BMW has embraced electric cars and
hybridization in a big way, launching the hot-selling i3 electric city car and the exciting
BMW i8 electric supercar to rave reviews already. BMW isn’t finished yet, though, and has plans to electrify even more of its models, including the German company’s other sub-brand,
Mini.
The real question for industry-watchers, then, isn’t “
can BMW sell electric cars?” Rather, it seems to be “will BMW’s electric cars increase the company’s overall market share?” That’s the question Zachary Shahan is asking over at our sister site,
EV Obsession, and we’ve reproduced his article, below. Enjoy!
Will The BMW i Lineup Boost BMW’s Market Share?
I’ve discussed it many times: I’m confident that electric vehicles will replace gasmobiles within the next decade or so. There are so many clear benefits that electric cars have over gasmobiles, including convenience, acceleration, and drive quality.
Electric car sales more than tripled from 2010 to 2011, increased 2½ times from 2011 to 2012, and more than doubled again from the end of 2012 to the end of 2013. As some have explained, electric cars may be ~50% of the way toward market domination. Battery costs have come down fast, which is an important driver of that growth, and that trend isn’t likely to stop anytime soon, especially as it is getting boosted by economies of scale.
You would think that industry insiders would see the writing on the wall: electric vehicles are coming, and they are coming to take over the market. However, as we’ve seen many times before, established industries have a lot of inertia and industry insiders have a hard time seeing that they need to transition to a disruptive technology… or be eaten. It has happened in many industries, but I like to call it “the Kodak moment,” in reference to Kodak’s great fall and a slogan that teenagers today have probably never heard (because of Kodak’s great fall).
Industry Inertia & Denial
The automobile industry is one of the largest in the world, and I think that only increases industry inertia and denial. However, a few major auto manufacturers seem to see what’s around the corner. Nissan-Renault is one of them, with strong statements coming from Chairman and CEO Carlos Ghosn about the future of electric vehicles, and I’d say the other big proponent of the electric vehicle future among major automakers is German giant BMW.
BMW Already Benefiting From BMW i Lineup
BMW hasn’t just introduced a couple of electric cars. It hasn’t simply modified gas versions of vehicles to make them electric, like most auto manufacturers have done. No, it has an entire program focused on developing electric cars. Its BMW i program, as it’s called, was kicked off in 2013 with the launch of the BMW i3 and the BMW i8 plug-in hybrid electric supercar. However, BMW plans to eventually have electric versions of all of its vehicles.
The BMW i3 is very nicely priced between the Tesla Model S and the Nissan Leaf, and its performance fits the pricing. It is a clear performance and comfort level above most electric cars. As I wrote when I reviewed the i3, it’s the nicest car I’ve ever driven (Note: I’ve driven a number of nice gasmobiles, but not a Tesla Model S).
Not surprisingly, the i3 is bringing in a lot of first-time BMW customers. In fact, last I read, 80% of BMW i3 buyers came from other brands. That’s impressive, and a great sign that BMW is moving in the right direction.
BMW is bringing the i3 to the Chinese market later this year. It is supposed to be selling it all around the US, not just in select markets (like many automakers do with the electric options). It is selling the i3 across its home country of Germany, as well as much of Europe. And it already has a nice market of supplementary BMW i3 products.
But it’s not just about where you are selling and to whom you are selling; it’s how much you are selling.
Luckily, the news is good on that front as well. Earlier this year, BMW announced that it would be increasing production to match strong demand.
We don’t know for sure which car companies are going to lead the electric car market once it grows to dominate the overall car market, but history has shown that companies that lead the way into a new market tend to benefit greatly from that leadership. Look at Toyota’s success in the hybrid market. Look at Google’s success in the search engine market. Look at Microsoft’s success in the software market. Look at Apple’s success! BMW is certainly one of the first serious movers in the electric vehicle market. It has an aim of selling 100,000 electric vehicles by 2020, which isn’t a great amount, but for it’s higher-end target market, that may not be a bad target. Furthermore, BMW is one of the only companies I’ve seen announce electric car sales targets.
Also, targets can be raised. In fact, it’s quite good press to say that you are exceeding your targets. I wouldn’t be surprised if we saw BMW raise its electric car sales targets before too long. Eventually, I think BMW could see strong market growth from being bullish about electric cars. But we’ll have to see how bullish it ends up being, how innovative, and how much better than the competition.
