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BMW CEO Tells Germans to Set Aside Angst to Go Electric

May 14, 2013

BMW CEO Tells Germans to Drop Infamous Angst to Go Electric

The electric charging cable for a BMW i8 concept automobile, produced by Bayerische Motoren Werke AG (BMW), at the 83rd Geneva International Motor Show in Geneva, Switzerland, on March 4, 2013. Photographer: Chris Ratcliffe/Bloomberg

Bayerische Motoren Werke AG (BMW) Chief Executive Officer Norbert Reithofer told his fellow Germans to set aside their infamous fear of the unknown and embrace electric-vehicle technology.

“Germany is respected and admired the world over for its engineering expertise and powers of innovation, but ‘German angst’ is also a concept the rest of the world is familiar with,” Reithofer said today in Munich. “We like to engage in long and fearful discussions because we Germans tend to see more problems than opportunities, and it is no different with electro-mobility.”

BMW aims to get its first electric vehicle -- the i3 city car, which will go on sale later this year -- off to a good start even as demand for battery-powered cars has disappointed because of cost and concerns about their range. The car is key for BMW’s image as the world’s largest luxury-car maker seeks to keep Volkswagen AG (VOW3)’s Audi and Daimler AG (DAI)’s Mercedes-Benz at bay.

To counter electric-car concerns, BMW yesterday started a global marketing campaign to promote its “i” subbrand through print and Internet ads and a series of nine online videos. The Munich-based manufacturer will also offer the i3 with an auxiliary engine that kicks in if the battery runs out of power. The range extender can allow the car to drive over 300 kilometers before needing to recharge, more than double the normal distance on the battery alone.

‘Disenchantment Phase’

“After the hype, we’re now in a phase of disenchantment on electric mobility,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “In Germany, that’s a good thing because you look at things more pragmatically.”

He estimates that battery-driven cars will account for just 2 percent to 3 percent of the global car market in 2020, while hybrid vehicles account for about 12 percent.

BMW, which was holding its annual shareholders meeting today in Munich, stuck to its goal of setting a sales record for the third consecutive year with the 4-Series coupe set to help offset a slump in Europe.

The share rose as much as 2 percent to 73.49 euros and were up 1.5 percent at 3:12 p.m. in Frankfurt trading. The stock has been essentially unchanged this year, keeping the company’s valuation at 47 billion euros ($61 billion).

BMW forecasts that rising demand in China and the U.S. and 11 new models in 2013, including the i3 and coupe-like 3-Series GT, will ward off the effects of the sovereign-debt crisis on Europe’s car market, which is sliding to a 20-year low.

‘Bold Actions’

The maker of BMW, Mini and Rolls-Royce cars is stepping up investment on new vehicles and technologies as Audi and Mercedes seek to claim the lead in luxury-auto sales by the end of the decade. The additional spending may hold back earnings growth, even as sales advance.

“Being the spearhead of change means taking a calculated risk,” Reithofer said today at the Munich meeting. “Progress has to be imagined, earned and paid for. The future belongs to those who dare to take bold actions.”

BMW reaffirmed its target that pretax profit this year will match 2012’s figure of 7.82 billion euros. Earnings before interest and taxes for the auto division are forecast to be in a range of 8 percent to 10 percent of sales in 2013, compared with 10.9 percent last year.

BMW shareholders voted today in favor of a three-year extension for Chairman Joachim Milberg, who was BMW CEO from 1999 to 2002. Investors also approved a dividend of 2.50 euros per common share and 2.52 euros per preferred share for 2012.

Sales Lead

The manufacturer extended its sales lead over its main competitors through the first four months of the year, boosted by higher demand for the X1 compact sport-utility vehicle and the 3-Series sedan and wagon. Deliveries of BMW’s namesake brand increased 7.1 percent to 512,000 vehicles, beating the 6.7 percent gain by Audi and the 5.6 percent advance by Mercedes.

In an effort to maintain its edge, BMW will roll out 25 new models by the end of next year, with 10 of them having no predecessor. Its rivals are expanding as well. Mercedes plans to introduce 13 all-new models by the end of the decade, while Audi will doubling its lineup of SUVs to six by 2020, a person familiar with the matter said in February.

BMW, which also makes motorcycles, is also adding the Mini Paceman and the Rolls-Royce Wraith to its lineup this year.

To contact the reporter on this story: Dorothee Tschampa in Frankfurt at dtschampa@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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