Paid for with sales of pricey luxury vehicles
In 2015, BMW’s best year for i3 sales in the U.S., the automaker only sold slightly more than 11,000 copies of the small car in this market. But over the next year, BMW is looking to increase sales of both electric and plug-in hybrid vehicles by a full 50 percent. Bloomberg reports that worldwide, that would mean selling 150,000 electrified vehicles in 2018. By doing so, BMW says it hopes to position itself ahead of competitors like Mercedes and Jaguar.
“We’ll definitely boost sales by a mid-double digit amount,” said Klaus Froehlich, BMW’s head of development. “This is to stay ahead of the competition that’s starting to do its own rollout.”
The problem is, batteries are expensive. And by 2025, BMW plans to offer 12 fully electric vehicles. However, the full-size X7 SUV and 8 Series coupe will both go on sale soon, each with starting prices north of $100,000. Profits on high-end cars like that are much higher than less-expensive vehicles like the X1 and 2 Series. The way BMW sees it, the more cars it can sell with six-figure price tags, the easier it will be to pay for EVs.
“Our goal for the luxury segment in the next few years is taking more market share,’’ BMW CEO Harald Krueger said. “In 2018, we’re significantly enlarging our offering in this lucrative growth segment.’’
If BMW’s newest offerings can’t capture market share from Mercedes, though, the German automaker may be in trouble. It recently said it plans to spend about $8.3 billion (€7 billion) on research and development this year, a figure that Bloomberg points out is about as much as it spent on R&D in 2011 and 2012 combined.
“This can’t be just about showcase cars,’’ said Froehlich. “We have to boost profitability and keep prices on an acceptable level by delving very, very deeply into our cost structure.’’
Source: Bloomberg