BMW Says European Customers Aren't Demanding EVs

Battery-electric vehicles are unwanted in Europe and fuel-burning cars have at least 30 years left, BMW claimed this week.

The day a European Environment Agency report showed Europe’s automotive CO2 contributions had risen for the second year running, BMW’s chief engineer insisted there was no demand for battery-electric vehicles (BEVs) and that nobody was asking for them.

BMW is planning to build 25 new plug-in models by 2025, but that includes both BEVs and plug-in hybrids (PHEVs) as Europe’s most prominent EV innovator backtracks on the technology.

“There are no customer requests for BEVs. None,” BMW’s director of development, Klaus Frölich, told a shocked round-table interview in Munich on Tuesday. “There are regulator requests for BEVs, but no customer requests.”

“If we have a big offer, a big incentive, we could flood Europe and sell a million (BEV) cars but Europeans won’t buy these things,” Frölich insisted.

“From what we see, BEVs are for China and California and everywhere else is better off with PHEVs with good EV range.”

One of Europe’s most active environmental lobby groups, Transport and Environment, attacked European car companies for their lack of BEV models on sale compared to the US and China as automotive CO2 numbers climbed 1.6 percent in two years and accused them of holding back BEV models until 2021 for profit reasons.

“Carmakers are playing a high-risk game where they’re deliberately postponing sales of cleaner cars to maximize SUV-fueled profits,” Transport and Environment’s clean vehicles manager, Julia Poliscanova, said.

“It may please their shareholders but it’s a tragedy for our planet. These figures are a stark reminder that governments need to be much more forceful when it comes to promoting zero-emission vehicles, in particular by reforming vehicle taxation and rolling out charge points.”

Poliscanova pointed out that gasoline-powered SUVs emitted 133 grams of CO2 per kilometer last year, while cars with the same fuel averaged 120 grams. Inflating that difference was a rise in SUV market share from seven percent in 2008 to a third last year, she insisted.

But while Frölich conceded car companies had held back BEVs from the market, he attacked Transport and Environment for not understanding the market demand for BEVs in Europe.

“What they (Transport and Environment) ignore is that the European customer is not prepared to take the risk on an EV because the infrastructure is not there, resale is not known,” Frölich said.

“Customers in Europe do not buy BEVs. We pressed these cars into the market and they’re not wanted.

“We can deliver an electrified vehicle to each person but they will not buy them.”

Frölich’s revelation at BMW’s attitude towards full-electric cars coincides with a pivot towards plug-in hybrids with real-world range of up to 100km, but more usually 80km, as shown by its Vision M Next concept car.

“We think the customers in Europe they are reluctant to buy BEVs and the plug-ins are the better option. The PHEVs are built on the same architecture as the BEVs, so the “Eagle Wing” battery goes into the floor and we can give them extra range by adding battery modules.

“Europeans are very reluctant to buy a BEV because Europeans have fewer cars in the garage than a BMW customer in the US.

“In the US they can have different cars for different purposes, like pickups and SUVs and smaller cars, but often the households in Europe have only one car so they are reluctant to rely purely on a BEV. So a PHEV gives them full freedom and 80km of EV range.”

BMW’s pullback from an expected BEV splurge comes as Tesla continues to pile on Model 3 sales and Audi, Porsche, Mercedes-Benz, Jaguar and the Volkswagen Group’s volume brands commit to a BEV future.

Jaguar’s first all-electric car, the I-Pace, won the World Car of the Year and European Car of the Year awards, as well as a handful of trophies from the International Engine of the Year judges, and it already has three more BEVs on its horizon.

BMW’s goals aren’t just about trophies and volume, though, CEO Harald Krüger insisted.

“We want to sell 500,000 electrified vehicles from 2013-2019 and then step up a gear. By 2021 we would like to sell double the volume of electrified vehicles from 2019 and then every year we would like to sell 30% more than the previous year.

“We have two clear targets, the fifth generation electric drive train developed without rare earth minerals and from next year all of our production sites will be powered 100% by renewable energy.”

But for all that, it’s still a shock that the first of the premium European brands to dive into dedicated BEVs with i3 would pull back from them when they seem to have a significant head start on their rivals, as even Frölich admitted.

“Where they (Transport and Environment) are correct is that a lot of companies started BEV development in 2015 and make a lot of speeches about it now. We started on October 15, 2004, and I was the head of (the BEV) strategy and it was the start of enabling electrification. The learning car was a mild hybrid,” he said.

Electric versions of Minis and BMW models followed, then BMW dived in with its new stand-alone i3 in 2013. It was one of the three best-selling BEVs from 2013 to 2018, but it won’t be replaced when its production run ends around 2022.

He also admitted there was some truth in Transport and Environment’s accusations that protecting profits was a major factor holding back BEVs and plug-ins until the EU’s new 2020-21 emissions regulations kick in.

“They (plug-ins) are not more expensive than BEVs. They are thousands more expensive than internal-combustion cars but we can’t charge that to customers and those (emissions) regulations are reducing our profit pool,” Frölich says.

“We can’t have the same margin on those cars. We know. The level is between the internal-combustion margin is halfway more but if we charged the customers for that cost, we would have downsizing with customers going from a 3 Series to a 1 Series.”

He also slammed the lack of governmental support for BEVs in Europe’s major car markets, pointing out that they were selling well in Norway, Sweden and The Netherlands with high levels of support, but not in Germany, France, Italy or the United Kingdom.

“You change the customers with incentives, not change the cars. In Munich, it’s 50c per kWh and a four-cylinder diesel is cheaper to drive than a BEV,” Frölich said.

“We are not late to BEVs. I think we are coming at the right time because we don’t have enough consumers who buy these cars. We need €70,000-€100,000 and this is not the market segment where you can make volumes.”

The range argument for BEVs was also “bullshit”, according to the engineer, insisting bigger range was a nice idea until volume customers, rather than niche customers, were asked to pay for it.

“All this range discussion is complete bullshit because it’s an economic proposition of how much you can afford,” he insisted.

“You have to pay for range, this is what people don’t seem to understand. The difference between 350km and 600km of BEV range will be 10,000 euros. You put them both out there and see how many people will buy the 600km car.

“If you look at a 180d and an M4 and the price difference is the performance. With a BEV the price difference will be performance and range.

“The shift to electrification is overhyped. Battery-electric vehicles cost more in terms of raw materials for batteries. This will continue and could eventually worsen as demand for these raw materials increases.”

BMW’s answer is to commit to continue building gasoline and diesel engines, albeit with some significant culling to the lineup, including the emotional V12, the quad-turbo, in-line six-cylinder diesel and the 1.5-liter turbodiesel passenger-car motors. The 4.4-liter V8 is likely to be re-engineered enough to survive at least another 15 years.

“A best assumption of 30 percent of electrified sales by 2025 means that at least 80 percent of our vehicles will have an internal combustion engine,” Frölich calculated.

“We see areas without a recharging infrastructure such as Russia, the Middle East and the western, internal part of China so they will rely on gasoline engines for another 10 to 15 years,” he said.