The next 5 Series will be electric, and so will other BMWs. That’s because if the German carmarker doesn’t cut CO2 emissions fast enough, its bosses will pay the price. Here’s the inside story on BMW’s war on carbon

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BMW has had it with carbon. The luxury carmaker gathered the press today for BMW Electric Days, an online event that spelt out its plans for a sustainable future just days after declaring all-out war on CO2.

On Monday it said it wants to cut carbon dioxide emissions by at least one third for its vehicles over their lifetime, for the climate’s sake. At a production rate of 2.5 million cars a year, the same number it built in 2019, that would save 40 million tonnes of the greenhouse gas by 2030.

Chief executive and chairman Oliver Zipse (below, with the Concept i4) laid out the targets and pledged to link them to directors’ compensation. If BMW falls short of cleaning up its carbon act, in other words, the bosses will be the first to pay.

 “We are not just making abstract statements. We have developed a detailed 10-year plan with annual interim goals for the timeframe up to 2030,” Mr Zipse said. “We will report on our progress every year and measure ourselves against these targets. The compensation of our Board of Management and executive management will also be tied to this.”

The company is fighting the war on CO2 on every front. It said it will only buy batteries for its electric cars from cell manufacturers who use green energy, for example (carbon saved: 10 million tonnes in 10 years).

That brings us to BMW Electric Days. The event’s name hints at what its engineers are working on to drive its future cars, but BMW isn’t trying to become Tesla. In fact, it’s now clear that if one word describes what technology BMW thinks is best for the future, it’s: everything.

BATTERIES INCLUDED
Critics could well take aim at BMW for being too cautious in adopting battery power and squandering an early lead. It launched the i3, its first pure electric car, all the way back in 2013, but only followed it up with a second battery-powered model this year. The iX3, a pure electric version of its best-selling sport utility vehicle (SUV) the X3, came out on July 13, trailing rival electric SUVs from Audi, Mercedes-Benz and Jaguar.

Then there’s Tesla, the electric juggernaut that’s now the world’s most valuable car company by market capitalisation — investors think it’s worth six times as much as BMW Group even though it has only ever posted a full year of profit once in its history.

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But Wieland Bruch, the spokesperson for BMW i and Electromobility, says BMW isn’t behind in the electromobility race if you count sales of EVs (full electric vehicles) together with PHEVs (plug-in hybrid electric vehicles, which can run on batteries for around 50km but have a petrol engine for longer drives).

By the end of next year BMW will have put a million of these so-called “xEV” cars on the road. In the EU, BMW, Tesla and Volkswagen are tied for xEV market share at roughly 10 percent each.

On average, 4 percent of global car sales are from xEVs, but such cars account for 7.6 percent of BMW (and Mini) sales.

Mr Bruch also points out that BMW sells electrified cars in 74 countries, more than any other carmaker. 

On the product front, the iX3 might have taken seven years to appear after the i3, but it’s the first in a bunch of new EVs from Munich: next year BMW is launching the i20 (a large crossover based on the iNext concept car) and the i4, a four-door coupe. Including the Mini Cooper SE, BMW Group will have five pure EVs on sale next year. By 2023, that grows to 12 EVs and 13 PHEVs.

Yet, while excitement about pure EVs has created plenty of froth in the stock market for the likes of Tesla and Nikola, an electric truck maker valued at S$16 billion even though it has no revenue (that’s not just zero profit, but zero actual revenue), BMW thinks there’s life in combustion engines yet.

Despite the ambitious CO2 reduction targets that chairman Zipse announced on Monday, the company that partially built its reputation on silky, revvy six-cylinder engines isn’t quite ready to give up on fossil fuel power yet. And that’s because its customers aren’t ready to give it up themselves.

EENY, MEENY, MINY, GO
The iX3 is BMW’s powertrain strategy in a nutshell. It’s an important enough car that Mr Zipse chose to conduct its online launch himself, and one reason could be that it’s the first example of how BMW is shaping its product strategy: in future, you can have a given BMW with petrol, diesel, plug-in or pure electric power.

That’s the case with today’s X3 — next year the iX3 rolls into Singapore with a target price of roughly S$250,000 with certificate of entitlement, not too far off how much the petrol xDrive30i and plug-in xDrive30e cost now. There’s no diesel variant of the mid-size SUV because Singaporean buyers don’t want diesels. Which is exactly BMW’s idea; build a car with four different power sources, and let customers choose.

Surprisingly, the brand’s early experience with the i3 is what taught it not to put all its eggs in the EV basket. “When we started with e-mobility seven years ago with the BMW i3, we felt that e-mobility would have a stronger, steeper ramp up, and that soon, the world would completely switch to electric power trains,” Mr Bruch said. “But the experience over seven years has taught us that that is not the case. There is not the one technical solution. Flexibility is the key for success for the next many years.”

That means building new cars with multiple powertrains, but also making sure they can all be produced in the same factory.

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Accordingly, BMW announced on Monday that the next 7 Series will come with a choice of four different powertrains — petrol, diesel, plug-in and full electric. Eventually, so will the 5 Series and even the X1, which is built on BMW’s compact car platform. That implies that the strategy, which BMW has given the fairly corny name “The Power Of Choice”, will apply to both its smaller high-volume models as well as its bigger, more exclusive cars.

If all goes to plan, BMW will put seven million electrified cars on the road in 10 years — two thirds of them fully electric.

SINGAPORE SWING
If you’re wondering how many of those seven million will be on Singapore roads, the answer is probably this: not many. Sales figures show that BMW’s xEV sales are generally under-represented here: since 2017, just under 5 percent of 5 Series sales have come from the plug-in 530e. The larger 7 Series is even less popular in electrified form, with 99 percent of its sales made up by old fashioned fossil fuel versions. So far this year, only around 2 percent of BMW registrations are from xEV cars.

Then again, no car manufacturer has cracked electrification here, unless you count Toyota’s success at putting thousands of self-charging hybrids on Singapore roads, the vast majority of them Priuses.

E-mobility is usually seeded by government incentives, Mr Bruch says. That can be anything from major tax breaks to smaller nudges such as free public charging. But beyond that, customers themselves need to be interested. “If politics don’t support e-mobility then it would require a strong demand from the consumer side. And if also that is not in place, then there will be no e-mobility,” Mr Bruch said.

“When there is no movement in your cities to increase life quality with a higher share of electric cars, if there isn’t a relevant percentage of your population asking for electric mobility, then this whole movement will not come together.”

That highlights the flipside of BMW’s Power Of Choice strategy: if the company keeps developing combustion engines and making them more efficient, what if people simply keep clinging to them?

If anything, BMW has seen people cling to xEV cars, once they’ve taken the plunge at least. Mr Bruch told CarBuyer a “remarkable” share of its PHEV customers decide to stick with plug-in tech for their next car. There is “also a substantial share, who after the plug-in hybrid experience, felt ready for a fully electric car,” he added.

The implication is that plug-in hybrids have a clear role in building a bridge to pure electric cars, which is why the BMW product pipeline has to be so full of both: if you jump from a petrol to a plug-in 5 Series today, maybe you’ll jump into a full electric one tomorrow. If BMW is going to win its war on carbon, it makes sense for it to recruit as many allies as possible.

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