BMW: taking the slow road to an electrified future
Carmaker steers different course to rivals as it bets on continuing demand for fossil fuel cars
Phasing out the internal combustion engine is one of the top goals of the climate summit. Munich-based carmaker BMW reckons the chances of a hasty death have been much exaggerated.
The company set out its philosophy alongside Wednesday’s strong third-quarter results. It argues that policymakers’ emphasis on electrification misses the big picture: the carbon footprint over a vehicle’s entire life cycle.
A lack of charging infrastructure will hobble the shift to electric vehicles, BMW says. It could have a point, symbolised by the shortage of charging points to power the fleet of electric vehicles at the Glasgow summit. Chip-fat powered generators were lined up to fill the gap.
To be sure, BMW has not ignored electric vehicles. Sales in the past nine months doubled that of the previous year — though only a quarter were purely electric. Emission-free sales will accelerate, as it starts to deliver its well-reviewed electric iX and i4 vehicles this month.
But it reckons that by 2030 half its cars sold will be petrol or diesel models. That view contrasts with that of Mercedes-owner Daimler. It plans to go all-electric by 2030, where market conditions allow. VW-owned Audi intends every new vehicle launched after 2026 to be electric.
BMW’s caution has left its share price performance lagging behind rivals. Over the past year, the market value of VW and Daimler has increased 43 per cent and 82 per cent respectively. BMW, meanwhile, has climbed just over a quarter. Its enterprise value-to-ebitda ratio is 8, almost a fifth lower than its 10-year average. That comes despite riding out the semiconductor shortage better than many peers.
Given the support of its biggest shareholder, the Quandt-Klatten family, the management can steer a different course to its rivals. If BMW is right about the pace of electrification, it will eventually benefit. But planning for continuing demand for fossil fuel cars is an unfashionable view. That is likely to continue to drag on the share price.