BMW eyes SUVs and shift to electric cars
GERMAN carmaker BMW is to increase output of profitable sportutility vehicles (SUVs) to boost earnings this year and help fund the rollout of a mass production system for electric cars.
The BMW Group and rival Mercedes have both forecast that demand for electric and hybrid cars will rise between 15% and 25% of sales by 2025, forcing them to overhaul their production lines and vehicle platforms to accommodate mass production techniques.
“The fully electric drivetrain will be integrated into our core brands,” chief executive Harald Krueger said at BMW’s headquarters in Munich yesterday.
Only 2.6% of the 2.37 million cars the BMW Group sold last year was equipped with a hybrid or electric motor.
The group also includes Mini and Rolls-Royce brands.
Electric car production would be integrated into BMW’s main production system, rather than relying on a separate, low-volume electric car factory in the German city of Leipzig, the carmaker said.
“To achieve this, we are gearing our architectures towards combustion engines and battery electric drivetrains,” Krueger said.
Even production in China was being prepared to make batteries and electric powertrains, BMW said.
The production level would be decided once China’s electric cars policy had been clarified.
The cost of integrating electric cars into mass production and investments in self-driving cars, such as the building of a research centre near Munich, would cause investments to rise.
BMW chief Financial officer Nicolas Peter said: “Due to necessary upfront investments, the research and development ratio for the next two years is likely to be slightly above our target range of 5% to 5.5% [of revenues].”
Earlier this month, BMW reported preliminary financial results for last year, with earnings before interest and tax down 2.2% at ß9.39-billion (R46.5-billion) even as revenues rose to a record ß94.16-billion (R1.3-trillion).
Every third BMW built last year was an SUV, a market that is growing so fast that the firm is increasing production and adding an X2 and an X7 to its lineup next year.
BMW’s core brand sold fewer vehicles than German rival Mercedes-Benz last year.
The company said yesterday it would look to recapture that lead by launching more than 40 new or revised models in the next two years, but not by chasing Mercedes at all costs.