Deep Dive: The Future Of BMW’s Project I Product Plans

BMW did not invest a cent into SGL shares!

Mind the SGL shares were bought by SKion, an investment company owned by Susanne Klatten (born: Quandt) - the biggest single shareholder of BMW AG.

BMW AG only invested into JV with SGL: a CF plant in Moses Lake, WA, USA.

30k per year is a feasible goal. Especially due to Chinese market - and upscale & prestigious image of BMW i brand.
100k per year is a BS. Kacher's info is wrong. He's not unmistakable.

10k of i8 per year is even bigger BS. Even conventional sports cars in the same price range as i8 do not genereat such annual sales. To expect a niche plug-in hybrid sports car can do it, is a delusion.

^Has any of the current zero emissions cars sold 30k in its first production year, I can't recall it happened which is why I question it happening now though I don't doubt it's a very achievable figure in the years to follow.

Q: outside of the state of California is the uptake of these motors that great?

P.S.
I'm not claiming the 100k figure, only giving a possible reason why that figure might have been required.

It is even greater. California being the most populous state leads in absolute numbers, but other smaller states have much higher market penetration - #mce_temp_url#



And I doubt the 30k figure is for the first year, but rather average over it's life cycle.

Guibo,

I don't think on this subject (like many) we will see eye to eye, though I still enjoy our debates. I have absolutely no idea whether their estimates have had to be readjusted or not, I am only commenting on the original post and giving a possible reason for why if it were indeed true. Until we see the Government incentives for buying an i3 over a tradition fossil fuel car none of us truly know who might or might not be a potential customer but we can all make opinions as to who they may be.

Over here TopGear and others has tried to show whether a completely electric car is a true alternative to a traditional car and here it simply doesn't work, we don't have enough fast charging sites so it's a second car at best and £35k is classed as one rather expensive second car in this country which suggests to me Focus and Golf customers aren't BMW's intended market (here at least).

I think at £35,000 the i3 will be overpriced.

But your possible reason for a 233% readjustment doesn't make any sense. In light of the economic downturn, continuing problems in the euro zone, and reduced government incentives for electric vehicle subsidies, it should make sense that any adjustment would be downward. Not upward into a marketshare that BMW can't pluck out of thin air. The 30k figure was floated before the VW-SGL matter and we haven't seen an official readjustment, to my knowledge, since then.
I only ask if you think 0.5% is an unreasonably huge portion of car buyers in those segments. If it's unreasonable, what makes it unreasonable? If you think it's unreasonable that Kacher could be mistaken in his figures, what makes it unreasonable? After all, we already have a record of him being wrong before on exactly the same car (ZR1).
Which other shows besides TopGear (high on entertainment value, not so much on educational value) has shown that electric cars don't work in the UK? And I'm not so sure the UK market is as vital to BMW's plans for electric cars as, say, China, where BMW has increased sales by 10-fold in 6 years. Last year, sales increased by 37% to 233k units, compared to an increase of 6.8% for the UK to 166k. In his address to the BMW board, Norbert Reithofer said:
"China also continues to place special demands on car manufacturers. The government wants to promote electric mobility, which is also why it plans to skip the whole option of efficient diesel technology. For instance, electric vehicles are exempt from the number plate lottery in Beijing. So we are taking our electric vehicles to China."

So when you comment on what it would take a 335i owner to swap his car for an i3, you have to consider the context of where that owner is. In the British countryside with plenty of nice B-roads where a performance car can stretch its legs, the 335i would make a lot of sense. In Beijing or the stop-and-go clogged arteries of Tokyo or Manhattan, not so much.

In 2011, out of the 400k Prius sold worldwide, only 27k came from whole of Europe out of which UK's share is probably even more miniscule. Here is another even more telling stat - out of more than 2 million Prius sold till the end of 2010, UK's share was a microscopic 38600, that is less than 2%. Even the state of NY alone has more than that. It is not much higher for Nissan Leaf sales either, out of the almost 30000 sold world wide, UK figures were less than 900 (<3%).

Seeing as BMW i aren't offering cars for sale yet, it's all hypothetical. Maybe EV cars haven't caught the imagination of UK buyers yet?

Maybe Toyota are not the right manufacturer for UK buyers. Maybe it will take BMW and the i3 to finally get UK buyers to fall in love with EV vehicles? If there's one company that can do it it's BMW.

As much as you describe the UK as a "tiny little island"' it's BMW's 4th biggest market in the world and they sell more BMW's per head of population than either China and the U.S., and I strongly suspect profit margins are bigger per unit too.

Thought you might like to see some UK EV interest data?

Tesla Model S reservation tally
Deliveries to start June 22, 2012.

US
S 1,136 (May 22, 2012)
SSL 244 (January 4, 2012)
R 439 (March 23, 2012)
P 9,169 (May 30, 2012)

Canada
S 132 (May 30, 2012)
P 285 (March 3, 2012)

Europe/Asia
S 283 (May 17, 2012)
R 83 (January 4, 2012)
P 926 (May 21, 2012)

Switzerland
S 14 (October 20, 2011)

UK
S 13 (May 21, 2011)
P 35 (January 31, 2012)

Hong Kong
S 2 (April 27, 2011)
R 2 (July 9, 2011)
P 1 (March 23, 2011)

Australia
S 9 (April 10, 2011)
P 10 (June 5, 2011)

Gross Total: 12,783 - May 30, 2012
Net Total: 11,190 - May 30, 2012*

http://www.teslamotors.com/forum/forums/model-s-reservation-tally?page=42

Why, don't normal Toyotas not sell well there? Not a rhetorical question, I really don't know (I could look it up, but I don't care enough either, so feel free to ignore).

Maybe, but I doubt a prudent plan for meeting I3's sales target hinges on UK buyers suddenly falling in love with EV's given how dismal sales of similar products have been.

I was specifically talking about the EV/hybrids. I know for a 'tiny island' you guys do spend more than your fair share on cars.

They sell well but I think their image is worse than it is in the U.S. They're generally bought by older people after retirement (although that is changing).

I know you were, but I'm just saying that BMW might be thinking it's a pursuit worth undertaking if BMW can replicate the success they have with the rest of their product range.

Out of curiosity, why do you think profits would be bigger in the UK than in the US?
As for China, they have a 34% import vehicle tax on top of a 17% VAT and 5-10% consumption tax. Apparently luxury automobiles are taxed as high as 145% according to this article:
http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1202&MainCatID=12&id=20110425000018

In many rural parts of the country, people would be lucky to have a horse nevermind a car. After all, they've only really started industrializing since the early 80s (at which point 85% lived below the poverty line). Given what Reithofer said about Chinese policy toward EVs with diesel pretty much a dead-end option, unlike it is in the UK, what doesn't work in the UK doesn't mean it will translate to China or even to the rest of the world.

I didn't say profits would be bigger in the UK than the U.S. I said profit "margins" would be.

The reason being that the net price of a BMW is higher in the UK than the U.S.

Where did I say BMW wouldn't sell many EV's in China or the rest of the world?

That's what I mean: profit margins. Could you give an example of a net price of a BMW being higher in the UK? I mean, after subtracting VAT and road vehicle license fees, which aren't added to US prices and are designed to pad government coffers (not those of BMW). You also said in the other thread that the majority of BMW sales in the UK are fleet/company car sales, and thus deeply discounted, correct? Very few are sold this way in the US. Nearly all are exclusively private sales.

The relevance is just like I said it: Just because something doesn't work in the UK, that doesn't mean it doesn't work in the UK (or elsewhere in the world). Just because the UK is ahead in per-capita sales of BMW, that doesn't mean they have any more meaningful input into BMW's direction, and apparently not in the area of EVs as Reithofer said.

That's nonsense and you know it. You (nor anybody else) don't know how much money went into R&D of the i3 so you can't tell at which price it's overpriced.


Best regards,
south

Ok, obviously my point has been misunderstood. I completely agree there will have been a lot of R&D gone into the i3. I wouldn't be surprised that even at that selling price, BMW don't really make much profit, if any at all. The development costs necessitate a selling price of £35,000. The benefits will come a few years later when they gain experience in mass producing CFRP.

When I said "overpriced" I meant from the perspective of the consumer and their alternative choices from BMW such as the 335i. The i3 will seem expensive to the customer i.e. "overpriced".

This wasn't any criticism of BMW, or a criticism of anybody in fact. To say its "nonsense" was a tad unfair but to be honest, expected.

I believe Fifthgear also ran a piece on them and came to the same conclusion. In this country we aren't yet set up to make it viable as an alternative.

What you said in that post was nonsense. What you're saying now isn't but I'd have assumed someone clinging to nuances of the English language as much as you do to express himself better the first time around. Overpriced just was the wrong term but let's move on.


Best regards,
south

The NET price of a 335i Luxury in the UK is equivalent to $47,400, which is more than the U.S. It also includes 4 years of servicing in the U.S. and a much better warranty.

Other models:

135i Coupe
UK $41,140 net
U.S. $39,300 msrp

M3 Coupe
UK $70,012 net
U.S. $60,100 msrp

M5
UK $93,503 net
U.S. $89,900 msrp

X5 M
UK $106,586 net
U.S. $88,850 msrp

640i Gran Coupe
UK $78,576 net
U.S. $76,000 msrp

So, UK cars consistently cost more than the U.S., along with the fact that servicing for four years is included in the U.S. price and a far superior warranty. The X5 M has a price difference of nearly $20,000.

So, I hope this satisfies your request.

When I subtract the 645 GBP for road license fee, then subtract 20% for VAT on the 135i, I get a price in £25,604, or $39,322. That isn't so different from the US price. Want to bet that far more of those UK 1ers will be fleet/company cars that benefit from discounting than in the US, where the cars are bought outright? That should more than account for the $22 difference.

M5:
£73,065 - 645 (-VLF), x 0.8 (-VAT) = £57936 = $89,001. Compare to $89,900 US MSRP.

640i Gran Coupe
£61,390 - 645, x 0.8 = £48,596 = $74,653. Compare to $76,000 US MSRP.

But you've chosen some fringe players in the overall profit game for both countries. Why not use an example that is more relevant to the overall profit margins.

328i
£29,065 - VAT/VLF = £22,736 = $34,927. Compare to $34,900. Big difference? Could be, in favor of US profit margins once you account for discounted 3-Series fleet/company sales in the UK.

528i
£33,615 - VAT/VLF = £26,376 = $40,518. Compare to $46,900 US MSRP. Many of these in the UK will be used as company cars or even police vehicles. You won't find many (if any) municipalities in the US that use 5ers as police/emergency vehicles. The city councils would be skinned alive, unless they could convince residents that BMW underbid, say, Ford/GM. In which case the purchase price will be far less than what a customer actually pays.

I'm not sure that BMW AG is the one underwriting servicing/warranty costs. That is usually done through BMW NA, which is a separate entitey from BMW AG.