11 Sep 2019

Early e-car starter BMW has lost ground in clean mobility race

BMW is mainly known for its racy performance vehicles, even though the Bavarian company was also a pioneer in e-mobility and sustainability among German carmakers. Yet BMW has fallen behind domestic rivals VW, Daimler and US upstart Tesla on the road to electrification. Industry observers remain uncertain whether the company can regain its edge under its new CEO. This factsheet provides a quick overview of the company and its plans for sustainable mobility.

BMW Group key figures 2018

Sales: 97.5 billion euros (compared to 2017: -1%)

Net profit: 7.2 billion euros (-17%)

Automotive Vehicle sales: 2.49 million (+1%)

Employees (year-end 2018): 134,682 (+4%)

Fleet emission: 128 g CO2/km (unchanged from 2017)

Market capitalisation (August 2019): approximately 40 billion euros

[Source: BMW Group key figures]

BMW was founded in 1916 and is headquartered in Munich. The group focuses on the premium car market with its BMW, Mini and Rolls-Royce Motor Cars brands. The carmaker can look back to a highly successful decade of strong growth – it managed to almost double sales and vehicle deliveries between 2009 and 2018. In 2018, however, sales dipped for the first time in five years, and the company’s car unit swung to a loss for the first time in a decade in early 2019 due to a ballooning legal provision related to alleged collusion in emission filtering technology.

Like its peers VW and Daimler, BMW is a publicly listed company, but it is controlled by the Quandts, one of Germany’s wealthiest industrial families (including Susanne Klatten), who own almost 47 percent of its shares. BMW's new CEO, Oliver Zipse, takes over from Harald Krüger on 16 August 2019.

Source BMW

Doubts about real climate commitment

BMW prides itself for being a sustainability pioneer, claiming it was the first company in the automotive industry to appoint an environmental officer in 1973. It was indeed widely seen as an international example until a few years ago. Yet the company's reputation has suffered because of its apparent indecisiveness regarding electric mobility, its opposition to ambitious EU emission standards, and the alleged collusion in the area of emission-reduction technology. The Bavarian company was repeatedly named the world's most sustainable automotive company by the Dow Jones Sustainability Indexes, but has since lost its pole position to French Peugeot.

Climate activists doubt the company's real commitment to sustainable mobility. British NGO InfluenceMap, specialised in assessing company climate lobbying, graded BMW an overall "D-" because the company "appears not to support several strands of climate change regulation that impact the automotive sector whilst retaining high-level memberships to trade groups actively lobbying against these regulations." BMW doesn't question the Paris Agreement and decarbonising transport, but "appears to emphasise concerns around the feasibility of greater ambition on vehicle CO2 targets in its disclosures”, the NGO said, adding that BMW's overall opposition to climate policies was more pronounced than international competitors Renault, Toyota and General Motors.

Source InfluenceMap

At the company's annual general meeting in 2019, a Fridays for Future activist challenged shareholders to think less about current dividends and more about what climate change and the necessary transition to clean transport mean for the company’s mid-term future.

BMW's image as role model in sustainability has also been tarnished by its embroilment in the "dieselgate" scandal. In the summer of 2017, media reports brought to light that German carmakers, including BMW, had met in “secret workshops” since the 1990s in order to coordinate their exhaust gas treatment systems and other issues. In April 2019, the European Commission officially accused VW, BMW and Daimler of illegal collusion to avoid competition on emissions reduction technology.

Searching for direction after an electrifying start

BMW was also a pioneer among German carmakers in the switch to e-mobility, but after an early sprint now described by German media as “expensive pioneering work”, the company has fallen behind competitors.

Whereas the first e-cars of other German automakers were models originally developed to house internal combustion engines, BMW launched the electric sub brand "i", which started from scratch to develop an entirely new electric model – a brave but costly strategy. The i3 went on sale in late 2013, featuring novel lightweight carbon-fibre technologies. It is assembled at BMW’s Leipzig plant, which operates its own wind turbines to power production.

A BMW i3 of the company's car sharing service DriveNow, which has now been merged with Daimler's. Photo DriveNow
A BMW i3 of the company's car sharing service DriveNow, which has now been merged with Daimler's. Photo DriveNow

The i3 became one of the bestselling e-cars worldwide for several years. The general uptake of e-mobility was slower than BMW expected, however, resulting in sales well below the company's hopes, severely dampening BMW's electric ambitions to this day. The i3 has a solid fan base, but its innovative, slim and light-weight design was highly controversial, partly because it contrasted with BMW's muscular car image. 

In early 2016, BMW announced a major strategic overhaul to put the technological focus on advancing electric mobility and automated driving, while continuing to develop hydrogen fuel-cell technology, because it believed that “a variety of drivetrain systems will exist alongside each other in the future.” BMW said it was preparing for fundamental changes in mobility, but added that the industry’s capital, intensive investment cycles and long car life spans, meant the changes would not occur abruptly and that the combustion engine would continue to play a major role “for many years to come.”

Many media commentators called BMW’s approach reluctant, noting that then CEO Krüger said the changes were an “evolution” rather than a revolution, and that the company seemed poised to leave its electric i-Series, which also includes the i8 plug-in hybrid sports car, largely unchanged for years to come. Several prominent electric vehicle experts left BMW because of Krüger’s reluctance to bet more energetically on electric mobility after the i3 failed to sell in large numbers.

In an ironic twist, it fell to California-based Tesla to conquer BMW's home market with electric cars that closely mirror the Bavarian company's reputation for high-end racy and sleek cars. Perhaps not surprisingly, Tesla managed to poach many BMW clients with its Model S and Model 3, which overtook both BMW and Daimler in European e-car sales in early 2019.

In 2018, the i3 had slipped to 18th place in global e-car rankings. While Tesla sold around 146,000 Model 3s, BMW i3 sales languished at around 35,000. Sales of fully electric and plug-in hybrid BMW and Mini cars even declined from January to July 2019, compared to the same period in 2018.

BMW hasn't released a new all-electric vehicle since the i3. Trailing many competitors in the rollout of electric models, it now plans to bring several models to market over the next few years. In June 2019, BMW stepped up its electrification plans yet again in "a bid to convince investors it is capable of catching rivals in the race to sell battery vehicles”, the Financial Times reported. The company said it would release 25 fully electric or hybrid models by 2023, two years earlier than previously announced.

In the meantime, VW and Mercedes-Benz have considerably accelerated their own electric car programs, putting them ahead in the race. Former dieselgate pariah VW in particular is now widely considered a decarbonisation trailblazer.

BMW's lag in electrification coincides with more general troubles. Rival Mercedes has overtaken the Munich-based company in sales and profit. Many industry experts wonder whether BMW will be able to gain much ground in the race to electrification, and whether new CEO Oliver Zipse, a former chief of production, is the right choice to steer the carmaker decisively into the right direction, given the rising importance of software and car-sharing. [See article BMW's new CEO takes the helm at former EV pioneer 'searching for direction']

"Historic partnership" with arch rival Daimler

In its bid to master the industry's "triple megatrend challenge" of stricter environmental regulation, autonomous driving technology and the shared economy, BMW has recently entered into a number of collaborations, most notably with arch rival Daimler and its Mercedes brand.

In what German business daily Handelsblatt called a "historic partnership" to "take on Google and Uber”, BMW and Daimler agreed to a broad alliance in mobility services in early 2019 involving the merger of BMW's DriveNow car sharing business and Daimler's Car2Go. The companies launched five shared brands: the car sharing Share Now; ride-sharing unit Free Now; the Park Now parking service; the Charge Now EV charging service; and Reach Now, which offers easier booking across various modes of transport. The companies say their existing services already have roughly 60 million customers worldwide.

BMW's IAA presentation. Photo CLEW
BMW's IAA presentation. Photo CLEW

BMW keeps propulsion options open at motor show

Facing an unprecedented wave of climate protests, Germany's trio of car groups, BMW, Daimler and VW, put their sustainability ambitions at the centre of their presentations at the Frankfurt Motor Show (IAA). 

New CEO Zipse began his highly anticipated talk with an expressed commitment to the Paris Climate Agreement, adding that his company's European production was already carbon-neutral and that BMW was on track to sell more than a million electric vehicles by 2021. He also stuck to the company's strategy of a "flexible" approach encompassing various propulsion technologies, however, including conventional combustion engines. Zipse added that BMW was working "intensively" on fuel cell technology for longer distances. "In 2022, we will introduce a fleet of fuel cell vehicles."

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