BMW accelerates comprehensive reorientation: uncompromisingly electric, …

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The BMW Group is entering 2021 with high goals for growth and profitability and will be putting the first pioneers of a far-reaching technology offensive on the road in the coming months. At the same time, the company has set the course for a comprehensive realignment: From the middle of the decade, a new generation of models is set to take premium mobility to a new technological level.

“The BMW Group has big plans for 2021: We started the new year with great momentum and want to return to the pre-crisis level as quickly as possible – and go beyond that,” said the Chairman of the Board of Management of BMW AG, Oliver Zipse, at the BMW Group Annual Conference. For the coming years, the manufacturer has “a clear roadmap to turn the transformation of our industry into a real competitive advantage for BMW: uncompromisingly electric, digital, circular.”

After a challenging year with a successful final sprint, the BMW Group wants to continue on its ambitious recovery course in 2021. Among other things, the company is aiming for a significant increase in consolidated earnings before taxes. Solid growth in deliveries is expected in the automobile segment. The EBIT margin in the segment should increase to a value in the corridor between 6 and 8 percent for the full year 2021.

“For us, 2021 is all about growth. At the same time, we are prepared to react flexibly,” said Nicolas Peter, Member of the Board of Management of BMW AG, Finance. “We always think and act in the long term and, with the right decisions today, create the conditions to achieve our ambitious strategic goals for 2025, 2030 and beyond.”

Electric, digital, circular – clear roadmap for transformation

For the BMW Group, the transformation towards fully electric and connected mobility is to take place in three phases: In the first phase, the company developed the technology with Project i as a pioneer of e-mobility and then brought electrification into series production, for example in form of the BMW i3, which has been on the road since 2013. This technology was spread across the entire product portfolio, especially in the form of plug-in hybrids. In addition to the electric drive, the increasing importance of software and digital interaction with the vehicle are also decisive factors in the transformation.
The second phase of the transformation started with the simultaneous offering of both combustion engine and fully electric drives in one and the same model. The basis for this are the intelligent vehicle architectures and a flexible production network, which in their unique combination should ensure maximum exchange flexibility between the individual drive types.

In terms of digitization, the BMW Group will introduce the BMW Operating System 8 in 2021, the most powerful system for data processing in the vehicle that the company has ever developed. With this new operating system, every BMW becomes a digital powerhouse with the ability to upgrade over-the-air at top speed.

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Operating System 8 will be used for the first time this year in the all-electric iX and lays the foundation for the eighth generation BMW iDrive. Both technologies are then to be rolled out in series. The number of vehicles that can be updated with remote software upgrades is also expected to continue to grow rapidly: by the end of 2021, the BMW Group wants to have the world’s largest fleet of vehicles on the road with well over two million units, the over-the-air new ones and can have extended functions installed.

With the BMW Operating System 8, it should also be possible in the future to book even more “Functions on Demand” later and to install them over-the-air than is already the case today – and with more flexible offers: customers should decide for themselves whether they want to buy a function permanently or book it for three years, 12 months or just one month.

Broad instead of niche: all-electric vehicles for around 90 percent of today’s market segments from 2023

With the approach of intelligent vehicle architectures and a highly flexible production network, the BMW Group wants to have around a dozen fully electric models on the road by 2023. In addition to the i3, MINI SE and the iX3 SUV that are already on the market, two central innovation drivers are coming to the streets this year with the iX and the i4 – the i4 even three months earlier than originally planned. “The BMW iX and the BMW i4 will give the starting signal for our technology offensive in 2021: In the future, e-cars will have to be measured against these two vehicles,” said Zipse with self-confidence.

All-electric versions of the high-volume 5 Series and the X1 will follow in the coming years. Then there is the 7 Series, the successor to the MINI Countryman and other models. As early as 2023, the BMW Group will have at least one fully electric model on the road in around 90 percent of its current market segments. “We are deliberately broadening our range of fully electric products and are not remaining in a niche,” said Zipse.

In this way, the company wants to be able to ensure an optimal balance between an attractive product range and efficient plant utilization even if demand in certain markets should shift completely towards fully electric vehicles in the coming years. This ability should be a key competitive advantage for the BMW Group in the coming years.

By the climax of this second transformation phase in 2025, the BMW Group wants to increase its sales of all-electric models by well over 50 percent per year on average, more than tenfold compared to 2020. In total, the company wants to have delivered around two million fully electric vehicles to customers by the end of 2025.

Transformation as an opportunity – the example of the main plant in Munich

The main plant in Munich, where production of the all-electric i4 is scheduled to start in 2021, is an example of how anticipatory handling of the transformation can strengthen long-term competitiveness. From there, the current production of combustion engines is to be gradually relocated to the Steyr (Austria) and Hams Hall (UK) sites. This process should be completed by 2024 at the latest. Instead, by 2026, a new vehicle assembly line will be built on the site of today’s engine production site, which will be designed for the new cluster architecture geared towards electric drives. The company is investing around 400 million euros in this conversion.

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In the future, the employees will work in other planning and production areas at the Munich location or at other Bavarian locations. Among other things, the company is expanding the competence center for e-drive production in Dingolfing from the current 1,200 to up to 2,000 employees. In addition, the BMW Group prepares its employees with the largest qualification offensive of the company’s history for professional development with 75.000 participants 2021 in Germany alone to prepare them for future requirements of e-mobility up to Data and Analytics. Thus, the BMW Group wants to ensure that the transformation of its works and locations and the future backup of employment continue to go hand in hand.

New class in digitization, electrification and sustainability

After 2025, then the third phase of the transformation should take place: With the new class, the BMW Group wants to re-align her successfully grown product offering for decades. The new class is characterized by three central aspects: a completely redefined IT and software architecture, a newly developed and, according to the manufacturer, high-performance electric drive and battery generation and a radically new level of sustainability over the entire life cycle. These strands are connected by an overall vehicle architecture that has been uncompromisingly optimized for electric drives, which sets standards in terms of digitization and electrification and will carry the characteristics of a typical BMW into the future.

The models of the new class are intended to enable a completely new type of user experience concept that has not previously existed in any production vehicle. Regionalizable technology stacks should optimally tailor the vehicle’s operating system to the different conditions in the major regions of the world and their digital ecosystems and keep them “always fresh” through continuous upgrades. At the same time, the consistent “digital first” orientation of the new class creates the basis for generating an increasing proportion of sales over the life cycle of the vehicle through individually configurable and bookable features.

The aerodynamics, uncompromisingly designed for electric vehicles, with new proportions and an enlarged interior, are combined with a new generation of electric drives with a completely newly developed, highly integrated high-voltage storage concept and optimized cell design. This combination should enable significant leaps in terms of low electrical consumption in the new class and aim for the level of combustion engines in terms of range and manufacturing costs.

The basis for the new drive generation should be highly scalable kits that, according to BMW, can cover all segments and variants of the new class, from the high-volume models to the exclusive high-performance M model. An electric drive based on the hydrogen fuel cell is also conceivable. The typical BMW driving experience is to be further intensified by the design for fully electric vehicles and supplemented by a state-of-the-art range of driver assistance systems and highly automated driving.

Paradigm shift: ‘Secondary First’ and Circular Economy as the goal of future product generations

With the New Class models, the BMW Group is planning to raise the issue of sustainability to a radically new level. In addition to switching to renewable energies in production and supply chain, the company also wants to significantly reduce its consumption of resources. In view of the scarcity of resources and rising raw material prices, this step is a clear efficiency imperative – but from the BMW Group’s point of view it is also a decisive lever for sustainable management. “In 2017, for the first time, mankind mined more than 100 billion tons of raw materials within one year – we must also counteract this trend in the automotive industry,” said Zipse. “Anyone who wants to use the earth’s scarce resources for their business model will need good reasons in the future.”

Accordingly, the proportion of secondary materials – for example recycled steel, plastic or aluminum – should increase significantly in order to minimize the necessary resource extraction with the new class. To this end, the BMW Group is examining a paradigm shift with a ‘secondary first’ approach in development – i.e. the use of secondary materials wherever the quality and availability of the materials allow it. “Our clear claim is: The ‘greenest’ electric car comes from BMW,” said Zipse.

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The BMW Group can draw on more than ten years of experience from the development of the BMW i3, which was the company’s first vehicle to establish a holistic understanding of sustainability. Among other things, around 25 percent of the materials used for the thermoplastic exterior parts of the BMW i3 are either recycled or made from renewable resources. A high proportion of renewable raw materials and recycling materials are also used in the interior.

In the future, recycling will be taken into account when designing vehicles. A central challenge of today’s recycling processes is to extract materials in a very pure form. For example, the vehicle electrical system must be easy to remove before recycling to prevent the steel from mixing with copper from the vehicle’s wiring harness. Otherwise the secondary steel would no longer meet the high safety requirements of the automotive industry. The use of mono-materials, for example in the seats, must also be increased significantly in order to be able to transfer the largest possible amount back into the material cycle. On the way to the IAA Mobility this year, the BMW Group wants to deepen the details of this circular economy approach. The company is also examining the possibility of cross-industry cooperation in order to make the goal of the circular economy a reality.

From 2030 at least 50 percent of global sales will be fully electric

The third phase will be characterized by a gradual decline in sales of vehicles with internal combustion engines. By contrast, BMW Group sales of all-electric vehicles are likely to increase by more than 20 percent annually between 2025 and 2030. Based on its current market expectations, the company assumes that by 2030 at least 50 percent of its global sales will consist of fully electric vehicles. The actual value is likely to differ significantly from market to market and, last but not least, depends to a large extent on the progress made in the regional expansion of the charging infrastructure.

By then, there should be no segment position in the entire product portfolio of the BMW Group in which the company does not offer at least one all-electric model. Individual segments, on the other hand, could only be served with fully electric models. Accordingly, the company wants to be able to present a significantly higher proportion of fully electric vehicles, provided that demand develops accordingly. Overall, the BMW Group wants to put around ten million all-electric vehicles on the road in the next ten years.

MINI is becoming a fully electric brand

MINI has a pioneering role: the urban brand is said to be made for e-mobility and will be launching a new model with a combustion engine variant for the last time in 2025 – after that only all-electric models will follow. By 2027, the share of all-electric vehicles in MINI sales should already be at least 50 percent. At the beginning of the 2030s, MINI will then have an exclusively all-electric range. At the same time, MINI should remain a global brand with a footprint in all regions of the world, even when it is fully electric.

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The all-electric MINI SE is currently being manufactured at the Oxford plant. The successor to the MINI Countryman will start at the Leipzig plant in 2023. The new crossover model from MINI will roll off the assembly line there with both combustion engines and purely electric drives. On the basis of a new vehicle architecture developed from the start, 2023 also produced in China in a cooperation with the local manufacturer Great Wall Motor battery electrical mini vehicles.

Sustainability anchored in all departments

According to the BMW Group, it is convinced that the fight against climate change and our use of resources will determine the future of our society – and thus also of the BMW Group. As a premium manufacturer in particular, the company therefore has the right to lead the way when it comes to sustainability. The BMW Group 2020 anchored this orientation in all departments – from administration and purchasing to development and production to sales.

The manufacturer has set itself clear targets for CO2 reduction by 2030 – for the first time over the entire life cycle of the vehicle from the supply chain through production to the end of the usage phase. Over this entire range, the CO2 emissions per vehicle are to be reduced significantly by at least one third compared to 2019.

In its own plants and locations, the BMW Group is already as benchmark in resource efficiency and set up the highest reduction targets for 2030 here – which even follow an ambitious path as the 1.5 degree target. The BMW Group aims to reduce these emissions by 80 percent by 2030. For the production of the BMW iX in Dingolfing and the BMW i4 in Munich, for example, the hydroelectric power comes directly from Bavaria. In addition to the significant reduction in substance, the BMW Group intends to completely neutralize its remaining CO2 emissions (Scope 1 + 2) from this year onwards by using appropriate certificates.

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The CO2 emissions of vehicles in the use phase are to be reduced by 40 percent per kilometer driven by 2030. The central lever for this is the far-reaching product strategy with a massive expansion of e-mobility. Especially by the increasing proportion of e-mobility, the CO2 reduction in the future must be laid a much greater attention to the upstream value creation – for example, in view of the energy-intensive production of high-voltage storage. Without countermeasures, CO2 emissions per vehicle would increase in the supply chain of the BMW Group by more than one third by the increased electrification content by 2030.

The company does not just want to avoid this growth, but even reduce the CO2 emission per vehicle compared to 2019 by 20 percent. Among other things, the BMW Group will establish the CO2 footprint of the supply chain as a award criterion in its decision-making processes. Thus, the company wants to take a pioneering role as one of the first car manufacturers with concrete CO2 goals for his supply chain.

The first measures are already having an effect on the BMW iX, the Munich-based company announced: The use of renewable green electricity in the production of the battery cells in combination with the increased use of secondary material can reduce CO2 emissions in the supply chain of the iX by 17 percent Compared to the same vehicle in which these measures would not have been implemented. At the same time, the BMW Group is reducing the use of critical raw materials and has reduced the proportion of cobalt in the cathode material to less than ten percent and increased the proportion of secondary nickel to up to 50 percent for the current, fifth generation of battery cells. The electric drive works entirely without rare earths.

Strong second half of 2020 provides tailwind

A profitable second half of 2020 gives the BMW Group momentum for 2021. Despite the global pandemic, the manufacturer achieved a convincing pre-tax result in the period from July to December: It amounted to more than 4.7 billion euros and was +9.8 percent well above the strong previous year’s figure (2019: 4.3 billion euros). After the pandemic-related decline in the second quarter, the BMW Group has returned dynamically to the road to success. The company delivered significantly more vehicles in the second half of the year with more than 1.36 million units than in the same period of the previous year.

The course of business throughout 2020, on the other hand, was heavily influenced by the effects of the corona pandemic. Due to global lockdowns lasting weeks, deliveries fell moderately by -8.4 percent to 2.36 million vehicles. Group sales in the 2020 financial year fell moderately to a good 99 billion euros (previous year: 104 billion euros). Earnings before financial result decreased significantly to 4.8 billion euros (previous year: 7.4 billion euros / -34.8 percent). The margin of the pre-tax result in the group was 5.3 percent (previous year: 6.8 percent).

In the automobile segment, the EBIT margin for the year as a whole was 2.7 percent (previous year: 4.9 percent). The company has thus achieved its forecast of achieving an EBIT margin in the upper third of the target corridor of 0 to 3 percent. In the fourth quarter, the EBIT margin of the segment even rose to 7.7 percent and thus in the fourth quarter of 2019 (VJ: 6.8 percent).

The ongoing transformation of the company resulted in high research and development expenses in the reporting period, which benefited the future fields of mobility in particular: The focus was on the research areas of vehicle networking and highly automated driving as well as e-mobility and new vehicle projects. Overall, the BMW Group was able to slightly reduce its expenses for research and development according to IFRS to 5.7 billion euros (previous year: 5.9 billion euros / -4.4 percent). On the basis of the annual financial statements, the Executive Board and Supervisory Board will propose to the Annual General Meeting on 12. May a dividend of 1.90 euros per ordinary share and 1.92 euros per preferred share.

No premium without sustainability: 2020 CO2 targets exceeded

E-mobility was already a significant growth driver for the company in 2020: it has a total of 192 worldwide.662 electrified BMW and MINI vehicles sold, a third more than in the previous year (+31.8 percent). Sales of fully electric vehicles increased by 13 percent. In Europe, the share of electrified vehicles in total sales was already 15 percent. Thanks to the increased sales of electrified BMW and MINI models, the BMW Group was able to exceed its European CO2 fleet target of 104 g/km in 2020 with 99 g/km according to preliminary calculations.

Despite a volatile environment impacted by the global spread of the coronavirus, an upward trend in business development and a stable risk situation are expected for the 2021 financial year. In the automobile segment, global sales in 2021 should be solidly above the previous year’s figure. The company expects the EBIT margin in the segment to be in a corridor between 6 and 8 percent.

Taking into account the effects described above, the BMW Group assumes that consolidated earnings before taxes will increase significantly compared to 2020. The company will continue to use the personnel measures that have already been communicated to press ahead with staff restructuring. Overall, the number of employees should be slightly below the level of the previous year.

The ongoing uncertainty, particularly from the further development of the corona pandemic, the (economic) political framework and international trade and customs policy could mean that the economic environment in many regions deviates significantly from the expected trends and developments. This would also have a significant impact on the business development of the BMW Group.

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3 thoughts on “BMW accelerates comprehensive reorientation: uncompromisingly electric, …”

  1. If it weren’t for the weird kidney, they would be quite nice vehicles. But maybe you get used to it. After all, it is a unique selling point.

    Reply
  2. Another such nonsense – either it’s up to the author or I’ll get sick.

    If I don’t get sick, then the author should switch to the PR department or become a civil servant and create the official forms for Corona help, then no one seeking help will be able to see through it.

    Reply
  3. In the long term, the question will be whether the Germans, with their high processing quality and their premium image, can score points against the cheaper competition from the USA and Asia in the usual way.
    It could be difficult in the long term because of a cheaply cobbled together Asia box
    with simple and long-lasting electrical technology, it will probably also last a long time and cause few problems.

    Reply

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