Most of BMW sales growth is from EVs

BMW has passed the tipping point for combustion engine vehicle sales and generates most of its sales growth from electric vehicles (EVs), says its CFO.

“The tipping point for the combustion engine is already there,” Walter Mertl said. In fact, it was passed last year.

“The current sales plateau for combustion cars will continue and then fall slightly,” Mertl predicted, pointing to looming environmental regulations that will restrict sales of such vehicles.

Carmakers are under pressure to ramp up EV offerings as regulatory deadlines from China to the EU and some US states will begin to ban sales of new fossil fuel emitting cars from the middle of the next decade.

BMW achieved a 15% allelectric sales share last year, and plans to raise that to 33% by 2026 rolling out six new models in its Neue Klasse EV-only line, a multibillion-euro bid to jump the technology gap with rivals.

BMW’s margins for combustion engine and all-electric cars would not reach parity before at least 2026, Mertl said, pointing to the higher costs of new battery technologies for later models. Discounting is likely for cars in certain price ranges, he said.

The carmaker is sticking to its announced target of 3-million vehicles sold by 2030 with an 8% to 10% automotive margin, a conservative goal sitting below its expected 2023 margin of around 10.3%, said Mertl.

BMW CEO Oliver Zipse said in September the group would be “at least as profitable” selling the Neue Klasse EVs at scale, bolstered by lower battery costs and higher efficiency per kilowatt hour. The carmaker said last week its Munich plant will be its first to produce exclusively electric models from end-2027. The Munich plant will build the Neue Klasse from 2026 in parallel with combustion engine cars.

The Neue Klasse, a multibillion-euro effort by BMW to jump the technology gap with competitors such as Tesla and other EV makers, will also be produced at BMW’s plant being built in Debrecen, Hungary, as well as in Shenyang, China, and San Luis Potosi in Mexico.

BMW has just reported record sales of more than 2.5million units in 2023, and hit its target of a 15% share of batteryelectric vehicles, aiming for more than half a million EV sales in 2024.