Dieselgate Fallout

BMW to Speed E-Car Overhaul, CEO Says

i3 leipzig factory nov 30 bmw source dpa
BMW is accelerating its transition to e-cars, the CEO Harald Krüger told Handelsblatt in an interview. One part of the strategy will be to improve BMW's i3 mini e-car, which has met with limited success.
  • Why it matters

    Why it matters

    If BMW does not expedite its move into e-vehicles, the German automaker risks being overtaken by U.S. rival Tesla and other competitors.

  • Facts

    Facts

    • BMW CEO Harald Krüger is developing a new strategy to guide the automaker through 2025 and will present it early next year.
    • Mr. Krüger told Handelsblatt that BMW will shift from diesel to electric cars in response to ever-tougher diesel emissions limits.
    • He called on the German government to stoke demand for electric cars by offering buyer subsidies and tax relief, and by building out charging points.
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    Audio

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BMW Chief Executive Harald Krüger is preparing the German automaker for a not-too-distant future when his main rivals will no longer just be automakers like Audi and Daimler, but technologists like Google, Tesla and Apple.

In an interview with Handelsblatt, Mr. Krüger, who took over the top job at the world’s best-selling premium automaker in May, said BMW’s focus will increasingly shift to electric cars.

The reason for the shift, said Mr. Krüger, 50, is in part the likely tightening of emissions limits for diesel engines in the wake of Volkswagen’s software-rigging scandal, which will have an effect on all automakers, including BMW.

Without diesel engines, automakers will be unable to reach the European Union’s fuel consumption and emissions limits planned for 2020 and beyond, he said.

“But in the future, the point will be reached at which it will be simply uneconomical to adapt diesel drive systems to the requirements of an increasingly ambitious legislation,” Mr. Krüger said. “Then electric mobility will play the decisive role.”

The BMW top manager will present the automaker’s new 10-year strategy next spring. It’s already clear that the Munich company will accelerate into electric technology.

BMW introduced its mini e-car, the i3, in 2013, to modest success. It is working on improving the i3 and plans to roll out an open-top version of the hybrid i8 sports car plus debut a new electric car. BMW is also working on fuel cell technology with Japanese partner Toyota.

 

harald krueger_ Handelsblatt_Falk Heller
BMW CEO Harald Krüger said VW’s dieselgate scandal will lead to tougher emissions standards for all automakers. BMW is speeding up its move into electric vehicles, he said. Source: Falk Heller for Handelsblatt

 

But support from the German government for the transition to e-cars — including heavy taxpayer subsidies — will be key, he said.

“It’s decisive that the government provides clear impetus in the form of purchase subsidies, tax relief or help in building an infrastructure for charging,” Mr. Krüger said.

If the government does not support electric car technology and give consumers an incentive to buy the vehicles, Germany will fail to reach its goal of putting 1 million electric cars on the road by 2020, he warned.

“In the future, the point will be reached at which it will be simply uneconomical to adapt diesel drive systems to the requirements of an increasingly ambitious legislation. Then electric mobility will play the decisive role.”

Harald Krüger, BMW CEO

“One cannot — and this point is very important — maintain global leadership in the auto sector in the long term if the home market isn’t a leading market for electric mobility,” he said.

Digitization and electric mobility go hand in hand, he noted.

“The push for electric mobility will come through self-driving technology. We can help people save time. Studies show that a driver in China spends up to 30 days in traffic jams per year,” Mr. Krüger said. “But if a car maneuvers itself through clogged-up traffic itself, (the driver) could use the time in other ways — to read, to work or to catch up on sleep.”

The VW scandal has highlighted how urgent the move to battery-powered vehicles is. Eight of 10 cars BMW sells in Europe are diesel-powered, the highest of any automaker in Europe.

Despite his electric-car ambitions, Mr. Krüger must stick by diesel technology for the time being. If he doesn’t, BMW will fail to meet the European Union’s own fuel consumption standards for auto fleets.

BMW has not seen its sales dip in the wake of VW’s diesel troubles so far, Mr. Krüger said, but he added it was too soon to gauge the long-term consequences of the scandal.

“There’s no reason to cast doubt on Germany’s status as location for technology or on its key industry,” Mr. Krüger said.

It would also be wrong to suspect the whole industry of wrongdoing, he said, adding that there had been no manipulation at BMW and that the carmaker adhered to national laws and test requirements.

“We installed binding processes and requirements at BMW group many years ago to prevent malpractice,” he said. “That includes the principle of having two pairs of eyes to allow departments to control themselves independently of each other, and strict compliance rules.”

In a reference to VW, which has been criticised for a hierarchical management system in the wake of the “Dieselgate” revelations, Mr. Krüger said he placed emphasis on a leadership culture “marked by fairness, openness and transparency. So that a colleague can tell me: with these cost limits we won’t meet the requirements.”

 

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Mr. Krüger with Handelsblatt authors Markus Fasse (left) and Grischa Brower-Rabinowitsch (right). Source: Falk Heller/argum for Handelsblatt

 

Meanwhile, BMW is responding to plans by major cities such as London to promote electric mobility and emissions-free driving.

“For cities that will simply limit the number of vehicles, we offer car-sharing with ‘Drive Now,’” Mr. Krüger said, referring to BMW’s joint venture with German car rental firm Sixt in car sharing in Europe and North America.

In Copenhagen, a fleet of 400 BMW i3 electric cars linked to the public transport system may herald the future of mobility in cities, Mr. Krüger said.

harald_krueger_3_Falk Heller_argum for Handelsblatt
Harald Krüger, the chairman of the Board of Management at BMW. Source: Falk Heller/argum for Handelsblatt

 

“With just one ticket in Copenhagen you can access local public transport, the i3 fleet or a bicycle from the public ‘Bike Sharing Program,’” Mr. Krüger said.

But the demand for sports utility vehicles worldwide is still growing, and BMW will keep making the bigger vehicles, he said.

“Why shouldn’t we profit from that?” he asked. “From a business point of view, it would be wrong to ignore this trend. In China many people are switching from limousines to SUVs. They like the functionality, the high seating position and the feeling of space.”

When asked to comment on whether U.S. electric car maker Tesla was overtaking BMW on self-driving technology given it already offered an autopilot facility for motorway driving, Mr. Krüger said he disagreed.

“Our aim is to be the technology leader. We can offer automated driving on the motorway up to 120 kilometers per hour. But our technology must be 100 percent reliable,” he said. “In the app industry, you can launch products on the market that are 70 to 80 percent ready and then complete their development with the customer. That is absolutely impossible with safety features in a car.”

BMW's Performance-01

He said BMW would gradually introduce automated driving.

“It starts with automatic parking without the driver at the wheel, which we already offer today in our new BMW 7 series version. The next step will be that you get out of the car in front of the parking garage and the car then looks for a space itself and parks,” he said. “It will continue with automated driving on the motorway. You will only have to set the desired speed, and your BMW will drive you safely from Munich to Nürnberg and back.”

Asked why BMW, unlike most other major automakers, wasn’t a member of Google’s “Open Automotive Alliance“ to use Google’s Android mobile operating system in vehicles, Mr. Krüger cited data protection concerns. Automakers like BMW are also wary of allowing Google to dominate the operating system of the next generation of e-vehicles.

“If you’re a BMW customer you do not want us to pass on data unprotected to third parties. We want to live up to that demand under all circumstances,” he said.

 

023 BMW - WTB 2014 resume

 

“On the one side are the technological possibilities. Your car could provide you with unsolicited information on great restaurants in your vicinity,” Mr. Krüger said. “On the other hand there’s your privacy. The customer must first actively agree to us using his data for such services.”

But premium services will help bind customers to the brand, he added.

“If we know your date of birth, then we can send a bunch of flowers on your birthday. Or we may know that your daughter is doing her drivers’ license. Then we’ll offer a test drive in a Mini convertible. And if your daughter likes the car we may have won a new customer.”

 

Grischa Brower-Rabinowitsch heads Handelsblatt’s U.S editorial coverage out of New York City. Markus Fasse is a Handelsblatt editor specialized in the aviation and automobile industry. To contact the authors: brower@handelsblatt.com and fasse@handelsblatt.com

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