BMW i3 to be “Profitable From Day One”

JUL 31 2013 BY ERIC LOVEDAY 13

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Profitable? Yes says BMW

Are electric vehicles profitable for automakers?

That’s a question that been tossed around for some time now and the answer is “yes” and “no.”

Fiat seems to be the only automaker to openly admit to losing money (approximately $10,000 per) on its electric vehicle: the 500e.

On the flip side, Tesla swears it profits off each Model S sold.

So too does BMW.

According to the German automaker, the BW i3 was conceived to be a profit-maker.  BMW says that it won’t lose a penny on the i3.

The Wall Street Journal quotes BMW global sales and marketing chief, Ian Robertson, as saying that the  i3 will be “profitable from Day One on each vehicle it made.”

From Day One?  BMW isn’t in the business of losing money and with the i3 being on the premium side of the EV scale, it seems the German automaker has a bit of room to play with in terms of costs versus on-sale price.

We don’t reckon BMW will get rich off the i3 (the i8, maybe), but at least there will be a profit made, which further suggests to us that BMW will push sales of the i3, rather than artificially constrain (compliance?) them to limit losses.

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13 Comments on "BMW i3 to be “Profitable From Day One”"

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i’ll laugh if this car flops after all this hype

You’re probably right. Americans scoffed at the i-MiEV, which is almost the same size as the i3, because it was weird looking and small. Let’s see if the i3 has the same fate in the US.

That being said, the i-MiEV does very well in Europe and Asia. Maybe the i3 will too.

From the pictures and cut-aways, the i3 looks cheaply made. Doesn’t look “BMW-bread and built” but perhaps a Japanese-source unit. I’d be surprised if they sell 1/2 to 3/4 the units per month as a Volt or Leaf.

Maybe it will surprise us …. It has the BMW badge and for some that’s a big deal 😉

Why GM loves Volt’s image of money looser? They never responded to such comments directly. Bob Lutcz responce was considered biased and not supported by active GM management and we hear just silence. Elon Musk would definetly use similar situation for Tesla promotion.
What Dan Akerson said once that GM has 7 bln R&D budget which very seldom ends in real things and has not admited that 1 bln spent on EREV development was finalized in real thing.

BMW generally know what they are doing, they take their sweet time about it but when they move generally the move in the right direction. My feeling is that this car is squarely aimed at the well off middle classes in the EU who want to pay to be green, the type who go on holidays to see the last orangutangs but come home and shower in shampoo filled with palm oil. These people want to be green but just can’t quite force them selves to buy a Nissan. I don’t think it will fly in the US because the same group of middle class weekend hippies just can’t quite force them selves to buy a small car. (N.B. It appears to my simple mind that this group is fairly untapped as far as BEV sales go with most people who are buying BEV’s appearing to be quite grounded and sensible buying a car that does what they want it to do). I am normally wrong on these things but my feeling is this car is designed for the EU and in the end will sell best there. It is only really going to the US because that is where… Read more »

You lose some money due to the up-front R&D that is baked into the budget. You need to sell say units to make up for the R&D expenses for that unit. If Volt was selling at 30,000 per month now, I’m sure it would be profitable for each one.

I am always a bit weary of those calculations especially in the highly connected world of the auto-maker. For instance how much was spent to develop the Tesla battery pack? The cells aren’t made by Tesla their just put in a box and strapped to a car I am sure a lot of their costs were building factories and buying machines to build cars which would have been subsidies by state governments etc. but probably still counted as costs.

similar for the Volt and the Leaf both cars would have been developed with partners both cars sell in fairly large numbers. Both cars have a significant number of components that can be shared with other cars. I am almost certain that every last R&D cost going was lumped onto the EV band wagon.

High R&D spendings are just marketing. The new technologies will be used in many other future models too. The coast will spread over much more cars.

The often repeated “We’ll lose $10K on each car sold.” from Fiat was off the cuff and made over 2 years ago. I doubt it is very accurate since battery prices have dropped. I do suspect they lose money but much of that is their own fault for limiting the number they will sell so they can never make back the NRE.

Toyota loses tons of money on the Rav4 EV compliance car for CARB-ZEV credits. They are paying Tesla a total of $100 million for 2600 units, over three model years, 2012-2014. That’s about $38k per unit just to Tesla.

The cars this month are discounted $15,400 from the $51,000 price tag for a lease. That is in addition to the $2500 state rebate for EV’s. The $7500 federal tax credit doesn’t apply in a lease, but would apply to a purchase. Last month, June 2013, they sold 44 total. Of the 2600 to be sold, 600 total have been sold since Sept 24, 2012 when it was released. I expect over 100 were sold this month of July 2013 with the large incentives.

Funny how BMW can say it is making profit from Day 1. but Volt-haters will say the Volt looses some ridiculous amount ($250,000 or some such nonsense) for each one sold because they lump in development costs. But I guess that same math won’t apply to BMW because they didn’t receive a bailout from the US government.

Aside from being tempted to shoot back “American voters to be gullible from day one”, I think that rather than asking whether EV’s are profitalbe, a stab at whether it is more the amortization of R&D that is the challenge, or the fixed input costs of each EV produced? Or, to what extent it is both?