BMW Profits Decline As Costs Of R&D Rises: Promises 12 BEVs By 2025

NOV 7 2018 BY MARK KANE 29

BMW develops 4 new all-electric cars

BMW Group just released Q3 results and as earlier announced, the company is gearing up for rising costs of development (electrified and autonomous cars) that combined with other factors, negatively affect profits.

The group delivered in nine months 1,834,810 cars (up 1.3%) and noted €72.5 billion in revenues (down 1.2%), but high levels of upfront expenditure for research and development and other reasons resulted in a net profit of €5.79 billion (down 8.7%).

The company sold 97,543 plug-in cars (up 42%) and is on track to sell 140,000 in 2018.

By 2021, BMW intends to have five BEVs on the market:

  • BMW i3
  • MINI Electric
  • BMW iX3 (first based on 5th generation drivetrain)
  • BMW i4

By 2025, the number of BEVs will increase to 12. The strategic battery supplier for BMW is CATL.

Rigorous expansion of electric mobility

With the launch of the BMW i3, the BMW Group established itself early as a pioneer in the field of electric mobility. Electrification is one of the key pillars of the Group’s Strategy NUMBER ONE > NEXT. By 2021, the BMW Group will have five all-electric models: the BMW i3, the MINI Electric, the BMW iX3, the BMW i4 and the BMW iNEXT. By 2025, that number is set to grow to at least twelve models. Including plug-in hybrids – whose electrically powered range will increase significantly in the coming year – the BMW Group’s electrified product portfolio will then comprise at least 25 models.

This wide range is possible thanks to highly flexible vehicle architectures and an equally flexible global production system. Going forward, the BMW Group will be capable of manufacturing models with all-electric (BEV), hybrid-electric (PHEV) and conventional (ICE) drivetrains on a single production line. Its ability to integrate e-mobility in the production network enables the BMW Group to respond even more flexibly to the increasing demand for electrified vehicles. The goal for the current year is to deliver 140,000 electrified vehicles to customers. By the end of 2019, the BMW Group expects to have more than half a million electrified vehicles on the roads.

The BMW Group is currently developing the fifth generation of its electric drivetrain, in which the interplay of electric motor, transmission, power electronics and battery will be additionally optimised. Integrating the electric motor, transmission and power electronics also cuts costs. Another advantage is that the electric motor does not require rare earths, enabling the BMW Group to reduce its dependence on their availability. The fifth generation of the electric drivetrain will be installed for the first time in the BMW iX3 in 2020.

At the beginning of the third quarter, the BMW Group signed a long-term contract with the Chinese company Contemporary Amperex Technology Co. Limited (CATL) to supply battery cells with a value of four billion euros. The award of this contract was a decisive factor in CATL’s decision to build the world’s most advanced battery cell manufacturing facility in Germany. From 2021 onwards, cells for the BMW iNEXT – which will be manufactured at the BMW Group plant in Dingolfing – will be supplied by the new CATL plant in Erfurt. The BMW Group has thereby anchored the entire e-mobility value chain in Germany – from battery cell production through to the finished vehicle.

One of the prerequisites for expanding e-mobility volumes on this pioneering scale is the ability to efficiently manage the highly sought-after raw materials needed to manufacture the battery cells. In order to ensure security of supply, the BMW Group will in future purchase specific raw materials such as cobalt itself, and then make them available to battery cell suppliers – a strategy that has already proven its worth for aluminium and other resources. In addition, negotiations are being held with suppliers with the aim of concluding long-term agreements for battery raw materials that meet the BMW Group’s sustainability criteria.

Furthermore the BMW Group is establishing a joint technology consortium together with Northvolt (a Swedish battery manufacturer) and Umicore (a Belgium-based company engaged in developing battery materials), thereby taking a further step to ensure access to the cell technology so vital for electric mobility. The collaboration will extend to the development of a complete, sustainable value chain for battery cells in Europe, including development, production and ultimately recycling. The recycling of battery components will play a key role: given the sharp rise in demand for battery cells, the consortium’s stated aim is to close the life-cycle loop of raw materials to the greatest possible extent with comprehensive recycling.

Categories: BMW, Mini, Sales

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29 Comments on "BMW Profits Decline As Costs Of R&D Rises: Promises 12 BEVs By 2025"

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Is the i3 going to be redesigned, or is the current model continuing? Or will it be a BEV version of the 3-series?

Does this also mean they are switching battery suppliers from Samsung SDI (in the current i3) to CATL?

I hope it stays largely the way it is. I love my i3, just add a bit more range and ditch the rex.

The i3’s death was announced before, but we don’t know if that was premature.

They’re going to increase worldwide production to 35,000? from 25,000. It should have a few more years left to it. It’s a superb car for city, suburban and country drives.

Where is all the boosting superlatives when you report legacy auto manufacturer investing huge amounts of money on evs? There is a huge difference on the tone even to reporting new Tesla bolt… journalism… poor version of that…

What’s your justification for describing BMW’s moves as “investing huge amounts of money on EVs” considering there are no specifics on the amount invested in this article?

It looks like their EVs are stale and still years out, while they produce mostly low-range hybrids (which I personally celebrate as an option, but definitely to a lesser degree than BEVs).

I park next to a 7-series PHEV, sometimes. Great spot because I know the 6.6KW split charger will dump all its watts my way, after ~1 hour fills the little 7.

I think, in the book of Bimmer, is says larger batteries belong in smaller cars.

That 7 Series is a land yacht, go figure.


What is a Tesla bolt?

Superlatives you must earn. I haven’t seen anything lately from BMW that deserves a lot of praise. Not in exciting BEV’s, nor in stunning sales figures.

Worse, one of their head honchos lately extolled the virtues of the ICE, saying they are aiming for 85% of their sales still being mainly ICE powered by 2030. That doesn’t win hearts and minds here.

I’m sure BMW has plenty of R&D spending ahead of it to gear up for the new EV age but once that’s done R&D spending should drop to levels way below ICE age levels as electric power trains don’t need to endless fine tuning to keep them compliant with fuel economy and emission mandates. Maybe that’s why BMW’s head of R&D insisted 85% of their cars would still have an ICE on board by 2030 the other day. If not he would be the head of a department the fraction of its current size I suppose.

His comment definitely illustrates the confusion and bewilderment among the incumbents in the face of the change that is coming.

5.8 billions of net profit????????? And they complain transition is expensive? What are they doing with all those money then?

They will probably be losing money for years. If you have money in them get it out.
Their electrification plan is poorly conceived and badly executed to say nothing of their problems
with their legacy products.

Easy for you to say.

I think their plugin efforts are much better than most.

They are not stupid and will weather the change better than the majority will.

That may be true, but they are in a lot of hot water, and the heat just keeps getting turned up.
Even brilliant people fail, have misconceptions, and I did not say they’re stupid, just not doing a very good job.
They have serious problems, Their ev offerings are not compelling, nor popular. They are wrapped up with diesel-gate.
They are spending a lot to try and catch up. I don’t think they will go away entirely. I just don’t expect much out of them.
Anytime soon, or even by 2025.

It’s true that BMW’s electrification efforts are better than most but it’s just bizarre that its nowhere near having an answer ready for Model 3 despite the fact that that car is eating its lower luxury class lunch as we speak.

They’re hiding the disaster that is Q3 by reporting in terms of YTD.

Here’s their auto divisions gross profits for 2018 and 2017:
Q1: 3.7B vs 3.7B
Q2: 3.9B vs 4.4B
Q3 YTD (what they gave): 10.3B vs 12.0B

Subtract out Q1 and Q2 from the Q3 YTD to get the actual numbers for Q3:
2.7B vs 3.9B.

Their profits fell by 1.2B, over 30%, Y/Y. Coincidentally, that’s the same numbers for quarterly change – they’re down 1.2B, over 30%, Q/Q.

BMW has somewhere between 6 and 24 months before they begin reporting losses. They spend 20B per quarter and are heavily unionized which will make reducing that burn difficult. They have 9B in Cash and Equivalents, so I’ll be surprised if they can operate for a year without profits without being forced to sell assets. Within 4 years, I expect the entire company will either go bankrupt or be bought. Not sure who will buy though, given I expect the other auto companies will be having the same troubles.

You’re not just Whistlin’ Dixie.

Nice! Same as saying that Tesla will be profitable from now on… 👍

That’s great because I will only buy another BMW IF it is 100% Electric.

And it better be reasonably fast and dynamic.

Promises, promises, promises. The Germans are very good at making promises they don’t follow through on.

Ah, the old 5-7 year projection. Keep it up. The competition lives in The Now. Complete transformation of the automotive industry is taking place (right NOW), and yet legacy manufacturers act like they have nothing but time.

The Now??? While I agree the industry is moving toward EVs, we are talking many years before EVs outnumber ICE vehicles. In the US, electric vehicles constitute less than 2% of vehicle sales. My guess is 2030 at the earliest, but I could be wrong. That’s many profitable years for existing car makers if they didn’t push toward EVs. But BMW (and the other German car makers) see the switch coming and are moving in that direction. A company like Tesla doesn’t have the luxury of existing profitable ICE vehicles…

Not long before Teslas outnumber BMWs. Tesla doesn’t have the onus of a tremendous investment in ICE factories.

Correct that’s the difference here BMW has a lot of past and present they have to pay for still.

BMW sold 2.1 million cars last year and an increase is expected for 2018. Tesla has a veeeeeery long way to reach those numbers.

“Tesla has a veeeeeery long way to reach those numbers”

Nope. A few years is not a “a veeeeeery long way” in the automotive industry. It’s the blink of an eye.

In a mere 2 years from now, Model 3 production will be in full swing, Model Y will start ramping up as will production in their Chinese GF. Tesla is still growing very quickly. My prediction is that another 2 years later, Tesla will have reached 2 million. So somewhere in 2023 or 2024 they will surpass BMW in global sales.

Too aggressive even for elon. Freemont max 500k ish and China will be at 250k in 2-3 years.

I keep saying this: BMW have got a kick in the arse coming if they think the world wants a Mini EV with the current i3 tech. It’s likely to be a smaller pack, so we’re only talking about mileage gains through better aero here. We’ve waited so long for an EV Mini, we could have waited for a better one with the improved drive-train. Instead we’re getting this year’s mutton dressed as 2020’s lamb.