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Apr 21, 2024

BMW invests more in EVs to meet growing demand

BMW said its first-half sales growth was largely due to demand for its full-electric vehicles. It expects a further boost with the market launch of the i5 all-electric sedan, shown, in October. BMW is

BMW said its first-half sales growth was largely due to demand for its full-electric vehicles. It expects a further boost with the market launch of the i5 all-electric sedan, shown, in October.

BMW is ramping up spending on its electric-car rollout after the luxury-car maker’s battery-vehicle deliveries more than doubled during the first half of the year.

The level of buyer interest in EVs means BMW is “investing more than originally planned in the global ramp-up of e-mobility,” Chief Financial Officer Walter Mertl said Thursday, adding that investments in batteries for the current and next generation of EVs are “massive.”

During the second quarter, development spending jumped by nearly a fifth to 1.84 billion euros ($2 billion).

Battery-powered car sales made up about 13 percent of group deliveries during the first half led by demand for models including the i4 sedan and iX3 SUV. Next year, the proportion of EV deliveries is set to rise to at least one-fifth, BMW said.

Incumbent carmakers are battling to catch up to Tesla, which is pulling away in the global EV sales race following aggressive price cuts.

In China, the most important market for Volkswagen, BMW and Mercedes-Benz, local manufacturers like BYD are increasingly dominating in EV sales.

BMW also increased its car sales forecast for 2023 to now expect solid gains with the new 5-Series sedan and its i5 electric sibling set to help boost volumes during the second half of the year.

While demand for its luxury cars remains strong, BMW warned Tuesday that increased costs for parts are reducing its cash flow while also citing logistics issues as a constraint.

The company will incur higher costs from increased inventories to ensure meeting customer demand, Mertl said Thursday in speech notes.

Several carmakers face new logistics constraints after a shortage of semiconductors eased, allowing them to produce more vehicles.

Volkswagen lowered its delivery outlook last week as shortages of trains and truck drivers left finished vehicles stranded at factories. Porsche had to restrict sales of its electric Taycan after grappling with sourcing certain components.

BMW group earnings before interest and tax increased 28 percent to 4.34 billion euros compared to the second quarter of last year. Automotive returns rose to 9.2 percent.

BMW CEO Oliver Zipse, a longstanding advocate of investing in a range of technologies to reduce carbon emissions, said on Thursday that it was still too soon to set an end date for combustion engine production, with sales still strong in major growth markets like China and the U.S.

"There is no indication that the world is renouncing combustion engine vehicles," Zipse said, pointing out that among major markets, only Europe had set an end date for the sale of carbon-emitting cars.

A lack of charging infrastructure was the main hurdle for a faster ramp-up of electric vehicles, he added.

Reuters contributed to this report

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