Published on August 15th, 2018 | by Michael Barnard0
BMW Now Means Boring Motoren Werke
August 15th, 2018 by Michael Barnard
The recent CleanTechnica assessment of Harley-Davidson’s electrification outlook — tl;dr: it’s in trouble — struck a nerve with brand loyalists. BMW was mentioned in passing, but that marquee’s problems are bigger and different than the rebel bike brand’s issues. Let’s find out if it’s possible to irritate BMW fans as much as Harley-Davidson brand adherents were irritated.
Harley-Davidson is a top 100 brand. So is BMW, #13 on Interbrand’s ranking compared to Harley-Davidson’s #77 spot. Also, like Harley-Davidson, BMW’s plans for electrification of its product line are going to be very challenging to execute. The reasons are different. While Harley-Davidson’s brand signifiers are fairly strongly antithetical to electrification, BMW doesn’t have that problem. Its problems are brand drift and German engineering arrogance.
How is BMW selling compared to Tesla?
There have been a string of car market comparisons with a Tesla focus published in CleanTechnica and other sites over the past year. Pulling them together into a unified story about BMW is an interesting exercise. The short version of that story is that Tesla is kicking all of the luxury car manufacturers’ butts up and down the categories they sell in. That’s true of all equivalent brands, but BMW is in the most trouble.
The following graphs and tables have been edited from their original forms to exclude everything except BMW and Tesla.
The Tesla Model 3 is the most recent focus of automotive industry interest. As the sales statistics from July 2018 show, the Tesla Model 3 is outselling the BMW 2, 3, 4, and 5 series. Many people predicted that the BMW 3 Series would be in trouble when the Tesla Model 3 was in full swing, along with the Audi A4 and the Mercedes C Series, but few predicted that the adjacent Series, including the 5 Series, would all be outsold en masse. The lack of BMW Series differentiation has been obvious for a while, with the proliferation of the model numbers and the market results making it clearer that that lack of differentiation is going to hurt BMW.
The Tesla Model S has been vastly outselling the BMW 6 and 7 series in the US for quite a while and this continued for the first quarter of 2018, with the Model S selling well over twice what the two Bavarian large luxury sedans sold combined. One argument that some have made is that the Tesla Model S isn’t really a large luxury sedan and so shouldn’t be compared to the BMW 6 and 7 Series, but to the 5 Series. That argument is well and truly debunked now, as the BMW 5 Series is selling less than either the Tesla Model 3 or the Tesla Model S. Considering that the Tesla Model 3 weekly production is targeted to rise to 6,000 cars a week from 5,000 by the end of August, considering that Tesla reportedly has a net 420,000 pre-orders for the Model 3, and considering that the US federal tax credit is good in diminishing form through the end of 2019, it seems clear that Tesla will continue to vastly outsell BMW’s luxury sedans by a wide margin for the foreseeable future.
At first glance, the bad news for BMW doesn’t appear quite as overwhelming in the important SUV segments of the market in the USA. The BMW X5 is still handily outselling the Tesla Model X, even though its year-over-year sales are slightly down. The X6 is selling fewer units but did have a good 21% year-over-year gain compared to only 10% for the Tesla.
But it’s worth unpacking that story a bit more. The Tesla Model X is much more expensive than either of the two BMWs. The MSRP runs about 40% higher for the Tesla than the X5 and about 30% higher than the X6. Given that Tesla doesn’t negotiate price and the BMWs are likely discounted by dealerships to move out the door, the real variance is probably closer to 35% to 45%. This means that Teslas are selling very strongly compared to the much cheaper BMWs. The good news for BMW evaporates under this LED high beam.
It’s worth pointing out that this isn’t just a United States story. Tesla has in recent times outsold all three of the big German luxury manufacturers in their home market. Yes, that’s right, Tesla is kicking BMW butt in Germany too.
What about BMW’s brand drift problem?
Like Harley-Davidson, BMW has a branding problem, although it’s not nearly as much of a problem for electrification. Its most memorable slogan, the one that people who pay any attention would still pull out if asked, is, “The ultimate driving machine.”
What are the problems with this? Well, the first is that this tagline is from the 1970s. BMW has never been able to convince anyone to remember anything else from their ad campaigns since. And the 1970s are 40 years ago. They’ve been trying to switch to luxury performance slogans, but it hasn’t stuck. They are basically Mercedes with different body work, and to be clear, less exciting bodywork.
The second is that they could make that claim 40 years ago. They could justify that claim easily 20 years ago. Even 15 years ago, when they introduced the normally aspirated, manual-transmission, straight-six Z4 with the manual rag top, that was an easy claim to make. (Full disclosure: that was the second-last BMW I owned.) That car was a stripped down, dedicated roadster. The only dashboards more minimalist than the original Z4’s are Tesla’s.
When they introduced the Z4 in 2003, they had 8 models of cars available, and that’s only if you counted the M3 and M5 as separate models. In 2018, they have 30 models of cars available, including several M derivatives. There’s a number for everyone. As stated earlier, the lack of differentiation between their models is blatant and uninspiring. They’ve given up on being the ultimate driving machine for being the generic car brand that tries to have a car for everyone.
And it shows. Every week, there’s a new video of a BMW M3 or M5 looking sluggish compared to a Tesla on a drag strip or highway. Tesla Model 3 track videos are starting to appear, often with BMW M3s somewhere behind them.
And then there’s the BMW i3. It’s a fun little urban hatchback. But it’s a box. With high-efficiency wheels. And much, much worse performance than any Tesla, even ones in the same price range. And it’s horribly compromised by the space left for a “range extender” and associated gas tank and fuel pumps. The best BMW i3 has half the range of the worst Tesla Model 3. And let’s face it, no one is going to give the BMW i3 the sexy award if there’s a bakeoff between it and the Tesla Model 3.
The BMW i3, while a competent if expensive urban hatchback, is clearly not an ultimate driving machine.
What about BMW’s electrification strategy?
The BMW i3 and the BMW i8 were BMW’s previous entrants into the electrification sweepstakes. The i3 is clearly not a big winner compared to current alternatives. Some even consider the Chevy Bolt to be more fun, and it also has much greater range and has none of the pretense of being a luxury or performance vehicle that the BMW has.
But we haven’t mentioned the bikeshedding.
“Spending disproportionate time and energy spent over an insignificant or unimportant detail of a larger concern. The term comes from an illustrative anecdote of a committee discussing a plan to build a nuclear power plant.”
Why is the BMW i3 an example of bikeshedding? Because BMW spent absurd amounts of time and money creating a new carbon fibre/plastic hybrid material and frame instead of just making a good all-electric car. They left room for a gas tank and a generator and created a new material that they won’t reuse. Bikeshedding.
As for the BMW i8, it’s in a weird class of its own. The swoopy sci-fi looks are niche cool. The plasticky-looking body gets mixed reviews. The 22 miles of low-performance range on battery alone gets invariably bad reviews. The performance of 4.4 seconds to 60 mph is sluggish compared to a Tesla Model S or even the Model 3 Performance — even with the i8’s gas engine going at full throttle. It pumps fake engine noise into its cabin, another example of bikeshedding. And it’s selling 2–3 dozen a month in the USA. It’s a rounding error.
And, to bring this back to Harley-Davidson momentarily, there is BMW’s electric motorcycle. Oh, look, it’s a dork-mobile. It’s a scooter. It’s weirder than the BMW i3. Maybe the same nerds designed it. Who knows? All anyone knows is that the behemoth BMW brand that inspired Zen and the Art of Motorcycle Maintenance thinks that trying to compete with Segways for nerd-appeal is a good idea in the electric space.
BMW has announced that the i3 and i8 are deprecated models and that it has a new strategy for electric cars. BMW agrees that it screwed up the first time out of the gate.
So, BMW will get it right this time, right?
They’ll build exciting, high-performance, visually appealing, all-electric cars, right? They’ll actually have a narrower range with better differentiation, right?
BMW’s new electrification strategy is the same as its current strategy — the generic car brand that tries to have a car for everyone. BMW’s documented and communicated strategy is to have every model be available in either a fully internal combustion, fully electric, or hybrid model.
“From 2021, new BMWs will be built on modular platforms capable of accommodating fully electric, plug-in hybrid or internal combustion powertrains. These cars won’t look radically different from today’s models, only being slightly taller to incorporate under-floor batteries.”
That’s right. They aren’t going to deliver a wide range of exciting, fully electric vehicles built from the ground up to perform superbly, they’re going to deliver a whole range of compromised performance. Want the best range from an EV? You won’t get it from BMW. Want the best performance from an EV? You won’t get it from BMW. Want the most exciting EV? You definitely won’t get it from BMW. Want the best looking EV? Sorry.
What’s that about the performance? Why won’t they be awesome? Because, to make amazing electric vehicles, you need to throw away most of the car and start from scratch.
Tesla figured this out with the Tesla Roadster. Musk is on record saying that starting with the Lotus was a mistake, and yet BMW is repeating it. Three years ago, VW had its dieselgate scandal and it was obvious then that it was a symptom of widespread automobile industry disruption. BMW didn’t learn the lesson. It’s doubling down not on electrification, but on the mistakes that many other companies have clearly shown to be mistakes.
As stated at the beginning, this is German engineering arrogance. They seem to think that the laws of physics don’t apply in Bavaria. Perhaps the VW engineers who promised clean diesels might have a word or two to say about that. The BMW marque is resting — heavily and with much bloated sighing — on its laurels. The brand has drifted and the engineers have become complacent and arrogant.
BMW has become the Boring Motoren Werke company. Instead of being the ultimate driving machine, it’s going to deliver the ultimate compromise machine.