Just ahead of his elevation to the position of CEO at BMW in 2019, then production head Oliver Zipse spoke at an event at the Mini plant in Oxford about the need for caution when it came to EVs.
“Flexibility is key,” he told journalists. “If we predict the success of 3 Series, we can be pretty much spot-on. To predict electro-mobility is much more difficult.”
Five years later BMW is reaping the rewards of its more circumspect strategy. In July the company actually sold more electric cars in Europe than the global EV leader Tesla, according to market research firm Jato Dynamics.
But BMW’s electric cars are even today still just adapted versions of combustion engine models, built on the same production line.
Back in 2019, BMW stood in opposition to Volkswagen Group, who was about to show the first model on its all-electric MEB platform built in a plant outfitted for just that platform. Indeed, the ousting of Zipse’s predecessor Harald Krueger was widely attributed to his failure to provide clarity on BMW’s own electric strategy after becoming a pioneer with the well-liked but costly i3.
BMW gambled on a cautious approach. Rather than redesigning the car to unlock the potential of the electric drivetrain, for example by liberating more cabin space as VW claimed, BMW offered electric as just another drivetrain choice. “You won’t feel difference as a customer. You maybe will find 2kg here and 2kg there, but that is not relevant for a buying decision,” Zipse said back in 2019.
Fast forward five years BMW is not only Europe’s number two EV seller behind Tesla year-to-date, but profits are buoyant at 3.7 billion euros in the second quarter to the end of June, translating into a margin of 10.5%. Zipse has earned his boast about the firm’s achievements. “Many years ago, we bet on the right strategy to be as flexible as possible,” he said on the company’s second quarter earnings call. “You're better prepared if you have ultimate flexible portfolio and an ultimate process competence to react to these things.”
This much cheaper strategy is now seen as the gold-standard for companies as they recalibrate for a lumpier demand in electric vehicles than expected. “Car companies at the moment are forced to work with two three drivetrains, BEV, hybrid or ICE. What we see is that flexibility is very valuable,” Ingo Stein, head of the automotive division for the Bain & Company consultancy, “You can balance the demand shift much easier than a company that produces different cars with different drive trains.”
In Europe and particularly the US, companies are shifting more of their production to hybrids after the expected EV boom hasn’t materialised at the speed first envisaged after Tesla’s original spectacular stock rise.
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