Pedal to metal in pursuit of electric future
INDUSTRY NEWS/ Michael Taylor reports on how BMW is planning to reinvent itself for the future
Bavarian car maker BMW has put the broom through its traditional car business to reinvent itself for an electric, autonomous future. The 100-year-old company confirmed it has accelerated the development of pure battery-electric and plug-in hybrid technologies, insisting it will have electrified versions of every model by 2020.
A strategy document, Strategy Number One Next, reveals the brand will launch its first Level 4 autonomous car, the i-Next, as early as 2020, but is frantically retraining its core of mechanical engineers to turn them into electrical engineers.
It has not ignored its traditional business, delivering plans to introduce a plug-in hybrid 5 Series early in 2017, a batteryelectric (BEV) Mini by 2018, a BEV X3 with 500km of range in 2019 and the full-sized five-seat i-Next BEV in 2020.
FLEXIBILITY
While it has revealed its plans to build in the manufacturing flexibility to change direction on internal combustion, batteryelectric and hybrid cars to meet a predicted fast change in demand, it has made an unsubtle dig at Tesla for releasing undervalidated autonomous systems to customers.
Now pushing the internal motto of “think like a start-up, deliver like a grown-up”, the German car maker’s chairman, Harald Krüger, says the brand is deep diving into digital services and autonomous development.
He says the brand’s engineering division, under the leadership of Klaus Fröhlich, has future-proofed the brand for every foreseeable powertrain demand, and a world with lower rates of car ownership. It has also been refocusing its automotive business, Krüger says, covering itself off against predicted “disruptor” threats from startups by delivering its own internet-based services and carsharing business units.
It plans to use its digital competence to deliver a new revenue stream based around the internet services provided by its BMW Connect app.
The strategy document is a 10-year plan to change the company’s priorities to ward off attacks to its traditional businesses by everybody from Uber, Tesla and Lyft to Jaguar, Mercedes-Benz, Audi, Porsche and a wave of Chinese battery electric vehicle makers (BEV).
Krüger says he has worked to protect the firm against sudden shift in buying trends, without dipping into predicted profits. “The next thing and the mix depends a bit. There are countries like Norway or the Netherlands where it’s battery-electric, other countries prefer plug-in hybrids,” Krüger says.
“We can’t really tell you what will happen. There are going to be countries where, if you look at it today, it depends on the infrastructure. If that can’t keep up then it (the opportunity to benefit from BEV) will be lost.
“We would like to average 8%-10% Ebit margin and we need to find it in the future.”
While admitting BMW has a renewed focus to deliver electric and autonomous cars, Krüger urges some caution, insisting up to 80% of new cars sold in 2025 will still have internal combustion engines. “A certain part of that 20% will be plug-in hybrid. We have more jobs then with internal-combustion development. We have not designed our last internal combustion engine family,” he said.
BMW’s strategy document predicts its three brands will have a combined BEV and plugin hybrid take-up rate of 15%25% by 2025, giving it up to 500,000 electrified cars a year.
It took BMW until November 2016 to clock over 100,000 in sales of electrified vehicles, but Krüger insists it will sell another 100,000 in 2017 alone.
“BMW is set up differently to our competitors because the only things we do not do ourselves is transmissions. The number of people working here in powertrain is lower than our competitors because we don’t do our own transmissions. Now we have more software training for mechanical engineers.”
BMW has traditionally made money by building and selling cars and providing the finance for customers to buy or lease them. The strategy document shows BMW is transforming itself into a mobility-solutions provider, without losing touch with its product origins.
It is also lessening its risk and increasing its development power in autonomous driving by teaming with Intel and Mobileye in a joint venture, while it also has high hopes for its fiveyear-old DriveNow car-sharing joint venture with German rental car agency Sixt.
Its other critical joint venture is the seemingly unlikely one with Audi and Mercedes-Benz that saw it buy the highly accurate Here digital mapping service unit off Nokia, then offer it for use by other car makers.
It has begun work on a campus in Munich to draw in suppliers and universities for research and development, along with topping up the funding plan on its i Ventures venture capital operation to €500m and moving its headquarters to Silicon Valley.
PRIORITIES
“This is why we founded i Ventures in 2011 — to make selective investments in young, fastgrowing start-up companies,” Krüger says.
“Everybody is talking about Uber and Lyft — but we are setting different priorities.”
One of those priorities is a combination of autonomous driving and digitalisation.
“The BMW Group’s vision is clearly defined — we want to be the leader in autonomous driving,” Fröhlich says.
“We have already announced that we will bring highly autonomous vehicles to the streets in 2021 with the BMW i Next…. we will develop the key areas for the technologies of tomorrow,” he added.
“Our shared aim is to create industry standards with these technologies. That is why we are open to working with additional partners: an open platform will quickly make these systems better and more secure.
“What we have already mastered on our own is “motion control”, the design and control of the vehicle through drivetrain, chassis, brakes and full systems integration,” he said.
IT HAS ALSO BEEN COVERING ITSELF OFF AGAINST PREDICTED ‘DISRUPTOR’ THREATS FROM START-UPS