timeline, competition should be pretty high by then in the EV sector. Which doesn’t bode well for the company, to say the least.
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