BMW is unveiling plans this week that show the companies focus on developing and bringing to market a number of electric cars. The transition from internal combustion engines to full electric is extraordinarily expensive however and huge investments have to be made.
Bringing in 2019 we’ll see the iX3 and MINI Electric hatch in showrooms. Shortly after that (2021) we’ll see BMWi’s next product the i4 (pictured above).
Official news. The BMW Group is stepping up the pace in its drive to shape tomorrow’s mobility. Two years after the launch of Strategy NUMBER ONE > NEXT, the BMW Group intends to increase upfront expenditure on research and development to an all-time high in 2018, while at the same time remaining steadily on course for a ninth record-breaking year in succession through profitable, sustainable growth.
“Our industry is currently experiencing a phase of unprecedented technological change. At the same time, however, it needs to cope with the challenge of present-day volatilities. At the BMW Group, we think in terms of opportunities and follow a clear strategy. Because the future of mobility is created today. We are stepping up the pace in 2018 and targeting our ninth successive record year,” stated Harald Krüger, Chairman of the Board of Management of BMW AG in Munich on Wednesday.
Despite major changes impacting the mobility sector, the one constant factor influencing the company’s strategic decisions is fulfilling the needs of its customers. “Their passion and excitement is at the core of our growth strategy,” emphasised Krüger. “That is why the BMW Group offers a unique range of products (from the BMW i3 to the Rolls-Royce Phantom) and services (from customised financing to intelligent mobility services), all of which contribute towards making our customers’ lives easier. With this point in mind, we are on our way to becoming a customer-focused mobility and high-tech company.”
In 2018, the broadest product initiative ever undertaken by the BMW Group continues: With the market launch of the BMW X2 in March, the ramping up of the BMW X3 at three production sites and the new generation of the BMW X4, 2018 is sure to go down as the “Year of X” for the world’s largest manufacturer of premium vehicles. “We are bringing out completely new models and introducing a new design language for the whole product range. This is our recipe to ensure that the BMW brand regains pole position in the premium segment by 2020,” Krüger stated. “We gave the public a taste of these developments with the unveiling of the BMW Concept M8 Gran Coupé at the Geneva Motor Show and the series version will be presented in 2019.”
Strategic decisions will begin to bear fruit in 2018
Numerous strategic decisions, for which the BMW Group did the groundwork at an early stage in conjunction with its Strategy NUMBER ONE > NEXT, will begin to bear fruit in 2018. For instance, the acquisition of Parkmobile LLC was announced in January, making the BMW Group the leading provider of digital parking solutions. The acquisition of the car sharing joint venture DriveNow closed in March. These two transactions give the BMW Group control over a wide range of strategic options for enhancing its range of mobility services in a field set to make a crucial contribution to sustainable urban mobility going forward. The BMW Group is aiming to have 100 million active customers by 2025.
In February, the BMW Group and the Chinese manufacturer Great Wall signed a letter of intent to establish a joint venture for the local production of fully electric MINI vehicles in China. This step is a further clear commitment to the electrified future of the MINI brand and highlights the importance of the Chinese market for the BMW Group.
At the Geneva Motor Show in early March, the BMW Group announced that the BMW i Vision Dynamics, unveiled at the Frankfurt Motor Show in 2017, will be launched as the all-electric BMW i4 and manufactured at the Munich plant. Today, the BMW Group already manufactures electrified vehicles at ten production facilities. In 2019, Plant Oxford will join this list with the start of production of the fully-electric MINI. The BMW i4 is just one of the 25 electrified models that the BMW Group intends to bring to market by 2025. Half of these models will be fully electric. Powered by the fifth generation of battery and drivetrain technology, from 2021 the BMW Group will be capable of offering all-electric vehicles with a range of up to 700 kilometres and plug-in hybrids with an electrical range of up to 100 kilometres.
Upfront expenditure for tomorrow’s mobility at record level
Continuing progress in the field of electric mobility is a key reason behind the BMW Group’s plan to allocate an increasing amount to research and development in the current year. After a spend of € 6,108 million in 2017, upfront expenditure for tomorrow’s mobility will increase significantly in the financial year 2018. Investment will rise by a further high three-digit million-euro amount year-on-year, primarily for the ongoing new model initiative as well as continued work on e-mobility and autonomous driving. In absolute terms, the amount could reach the 7 billion euro mark. The major scale of investment reflects the BMW Group’s determination to play a leading role in transforming the mobility sector with its future-oriented ACES programme: Automated, Connected, Electrified and Services.
Despite the cost of these wide-ranging activities, the BMW Group expects Group profit before tax to be at least in line with the record level reported for 2017. “We will need to remain steadfast in 2018 in order to achieve our target of reporting another year of record pre-tax earnings,” stated Nicolas Peter, Member of the Board of Management of BMW AG, Finance. “But we are an ambitious company, constantly striving to improve the efficiency of our business processes. We are reducing the complexity of our range of products and services, rigorously bringing it into line with the requirements of our customers. This provides us with the necessary resources for future investments. As ever, our strategy is driven by the desire to achieve long-term sustainable profitability.”
As part of its Strategy NUMBER ONE > NEXT, the BMW Group is systematically expanding into market segments with high rates of return in order to finance the similarly high levels of upfront expenditure necessary to drive tomorrow’s mobility from a position of underlying strength. Accordingly, the Group continues to target an EBIT margin within a range of 8 to 10 per cent for its Automotive and Motorcycles segments. Deliveries to customers are expected to rise slightly in the financial year 2018, resulting in a corresponding slight increase in Automotive segment revenues. The Motorcycles segment expects to see solid growth in volume terms.
In 2017, the BMW Group delivered more than 100,000 electrified vehicles to customers for the first time in a single year, mainly driven by the performance of the all-electric BMW i3, sales of which have risen every year since its market launch in 2013. Last year, the BMW Group accounted for more newly registered electrified vehicles (all-electric + plug-in hybrid) than any other manufacturer in Europe, with a share of 21 percent. The BMW Group intends to grow sales of its electrified vehicles to at least 140,000 units globally in 2018 and is targeting more than half a million units on the world’s roads by the end of 2019. “Our electric mobility strategy is having a positive impact: the broad range of electrified models we now offer enabled us to cut CO2 emissions across our EU fleet yet again in 2017,” CEO Harald Krüger pointed out.
This year, the BMW Group will also broaden its base for adding value worldwide. Further investments are planned in the key regions of China, the USA and Europe. Maintaining a strong local presence, particularly in the USA and China, is and remains an essential prerequisite for being part of future growth in these regions.