BMW AG is banking on its top-end electric vehicles, such as the 7 Series sedans, X7, and Rolls Royce Spectre, to drive profits despite global challenges affecting broader electric vehicle (EV) sales. The luxury car manufacturer anticipates these premium models to play a crucial role in achieving an 8% to 10% margin for its automotive segment, aligning with its long-term goals. While facing intense competition in China, its largest market, BMW remains optimistic about slight volume growth in key regions like North America, China, and Europe. CEO Oliver Zipse expressed confidence in the potential of fully electric vehicles, particularly in the upper premium segment.
However, BMW confronts significant hurdles in China, including a sluggish economy and intense price competition led by Tesla Inc. These factors, along with heightened production costs, impacted BMW’s fourth-quarter profits, falling short of analysts’ expectations. Consequently, BMW shares experienced a decline in early trading, contrasting with gains seen in its competitor, Mercedes-Benz Group AG.
Despite these challenges, BMW is leading the premium-segment transition to EVs, with electric vehicles constituting roughly 15% of its total deliveries. To further increase this share, BMW aims to achieve half a million EV sales this year, leveraging its portfolio of 15 fully electric models across brands. This strategic move underscores BMW’s commitment to innovation and sustainability in the automotive industry.
Meanwhile, Mercedes anticipates stagnant EV and plug-in hybrid sales, while Audi scales back new electric model launches to prevent factory strain. BMW predicts used car demand to stabilize, with reduced returns from leased car resale affecting group profits. CFO Walter Mertl notes high investments in the “Neue Klasse” generation of EVs, scheduled for late 2025 release, will impact earnings.
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