BMW Will Fund Shift To EVs…By Selling More Petrol SUVs Today, Irony Anyone?

6 months ago by Mark Kane 19

BMW has announced the expansion of plug-in offerings into its core brands, which of course requires a rather hefty investments to make happen.

BMW 740Le, BMW X5 xDrive40e, BMW 2 Series Active Tourer 225xe, BMW 330eCEO Harald Krueger said during BMW’s annual earnings conference in Munich:

CEO Harald Krueger said during BMW’s annual earnings conference in Munich:

“The fully electric drivetrain will be integrated into our core brands,”

In 2016, German company sold about 62,000 plug-ins, while this year target stands at 100,000.

To introduce more plug-in models, BMW intends to increase R&D spending. As for where this capital will come from, somewhat ironically, the source of cash is to be higher sales from SUV offerings, which provides higher profitability.

“The cost of integrating electric cars into mass production as well as investments in self-driving cars, such as the building of a research centre near Munich, will cause investments to rise, the carmaker added.

“Due to necessary upfront investments, the research and development ratio for the next two years is likely to be slightly above our target range of 5 percent to 5.5 percent (of revenues),” Chief Financial Officer Nicolas Peter said.”

In other words, BMW choose path of electrification, but needs to carefully balance the revenues with growing expenses. In 2016 revenues were record €94.2 billion, but the earnings before interest and tax (EBIT) decreased by 2.2% to €9.39 billion ($9.9 billion).

By 2025 BMW expects that plug-ins will be 15-25% of total new car sales.

source: Yahoo!

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19 responses to "BMW Will Fund Shift To EVs…By Selling More Petrol SUVs Today, Irony Anyone?"

  1. DJ says:

    Like it or not it makes a lot of sense.

  2. Hauer says:

    If they have unly 15% plugin sales in 2025 they are in serious trouble.

    1. realistic says:

      “If they have unly 15% plugin sales in 2025 they are in serious trouble.”

      Interesting.

      Look at CARB’s own “Advanced Clean Cars Midterm Review” page ES-51:

      https://www.arb.ca.gov/msprog/acc/mtr/acc_mtr_finalreport_full.pdf

      In these graphs you’ll see that California’s projections for “Sales from mid-range scenario for ZEV regulatory compliance” in the Golden state is less than 150k LDVs in 2025, and about 200k LDVs in Section 177 ZEV States. This is about 15% in CA and less than that in the other co-signers. Mind you these are in places with the highest incentives and the highest taxes on liquid petroleum fuels. Moreover, with about 3% of CA sales and less than 2% of Sect177 state sales from plug-ins flat for the last three years, 15% is a tough putt.

      In China, where the market is much newer and more vibrant and incentives for home-grown electrified cars are huge, the government will likely concede to manufacturers that the proposed policy for achieving 8% of automobile sales from plug-ins by 2018 is too hard.

      http://mobile.reuters.com/article/idUSKBN16K17W?feedType=RSS&feedName=environmentNews

      It looks like BMWs target is pretty enthusiastic even by the optimistic standards of regulators.

    2. I think their prediction is 15% to 25% is a reasonable one. If you project their annual sales based on the recent annual sales, the BMW group should be somewhere around 3.2 million cars sold per year by 2025. Split the prediction down the middle to 20% and that means they are selling about 650,000 EVs per year in eight years.

      Personally, I think they could be closer to 1 million per year by 2025, or about 33% of total sales, but to get to that, there needs to be continued support from governments as well as continued battery improvement. I don’t doubt the advancements in battery tech will continue, but the governmental support (tax credits, infrastructure investment, etc) is definitely not something that can be banked on.

      1. CLIVE says:

        Absolutely correct about all that.

        GOV is the huge unknown moving forward.

        I may drive my current EV longer than I expected

  3. realistic says:

    Should they issue shares instead?

  4. (⌐■_■) Trollnonymous says:

    lol

    and people put me on blast when I say the revenue from purchasing ICE products from ICE manufacturers are used elsewhere…..like lawyers to push back on CARB/EPA and Tesla sales model.

  5. unlucky says:

    Seems reasonable for BMW. Most of their “EVs” are just ICE cars with a vestigial plug anyway.

    1. CLIVE says:

      unlucky

      Those are BMW’s compliance efforts at best.

      15 miles is enough to get anybody to scratch their head.

  6. Four Electrics says:

    It’s no more ironic than this site continuously pimping PHEVs (which are dead ends) to raise revenue. If it burns gas, I don’t want to read about it.

    1. CLIVE says:

      I am all for that.

      Out of gas!

  7. Surya says:

    Tesla funds their investments by not selling any petrol cars at all…

    1. realistic says:

      “Tesla funds their investments by not selling any petrol cars at all…”

      That is partially true, but you need to add “with 200% of their capital expenditures funded equity or convertible bond issuances about once per year”.

  8. Nick says:

    “I just need to sell a little bit more heroin to these children so I can afford to go to collage and become a public defender.”

    – legacy car maker logic.

    1. Mister G says:

      Great analogy lol

  9. Nix says:

    I have no problem with this. They can either sell gas guzzlers and spend the money on R&D for more future gas guzzlers, or they can do this. I prefer this.

    1. GRA says:

      Indeed. After all, Norway’s huge incentives for EVs come from government, and one of (if not the largest) revenue sources of the Norwegian Government’s income is oil and gas extraction and related businesses.

  10. Anthony McMahon says:

    My BMW 330e hasn’t got a great battery range , but 2 fills of petrol in 6months on my short distance town driving is saving me quite a lot over the year compared to my previous diesel engine BMW!!

  11. Trackdaze says:

    60% growth per annum is great. So long as they are not the pathetic 7kwhr hardly ever plugged in phevs variety.