Export of BMW vehicles
Demand is picking up.
(Photo: obs)
Munich The BMW Group expects a faster change to electromobility. In the third quarter, the group sold almost 50 percent more electric and hybrid vehicles compared to the previous year. “The thrust is clear,” said CFO Nicolas Peter on Thursday in Munich. “The development is at the expense of the combustion engine”, BMW is “rather faster than slower” when changing the drive.
Since costs have to be reduced at the same time, BMW will further reduce its engine range for combustion engines. In addition, Peter indicated discussions with partners about possible cooperation in the engine area.
Gasoline and diesel drives are losing massively in importance for the Dax group. By 2030, BMW wants to have sold a total of seven million electric cars and increase the share of electric and hybrid cars in total sales to 50 percent. The majority of new cars sold should be fully electric, with hybrid cars increasingly smaller combustion engines should be used over the years.
The auto industry is under massive pressure: Sales have collapsed due to the corona crisis, and BMW alone has been 12.5 percent below the previous year since the beginning of the year. On the other hand, the EU Commission wants to massively tighten the requirements for the automotive industry. By 2030, emissions are not expected to drop by 37.5 percent, as previously planned, but by half compared to 2021.
“With the short-term, massive tightening of the CO2 targets, Europe is taking a path that is too risky,” said Hildegard Müller, President of the German Association of the Automotive Industry (VDA), to the Handelsblatt in mid-September. “But dirigistic interventions that make it impossible to achieve company goals are not accompanied by additional, painful job losses.”
At BMW, 6000 jobs are already being cut and around 10,000 temporary workers are said to have been cut, according to employee groups. In addition, there are tens of thousands of jobs at suppliers such as Continental and Schaeffler, who supply many mechanical components for internal combustion engines. The road to electromobility is a done deal for the Munich company.
BMW CFO Nicolas Peter
“If you don’t meet the requirements, you are no longer in the game, not even on the bench.”
(Photo: BMW)
“If you do not meet the requirements, then you are no longer in the game, not even on the bench,” said Peter, referring to the EU’s climate requirements. “We see ourselves as a company that can achieve the goals,” said the CFO. In 2020, the first year from which fines are calculated in the EU, BMW will even exceed its targets, said Peter.
The demand is mainly driven by electric subsidies in Germany, the Netherlands and Norway, where 80 percent of new cars now have electric or hybrid motors. On the other hand, gasoline and diesel will become steadily more expensive due to the climate tax, in the coming year alone probably by seven cents per liter.
London, Paris and Madrid are planning to ban internal combustion engines from the urban area in the medium term. California has announced the end of gasoline and diesel engines in 2035. Bavaria’s Prime Minister Markus Söder (CSU) also recently spoke out in favor of an end to the internal combustion engine – after he had demanded sales incentives for it in the summer.
Catching up on Tesla
At BMW, the turnaround is now beginning. Over 90 percent of new cars still run on petrol or diesel. The company currently has half a dozen hybrid models on the market and, in addition to the “i3”, which has been built since 2012, now has the electric mini on offer.
An electric version of the X3 has been built in China for a few days and exported to Germany. The electric SUV “iNext” and the electric sedan “i4” are to follow from the German plants in 2021, followed by the 7 and 5 series with electric drives.
With the range, it is hoped to catch up the lead of the competitor Tesla, which now dominates the market for electric cars and wants to start producing in Brandenburg from next year. The German rivals Audi and Mercedes have also set themselves ambitious goals in electromobility and are reallocating their capacities.
For example, Daimler boss Ola Källenius wants to reduce the number of engine variants for combustion engines by 70 percent and thus reduce costs. From 2025, Daimler intends to return high single-digit returns, and if the market situation is good, even double-digit returns.
In 2020, Daimler and BMW will not make any losses. After the massive slump in the first and second quarters, sales in the third quarter are again up on the previous year, and at the end of the year BMW should have a slight operating profit. “We are on the way to achieving the goals,” says Peter.
Above all, the high demand for the 8 Series luxury model or the large X7 SUV and the jump in sales in China ensured that the carmaker can get through the corona crisis well. In China, the world’s largest sales market, BMW sold almost a third more cars in the third quarter than in the previous year.
The group does not venture a forecast for 2021. In the medium term, BMW wants to get eight to ten percent returns from the auto business. This is to be achieved with a massive reduction in costs by eliminating less popular models and drives. At the same time, however, substantial investments are to be made in research and development.
According to Peter, the focus is on “emission-free mobility” and the “digital backbone”. The networking of cars has become the most important purchase criterion alongside design, especially in the USA and China.
Autonomous driving and mobility services, which until recently were given equal status at BMW alongside electromobility and digitization, are not mentioned. In June, BMW gave up the joint venture it had founded with Daimler to develop a fully autonomous car.
And the costly mobility services no longer play a major role at BMW. After the car sharing service “Share Now” was discontinued in North America and many European cities, the withdrawal from the mobility service “Free Now” is apparently on the agenda. CFO Peter did not want to comment on reports that Uber was negotiating a sale with BMW and Daimler.
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