Valuation down: People look at BMW engines displayed at the Frankfurt Motor Show in this file photograph. The payoff of developing electric cars is uncertain, as high battery prices will squeeze returns for years. Picture: REUTERS
Valuation down: People look at BMW engines displayed at the Frankfurt Motor Show in this file photograph. The payoff of developing electric cars is uncertain, as high battery prices will squeeze returns for years. Picture: REUTERS

Munich — BMW is targeting another ambitious hike in plug-in hybrid and battery car sales in 2018 to defend its position in the electric car shift as competitors such as Volkswagen prepare their own battery line-ups.

The planned increase to about 150,000 cars sold would represent a 50% rise from 2017, and a jump of about two-thirds from 2016’s deliveries of green cars. BMW, an early mover in the electric car shift with 2013’s i3, is facing increasing competition from rivals such as Volkswagen and Mercedes-Benz.

"We’ll definitely boost sales by a mid-double digit amount," said Klaus Froehlich, who heads development for BMW.

"This is to stay ahead of the competition that’s starting to do its own rollout," he said.

Faced with tightening emissions regulation, BMW and other car makers are spending record amounts developing a more attractive suite of electric cars to kick-start sluggish consumer sales. The payoff remains uncertain, as high battery prices will squeeze returns compared to equivalent combustion engine vehicles for a number of years.

Demand for the vehicles remains at a fraction of total car sales, with BMW’s target paling compared to its total 2016 deliveries of 2.4-million vehicles. To help pay for the shift, BMW will start sales in 2018 of the all-new X7 SUV and 8-Series coupe, priced at about €100,000.

The expanded top-line segment will go head-to-head with Mercedes-Benz’s luxury variants such as the S-Class coupe and Maybach sub-brand.

Unlike Mercedes’s parent, Daimler, which is the world’s biggest commercial vehicle maker, or 12-brand Volkswagen, BMW has less opportunity to spread development costs of its suite of at least 12 all-electric cars by 2025.

Volkswagen plans to offer 50 battery cars by then.

"Our goal for the luxury segment in the next few years is taking more market share," CE Harald Krueger said. The new suite of luxury cars would be sold under the Bayerische Motoren Werke signature.

"In 2018, we’re significantly enlarging our offering in this lucrative growth segment."

BMW is in the midst of a record roll-out of 40 all-new and revamped vehicles in 2017 and 2018, seeking to wrest back global leadership of luxury car sales from Mercedes. Its rival overtook BMW in 2016 for the first time in a decade.

BMW’s electric push coincides with the biggest transformation for the industry in decades, drawing in a host of new competitors such as Tesla and Uber Technologies. BMW said in November it would spend €7bn on research and development in 2017, as much as 2011 and 2012 taken together.

Mercedes said it was targeting savings of €4bn by 2025, believing returns on electric cars could be about half that of petrol and diesel vehicles for years.

Concern about mastering the pressures have pushed the valuations of BMW, Daimler and Volkswagen to the bottom four rungs in the DAX index.

BMW’s struggles with slow sales of the i3 city car, which used a lightweight carbon-fibre body for the first time in a mass-produced vehicle, prompted the car maker to dial back its electric ambitions and pause from adding more electric-only models to its line-up. In 2018, it is bringing out an electric Mini, followed by a battery-powered X3 sport utility vehicle in 2020, adding electric power trains to existing models rather than creating a distinct, separate line-up such as Mercedes’s planned 10-car EQ range.

The approach will give BMW the option to tailor output of plug-ins and electric cars to yet uncertain demand.

Flexible production set-ups were usually more expensive and might require some compromises in some models to fit batteries, Warburg Research analyst Marc-Rene Tonn wrote in a report.

Bloomberg

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