Plugging the profits back in for the future
INDUSTRY NEWS/ BMW is increasingly focused on its electric vehicle strategy after another profitable year in 2017, writes Michael Taylor
The BMW Group clambered over the €10bn pre-tax profit mark for the first time in 2017 on the back of selling a record 2,463,526 cars. Its profit margin has remained in an 8% to 10% window for the eighth consecutive year on €98,678m in revenues. It lifted its earnings before tax result by 10.3% to €10,665m, with the group ending the year with €14.5bn in available cash.
Its sales rose 4.2% following a 14.7% jump from the 1 Series to 201,968 cars, a 9.6% leap from the SUV X models and a 6.3% rise from the 5 Series, to 291,856 cars. Mini’s Countryman scored 30% growth.
Twenty-four hours after Dieselgate investigators from the Munich public prosecutor’s office raided its headquarters, the BMW Group declared diesel remained a core pillar of its plans to reduce CO2 emissions.
Board of management chairman Harald Krüger insisted the group would launch 20 new or revised cars in 2018 and confirmed it would build two allelectric cars, the iNext and the i4, in Germany. It will build the i4 in its flagship Munich factory from 2021, with an initial production target of 50,000 cars a year (not coincidentally a typical sales year for the Tesla Model S), though it retained the capacity to double that.
While the group is still ramping up towards its next level of battery-electric vehicles, Krüger confirmed its sales of electrified vehicles (including plug-in hybrids) jumped 65.6% in 2017 to 103,080 cars and SUVs.
It has a 2018 sales target of 140,000 electrified vehicles, with plans for more than half a million electrified cars on the roads by the end of 2019. It plans 12 pure battery electric vehicles (BEVs) and another 13 plug-in hybrid models by 2025.
“Our future is definitely electric,” Krüger insisted. “With our electric vehicles and plug-in hybrid models, we are already the clear number one in Europe.
“We are using scalable modular kits for electrification. From 2020, we will be able to fit all model series with any type of drivetrain. And there is more to come: in 2020, BMW will launch the iX3. 2019 will see the first pure electric Mini. You can imagine at some point in the future that it (Mini) will be one day fully electrified as a brand.”
BMW will deliver both an upgraded i8 coupe and a new i8 roadster in 2018 (we will be driving them in April) with fourth-generation electric drive technology, with a 40% boost in plug-in range, but its big step is planned to come with the fifth generation. “With the fifth generation of eDrive, our vehicles will drive 550km to 700km on electric power, depending on the model,” Krüger says. “We will achieve this in the BMW i4 and the iNext.”
None of that is free, though, with the BMW board member for finance, Nicolas Peter, admitting it is spending more and more every year on research and development, largely on electric vehicles (EVs).
“Research and development expenditure also rose significantly in 2017, to €6.11bn. This is almost a billion euros higher than the previous year. In addition to upfront investments in the development of flexible vehicle architectures, this amount also includes preparations for new models such as the X3 and M models.”
It had two free financial kicks, too: one expected and the other not. It received €183m for selling stakes in the Here digital mapping operation it bought with Audi and Daimler.
It also reduced its total income tax bill from €2.755bn in 2016 to €1.949bn in deferred payments from 2017, largely due to the US lowering its corporate tax rate from 30% to 21%.