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BMW has crossed the tipping point for combustion engine vehicle sales, with most of its sales growth now coming from electric cars, according to Chief Financial Officer Walter Mertl.
He mentioned that the tipping point for combustion engines was reached last year, and the current plateau in combustion car sales is expected to continue, followed by a slight decline.
Mertl attributed this shift to looming environmental regulations restricting combustion vehicle sales.
Environmental Regulations Impacting Combustion Car Sales:
Environmental regulations are playing a crucial role in the changing dynamics of car sales, with regulatory deadlines worldwide pushing automakers to enhance their electric vehicle (EV) offerings.
The pressure is particularly evident in regions like China, the European Union, and certain U.S. states, where bans on new fossil fuel-emitting cars are set to begin in the mid-2020s.
BMW’s EV Sales Share and Future Plans:
BMW achieved a 15% share of all-electric sales in 2023, aiming to increase this to 33% by 2026.
The automaker plans to introduce six new models in its “Neue Klasse” EV-only line, representing a significant investment to bridge the technology gap with competitors.
However, BMW expects the margins for combustion engine and all-electric cars to reach parity no earlier than 2026.
Challenges and Future Margins:
Challenges lie ahead for BMW, including the higher costs associated with introducing new battery technologies for upcoming EV models. CFO Mertl acknowledged that margins for combustion engines and all-electric cars are not expected to be on par before 2026.
He also suggested that discounting might occur for cars in specific price ranges without providing specific details.
Sales Targets and Profitability:
Despite the shift toward EVs, BMW maintains its previously announced target of selling 3 million vehicles by 2030, with an 8-10% margin in its automotive segment.
This goal is deemed conservative compared to the expected 2023 margin of approximately 10.3%. BMW CEO Oliver Zipse had previously stated that the company anticipated being “at least as profitable” when selling the “Neue Klasse” EVs at scale, benefiting from lower battery costs and higher efficiency.
