BMW already generating most sales growth from EVs, says CFO
Walter Mertl says combustion sales will plateau then fall away in coming years
15 January 2024 - 18:34
byVictoria Waldersee
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Berlin — BMW has passed the tipping point for combustion engine vehicle sales and generates most sales growth from electric vehicles (EVs), its CFO says.
“The tipping point for the combustion engine is already there,” Walter Mertl said, adding in his view it had been passed last year.
“The current sales plateau for combustion cars will continue and then fall slightly,” Mertl predicted, pointing to looming environmental regulations that will restrict sales of such vehicles.
Carmakers are under pressure to ramp up their EV offerings as regulatory deadlines from China to the EU and some US states will begin to ban sales of new fossil fuel emitting cars from the middle of the next decade.
BMW achieved a 15% all-electric sales share last year. It plans to raise that to 33% by 2026 as it rolls out six new models in its Neue Klasse EV-only line, a multibillion-euro effort to jump the technology gap with competitors.
BMW’s margins for combustion engine and all-electric cars would not reach parity before at least 2026, Mertl said, pointing to the higher costs of introducing new battery technologies for later models. Discounting is also likely for cars in certain price ranges, he said, without going into further detail.
The carmaker is sticking to its previously announced target of 3-million vehicles sold by 2030 with an 8% to 10% margin in its automotive segment, he added — a conservative goal sitting below its expected 2023 margin of around 10.3%.
BMW CEO Oliver Zipse said in September the company would be “at least as profitable” when selling the Neue Klasse EVs at scale, bolstered by their lower battery costs and higher efficiency per kilowatt hour.
The carmaker said last week its Munich plant will be its first factory to produce exclusively electric models from the end of 2027. The Neue Klasse will be built at the Munich plant from 2026 in parallel with combustion engine cars, it said.
The Neue Klasse, a multibillion-euro effort by BMW to jump the technology gap with competitors such as Tesla and other EV makers, will also be produced at BMW’s new plant under construction in Debrecen, Hungary, as well as in Shenyang, China, and San Luis Potosi in Mexico.
BMW reported record sales of more than 2.5-million units in 2023 earlier this week and hit its target of a 15% share of battery-electric vehicles, aiming for more than half a million EV sales in 2024.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
BMW already generating most sales growth from EVs, says CFO
Walter Mertl says combustion sales will plateau then fall away in coming years
Berlin — BMW has passed the tipping point for combustion engine vehicle sales and generates most sales growth from electric vehicles (EVs), its CFO says.
“The tipping point for the combustion engine is already there,” Walter Mertl said, adding in his view it had been passed last year.
“The current sales plateau for combustion cars will continue and then fall slightly,” Mertl predicted, pointing to looming environmental regulations that will restrict sales of such vehicles.
Carmakers are under pressure to ramp up their EV offerings as regulatory deadlines from China to the EU and some US states will begin to ban sales of new fossil fuel emitting cars from the middle of the next decade.
BMW achieved a 15% all-electric sales share last year. It plans to raise that to 33% by 2026 as it rolls out six new models in its Neue Klasse EV-only line, a multibillion-euro effort to jump the technology gap with competitors.
BMW’s margins for combustion engine and all-electric cars would not reach parity before at least 2026, Mertl said, pointing to the higher costs of introducing new battery technologies for later models. Discounting is also likely for cars in certain price ranges, he said, without going into further detail.
The carmaker is sticking to its previously announced target of 3-million vehicles sold by 2030 with an 8% to 10% margin in its automotive segment, he added — a conservative goal sitting below its expected 2023 margin of around 10.3%.
BMW CEO Oliver Zipse said in September the company would be “at least as profitable” when selling the Neue Klasse EVs at scale, bolstered by their lower battery costs and higher efficiency per kilowatt hour.
The carmaker said last week its Munich plant will be its first factory to produce exclusively electric models from the end of 2027. The Neue Klasse will be built at the Munich plant from 2026 in parallel with combustion engine cars, it said.
The Neue Klasse, a multibillion-euro effort by BMW to jump the technology gap with competitors such as Tesla and other EV makers, will also be produced at BMW’s new plant under construction in Debrecen, Hungary, as well as in Shenyang, China, and San Luis Potosi in Mexico.
BMW reported record sales of more than 2.5-million units in 2023 earlier this week and hit its target of a 15% share of battery-electric vehicles, aiming for more than half a million EV sales in 2024.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.