Slow Expansion

BMW's Electric Marathon

  • Why it matters

    Why it matters

    German carmakers are all heavily investing in electric car production and technology, hoping they can protect their leading market shares against new rivals, including Tesla and China’s BYD.

  • Facts

    Facts

    • Electric cars are seen as one of the major upheavals affecting the industry, in addition to self-driving vehicles.
    • The three big German carmakers VW Group, Daimler and BMW have all adapted their strategies this year to make and sell more electric cars.
    • BMW launched its fully electric i3 model in 2013, but sales numbers have been relatively low.
  • Audio

    Audio

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Following the 2013 launch of the fully electric BMW i3, the luxury carmaker will eventually offer electric versions of all its vehicles. Source: Jan Woitas, DPA

Every December BMW invites a select group to a discreet evaluation of their new models. Normally the world’s largest maker of luxury cars doesn’t want any photos or video footage of this “sneak preview,” nor any quotes from management.

On Thursday, BMW chief executive Harald Krüger changed the rules. He has pointed the way for BMW’s in-house electric prototype production.

“For 2017, I’ve set the ambitious goal of 100,000 more electric cars,” he said, confirming a newspaper report from last month. “That’s as many as in the last three years, since the introduction of the i3 and the i8.”

“It’s a fact: we’re going to continue investing in electromobility,” Mr. Krüger promised.

It was almost as if he was reassuring himself. BMW has already poured at least €3 billion ($3.06 billion) into its electric car project i3 and i8, so far for little return. In the last few weeks figures have improved slightly, thanks to the government subsidy which Mr. Krüger had so vehemently backed. But more then 98 percent of all BMWs sold were running combustion engines and in Europe they were mostly diesel.

In 2019 the Mini will be available in electric, in 2020 the X3 will go electric, and then each production series will be getting a full electric drive.

Faced with ever stricter emissions regulations and rising competition from U.S. electric carmaker Tesla Motors, BMW, Mercedes-maker Daimler and VW have all changed strategy this year, expanding the number of electric models on offer. BMW’s electric i3 model, on sale since 2013, has not delivered the success the Munich-based carmaker had hoped for.

“BMW is just learning that if you come to the market too early, you burn a lot of money,” according to a manager from one of BMW’s competitors.

On second inspection, the 100,000 target is not as ambitious as it seems at first. For one thing, the BMW-initiated car-sharing project “Drive Now” has become the biggest single customer for the i3. And alongside the i3 and the sportier i8, there’s the new plug-in hybrid which, with its combustion engine as auxiliary power plant, is capable of longer journeys. BMW plans to make a strong market play with this technology in the next two years.

Happily for Mr. Krüger and his head of development, Klaus Fröhlich, 2017 and 2018 are not the decisive years. Mr Fröhlich has said he’s not going to get dragged into a short-term “cherry-pit spitting contest” over vehicle range. The range of the i3, at just 150 kilometers (93 miles), has so far been its biggest weakness.

Now BMW is doubling the range of the i3, measuring 300 kilometers on the laboratory test-bed. They’re also improving the car’s design. The internal marketing division says that nine out of ten customers would buy another electric vehicle simply because the acceleration is so much fun. But the Bavarians know that they’re not going to reach the mass market with the i3 any more.

023 BMW-01 WTB 2015

BMW is taking a deep breath right now, waiting for the big breakthrough in the electric car industry. In two to three years, the Korean company LG Chem will have made their new battery technology available, making ranges of 500 km possible. In 2019 the Mini will be available in electric, in 2020 the X3 will go electric, and then each production series will be getting a full electric drive.

This was evidently too slow for some. In mid April, Carsten Breitfeld, the lead developer on the hybrid sports-car the i8 took three colleagues with him to the Chinese start-up internet company Tencent. But Mr. Krüger doesn’t seem terribly concerned, “because know-how quickly decays,” he said.

In fact neither Tencent nor Faraday Future, a Silicon Valley-based electric carmaker, can report any advances. Faraday has payment problems and the construction site for its factory in Nevada has been silent since November. In the meantime even Apple has reduced its automotive team. The industry pioneers from California have been sounding BMW out over a joint project, but the Bavarians prefered to go it alone.

BMW will nevertheless has to change up a gear. From 2018 Audi and Mercedes will begin their electric attack and Tesla has announced the Model 3 for 2018, which BMW hopes to counter with an electric version of its series 3.

The great leap forward should happen in 2021 with BMW’s iNext, a long-range, fully electric model currently being planned. By 2025 BMW aims for 15 to 25 percent of its sales volume to be fully electric. That would be around half a million units per year. That’s about equivalent to Volvo’s current sales totals.

The electrification is a mammoth project and the preliminary work is in progress. Over the next two years, BMW will renew the 5 and 3 series – that is, half its vehicles. The two most important series would be designed to accommodate the flat batteries available in 2018 with a range of 500 kilometers and more, said Stefan Juraschek, responsible for the development of the electrical components.

In contrast to most of their competitors, BMW is building the electric motors itself. “We can do it better than any component supplier,” the engineers said in typical BMW style.

Half a dozen of these electric drives are currently being tested. They’re being built in Landshut and the batteries are being made in Dingolfing. The big manufacturing bases in Spartanburg, South Carolina and Shenyang in China will also have battery manufacturing facilities. In addition, the carbon fiber production will be done in Spartanburg, Landshut and Wackersdorf. Despite the i3 doldrums, BMW wants to continue with carbon fiber manufacture, but only on a larger scale again with the iNext.

Meanwhile a second strategy is being rolled out. Electric cars will be at the centre of the car-sharing network Drive Now as an emissions free mobility concept to be offered to entire cities. Drive Now is already available in 12 cities, from Berlin to San Francisco. Now more and more petrol driven cars are being swapped out for electric models.

BMW is counting on the growing number of cities which want fewer cars on the road and lower pollution. Copenhagen is an example, where there are already 400 i3 cars in circulation. The model works on a franchise basis with transport service providers which supply parking spaces and charging infrastructure. According to BMW’s mobility concepts division, another 15 cities have shown interest.

 

Markus Fasse writes about the auto industry for Handelsblatt. To contact the author: fasse@handelsblatt.com

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