Rest in peace, Ultimate Driving Machine. BMW AG, which rode that tagline to automotive supremacy, is now busy shaping “tomorrow’s individual premium mobility.”
Not very catchy, that. It actually downplays the pleasures of actually driving.
But you’ll find it at the heart of an important BMW presentation, one that dwells on the future profits that will come from being a leader in autonomous, connected, electrified transportation – ACES, with the “S” representing the dollar bill, as in profits.
Let’s pause for a moment. Yes, BMW still sells the 3-Series and such, and there is a new 3, in fact. Moreover, in recent weeks I have tested a 2019 X4 M40i and a 2019 430i xDrive Gran Coupe, and each retains the basic BMW characteristics you’d associate with ultimate driving – balanced, responsive, quick and unruffled when a reasonably skilled driver pushes the limits of powertrain and chassis.
But BMW’s leadership seems primarily consumed with convincing investors, governments and even consumers that the company’s future lies in its “Electrification Pathway.” By the end of this year, BMW plans to have some 500,000 electrified vehicles on the road globally. By 2025, BMW expects to have at least 25 electrified vehicles on the road, including at least 12 fully electric cars.
Of note for 2019 is the Mini BEV (battery electric vehicle). We can look ahead in the next two years to the iX3, the iNEXT, and the i4/i Vision Dynamics. By 2021, the new “core” platform at BMW will fit all types of powertrains – internal combustion engine, hybrid and pure electric.
To profit from electrification, BMW is counting on governments to support e-mobility. Some might, with tax incentives, outright subsidies and regulations that discourage vehicles running on gas or diesel.
BMW is also predicting the emergence of an efficient and flexible charging infrastructure in its main markets (Europe, China and North America), though how this will come about and how it will be funded remain vague. BMW seems to believe that if we build it (EVs and chargers) customers will come. But again, the world’s most advanced charging network belongs to Tesla. No one associates Tesla with profitability.
What BMW is planning, then, calls for a delicate balancing act, with many variables out of BMW’s control. To make EVs profitable, BMW is counting on premium pricing, more efficient production, dramatic EV sales increases, lower battery costs and huge savings in materials costs.
Let’s go through these, one by one.
I can imagine that any BMW EV should command a decent price; the brand is strong. But it’s far riskier to predict profits based on lower battery and material costs, both of which are largely unpredictable.
Don’t believe me? Consider what’s happening with copper in the Congo and rare earth minerals in China. In both instances, the country in question continues to threaten supply and demand higher pricing. Point is, in a world increasingly riven by trade wars and greed, the guaranteed availability of key components in batteries and battery cars cannot be counted on by car companies.
And what of customers? To say they remain reluctant to buy EVs in great numbers is an understatement. As well, the production efficiencies that come with volume sales are not guaranteed. In short, BMW’s vision for the company seems based to a large extent on hopes and prayers, the generosity of others, whimsical governments and regulators, fickle consumers and blind luck.
CEO Harald Kruger argues that BMW is not “betting on any single technology” and that “We are relying on a broad portfolio of technologies with flexible platforms for combustion engines, plug-in hybrids and electric drive trains.”
But in the next breath, he pointed to BMW’s joint work with Toyota on fuel cells, another pie-in-the-sky technology. “Over the long-term, drive trains with hydrogen fuel cells will offer greater local emission-free range, with very short refueling times. These will complement our battery-electric vehicles.”
If you question the future of an infrastructure that makes large scale EV sales viable, then you simply cannot image hydrogen filling stations capable of supporting a fleet of fuel cell cars. Yes, Toyota believes in fuel cells, as do Hyundai Motor and others. But the truth is, hydrogen cars are the next technology that have been promised for decades. I believe they will be the “next thing” for the rest of my life.
The reality of climate change makes me want to believe in BMW’s electrification plan. But in this age of a coal-loving Trump and his millions of apologists and enablers, I am unconvinced.
BMW, then, is devoting billions to a transition that I fear will not materialize in my lifetime. I hope I am being unduly pessimistic, that electrification will happen, and that car companies such as BMW are making the right bets on EVs. I am not optimistic here, however.