BMW is the surprise winner in electric vehicles


As sparks from a robotic welder rolled down an assembly line in Munich recently as a BMW car body, it was difficult to tell which vehicles would be powered by batteries, fuel-burning engines or both. In the eyes of many analysts this is not a good thing.

The German automaker's electric vehicles are made on the same assembly lines as gasoline cars and look similar on the outside. That approach of using the same basic body for electric, hybrid, gasoline and diesel cars has been seen as an awkward and inefficient compromise, which some established carmakers have deployed as they seek to compete with Tesla and emerging Chinese automakers. are struggling to compete with those that produce cars designed entirely for batteries. Power.

But confounding the pundits, BMW's strategy has been successful. The company sold 376,000 electric vehicles last year, including some under its Mini brand, up 75 percent from the year before. In the luxury segment, BMW was second behind Tesla, which remained the leader with 1.8 million cars. Electric vehicles will account for 15 percent of BMW's sales in 2023, up from 9 percent last year.

The company's growth comes as electric vehicle sales have grown at a slow pace worldwide. What's even more surprising is that unlike General Motors or Ford Motor, BMW made a profit on the electric vehicles it sold.

BMW's experience suggests there is hope for at least some established carmakers as Chinese carmakers like BYD begin exporting cars to other Asian countries, Europe and Latin America. As electric vehicles move into the mainstream, the popularity of BMW cars shows that many buyers value the familiarity and workmanship of older carmakers and are wary of new brands.

If so, BMW's approach could point a way to other automakers that have been building automobiles for decades but have made little progress toward transitioning to battery-powered vehicles.

BMW's strategy gave the company time to develop expertise in battery technology and specifically design a range of electric cars. This has helped the Munich-based company deal with fluctuations in demand as it can more easily increase or decrease production of different types of cars.

This approach also helped BMW connect with customers who are interested in electric propulsion but not ready to make a sudden break from the past. The company offers hybrid versions of many of its most popular models, saying buyers should have as much ease choosing a car's propulsion technology as it does choosing its color.

“If you tell them, 'You are part of the old world,' we will lose our traditional customers,” BMW Chief Executive Officer Oliver Zipse said in an interview, referring to those people. “They will defect immediately.”

Next year, BMW will begin selling a new range of cars designed to run only on batteries. Last month, at a company event on a site overlooking a rocky, wave-battered coastal area north of Lisbon, Mr. Zipse showed prototypes of a sedan and a crossover sport-utility vehicle, part of the company's New Classe Are, or new class.

These cars will offer significant improvements over existing models, including batteries that store 20 percent more energy per pound and features not available from Tesla, such as a digital display that runs along the entire bottom edge of the windshield.

The display, which can be customized, gives drivers information about speed, range, weather and navigation without taking their eyes off the road, and eliminates the need for an instrument cluster in front of the steering wheel. Most Teslas have a large display in the center of the dashboard, requiring drivers to look to the side to see maps and other information. There are also many of the car's controls on that screen.

Additionally, new BMWs will be available with autonomous driving technology that allows drivers to take their hands off the wheel on the freeway and change lanes simply by glancing in the side mirror. This feature directly challenges Tesla's vaunted self-driving technology.

Since Tesla has proven over the past decade that electric vehicles are practical and fun, it's been an open question as to which car companies will rule the industry. Tesla, with its roots in Silicon Valley, has led in software and battery technology, but has struggled with manufacturing and introducing new models. Established car companies had decades of experience in manufacturing, but faced steep learning curves when it came to batteries and software.

Matthew Fine, portfolio manager at investment firm Third Avenue Management, said BMW may survive this difficult transition to electric vehicles because of its engineering expertise, strong brand and profit margins that have allowed the company to invest in new technology. BMW Share.

“We thought this would give him a very good fighting chance,” Mr Fine said. “And that seems to be true so far.”

Luxury carmakers began the switch to electric vehicles with some advantages. The brand recently topped Consumer Reports' ranking of auto brands making best vehicles for the second year in a row. Tesla was ranked 18th out of 34 brands on the list.

But Tesla has significant advantages. According to the Environmental Protection Agency, a Tesla Model S, which starts at $75,000, can go more than 400 miles on a single charge, compared to about 320 miles for a BMW i7, which costs more than $100,000. BMW said its next generation of cars should address that shortcoming with smaller batteries that offer 30 percent more range.

Tesla may be unsafe in several areas. Shares of the Elon Musk-led company have lost more than half their value since their peak in 2021. BMW shares have increased by about 17 percent in the same period. Wall Street still values ​​Tesla at more than eight times the stock market value of BMW.

Tesla's lineup is becoming dated by automotive standards. The company recently began selling an upgraded version of its Model 3 in the United States, but it has not introduced a completely redesigned sedan or SUV since 2020. Tesla is producing its latest model, the Cybertruck, which went on sale in limited quantities last year. Number.

“Newcomers,” Mr. Zipse said, without mentioning Tesla, “if they're not careful, they may grow old before they grow up.”

The ride in the i7, an electric incarnation of BMW's top-of-the-line sedan popular among politicians and corporate executives, offers a lesson about comfort being key to the company's appeal. The car, which looks almost identical to its internal combustion counterpart from the outside, is extremely quiet even at highway speeds. The car comes with a large video screen that folds down from the roof.

Mr Zipse argues that BMW is not just an automaker. “BMW, yes, it's a car company,” he said. But, he added, “In essence, it is a technology company with the ability to integrate very different technologies into one product.”

In Munich, BMW is demolishing buildings that were used to make internal combustion engines to make room for assembly lines that will produce the New Class cars. The last V-8 came off the assembly line last year.

BMW buys most of its batteries from suppliers such as China's 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 involves allowing the solution containing lithium and other active ingredients to be mixed in a continuous flow rather than in batches, which is now the traditional practice. This process is fast and cheap.

Starting in 2027, BMW will no longer produce anything but electric vehicles in Munich, although it will continue to build models with internal combustion engines at other factories. The company has large plants in Shenyang, China; Spartanburg, SC; and other places in Europe. BMW has said it will begin manufacturing electric vehicles in the United States by the end of the decade.

Unlike Audi and other competitors, Mr Zipse has refused to put an expiry date on internal combustion engines, which has been criticized by environmental groups.

“BMW can lead the European auto industry in the electric vehicle transition if it makes a clear commitment to end the production of climate-damaging internal combustion engines,” Benjamin Stephan, transportation expert at Greenpeace in Germany, said in an email.

But Mr Zipse said the future of the industry was clearly electric. He said sales of BMW with engines have stagnated. “The fastest-growing segment is electromobility,” Mr Zipse said. Electric vehicles will be a major market force, he said,


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