As BMW bodies glided down a Munich assembly line recently, showered with sparks from robotic welders, it was difficult to tell which vehicles were powered by batteries, fuel-burning engines, or both. Ta. In the view of many analysts, that's not a good thing.
The German automaker's electric cars are built on the same assembly lines as gasoline-powered cars and look similar. This approach, which uses the same basic body for electric, hybrid, gasoline and diesel cars, is part of the struggle to compete with Tesla and emerging Chinese automakers that produce cars designed specifically for batteries. has been seen as a cumbersome and inefficient compromise adopted by existing car manufacturers. Power.
But BMW's strategy worked, even if it baffled experts. Last year, the company sold 376,000 electric vehicles, including those under the Mini brand, an increase of 75% from the previous year. In the luxury car segment, BMW was in his second place after Tesla, which still held the dominant position with his 1.8 million cars. Electric vehicles will account for 15% of BMW sales in 2023, up from 9% a year ago.
The company's growth comes as the pace of electric vehicle sales slows overall around the world. What's even more surprising is that, unlike General Motors and Ford Motor Co., BMW makes money from the electric cars it sells.
BMW's experience suggests there is hope for at least some established automakers as Chinese automakers like BYD begin exporting cars to other Asian countries, Europe and Latin America. . As electric cars move into the mainstream, the popularity of BMW cars suggests that many buyers value the familiarity and workmanship of established automakers and remain wary of newer brands.
If so, BMW's approach could point the way for other automakers that have been making cars for decades but have made little progress in transitioning to battery-powered vehicles.
BMW's strategy has bought the company time to develop expertise in battery technology and design a series of cars focused on electric vehicles. The Munich-based company can more easily ramp up or down production of different types of cars, helping it cope with fluctuations in demand.
This approach has also helped BMW retain customers who are interested in electric propulsion but not ready to make a big break from the past. The company offers hybrid versions of some of its most popular models and says buyers should be able to choose their car's propulsion technology as easily as choosing a color.
BMW CEO Oliver Zipse said in an interview that people still prefer internal combustion engine cars, saying, “If they say, 'You belong to the old world,' We're going to lose customers.” “They will soon go into exile.”
Next year, BMW will begin selling a new line of cars designed to run solely on battery power. Last month, at a company event overlooking the rocky, wave-capped coastline north of Lisbon, Mr. Gipse unveiled a prototype sedan and crossover sport-utility vehicle that is part of what the company calls the Neue Classe. . Or a new class.
These cars feature significant improvements over existing models, including batteries that store 20 percent more energy per pound and features not available on Teslas, such as a digital display that runs along the entire bottom edge of the windshield. administered.
A customizable display provides information on speed, range, weather and navigation without the driver taking their eyes off the road, eliminating the need for an instrument cluster in front of the steering wheel. Most Teslas have one large display in the center of the dashboard, which requires drivers to look to the side to see maps and other information. This screen also contains many of the car's controls.
In addition, new BMWs will be equipped with self-driving technology that allows drivers to change lanes on the highway by simply taking their hands off the wheel and glancing in their side mirrors. This feature is a direct challenge to Tesla's self-driving technology.
Ever since Tesla proved electric cars can be practical and fun over the past decade, it has been an open question which car company will dominate the industry. Tesla, which has roots in Silicon Valley, has led the way in software and battery technology, but has struggled to manufacture and introduce new models. Although established car companies had decades of experience in manufacturing, they faced a steep learning curve when it came to batteries and software.
BMW is likely to survive this difficult transition to electric vehicles thanks to its engineering expertise, strong brand and profit margins that have allowed it to invest in new technology, said Third, the investment firm that owns BMW. said Matthew Fine, portfolio manager at Avenue Management. BMW stock.
“We thought that would give them a very good fighting chance,” Fine said. “And that seems to be true so far.”
The luxury car manufacturer has started the switch to electric vehicles with certain advantages. The brand recently topped Consumer Reports' ranking of car brands that make the best cars for the second year in a row. Tesla ranked 18th out of 34 brands on the list.
But Tesla has a big advantage. The Tesla Model S, which starts at $75,000, has a range of more than 400 miles on a single charge, while the BMW i7, which costs well over $100,000, has a range of about 320 miles, according to the Environmental Protection Agency. BMW said the next generation of cars should do more than address that shortcoming with a smaller battery that increases range by 30%.
Tesla could be vulnerable in several areas. Elon Musk's company's stock has lost more than half its value since its peak in 2021. BMW stock rose about 17% during the same period. Wall Street still values Tesla at more than eight times BMW's stock price.
Tesla's lineup is becoming outdated by automotive standards. The company recently began selling an upgraded version of its Model 3 in the U.S., but it hasn't introduced a completely redesigned sedan or SUV since 2020. Tesla is producing a limited number of its latest model, the Cybertruck, which was released last year. numbers.
“Newcomers have to be careful, or they might grow old before they grow up,” Gypse said, without mentioning Tesla.
A ride in the i7, an electrified version of BMW's top-of-the-line sedan popular with politicians and corporate executives, teaches you about comfort, which is crucial to the company's appeal. The car looks almost identical to an internal combustion engine car, but it's also eerily quiet on the highway. The vehicle is equipped with a large video screen that folds out from the ceiling.
Zipse insists that BMW is more than just an automaker. “BMW, yes, it's a car company,” he said. But, he added, “At its heart, it is a technology company with the ability to integrate very different technologies into one product.”
In Munich, BMW is demolishing a building used to produce internal combustion engines to make room for an assembly line producing Neue Classe cars. The last of his V8 engines rolled off the assembly line last year.
BMW buys most of its batteries from Chinese suppliers such as CATL, which also sells to Tesla, but develops its own technology. In a building with blue and gray corrugated metal walls in the Munich suburb of Parsdorf, BMW operates a mini-factory where it tests new battery designs and manufacturing processes. One change is to allow the slurry containing lithium and other active ingredients to be mixed in a continuous flow rather than in batches, as is traditionally done today. The process will be faster and cheaper.
From 2027, BMW will only produce electric cars in Munich, but other plants will continue to produce models with internal combustion engines. The company has a large factory in Shenyang, China. Spartanburg, South Carolina. and elsewhere in Europe. BMW has announced that it will begin manufacturing electric cars in the United States by the end of 2010.
Unlike Audi and other competitors, Gypse refuses to put an expiration date on internal combustion engines, drawing criticism from environmental groups.
Benjamin Stefan, a transport expert at Greenpeace Germany, said in an email: “BMW's clear commitment to stop producing climate-damaging internal combustion engines will help Europe's auto industry move towards electric vehicles. I think we can take the lead.”
But Gypse said the future of the industry is clearly electric. He pointed out that sales of BMWs equipped with the engine have plateaued. “The fastest growing segment is electromobility,” Gypse said.Electric vehicles “will become a dominant market force,” he added.”
