BMW and Mercedes-Benz take opposing views on flexible EV manufacturing

Luxury automakers BMW and Mercedes-Benz are both pursuing robust rollouts of EVs. But the two brands also consider EV markets to be uncertain in the next few years. Their respective strategies for dealing with that perceived uncertainty are different.

BMW is integrating the production of EVs, plug-in hybrids, and internal-combustion cars on the same assembly line so it can dial EV volume up or down. Meanwhile, Mercedes is building dedicated EV platforms and a global network of battery plants, even as it reduces the short-term output of its first electric SUV.

Let’s start with BMW. A year ago, Wieland Bruch, BMW’s communications manager for electromobility, told me that selling the BMW i3 brought tough lessons about how EVs can be hit or miss, depending on the model and the market.

“Our big learning was that electric mobility is picking up speed very differently from market to market, and that it will definitely be a longer transition from the combustion engine to completely electric mobility,” he said.

That message was echoed this week by BMW engineering executive Udo Haenle, who told Automotive News Europe:

In our view, market forecasts are too uncertain to warrant inflexible, electro-only platforms. What we don’t want is for our plants to operate below capacity.

Building a new plant would cost roughly €1 billion, whereas ramping up existing facilities to produce battery-electric vehicles will amount to a three-digit-million-euro investment, mainly for body shop and assembly.

These statements follow what CEO Oliver Zipse said a couple of months ago:

We don’t believe that is at all necessary [to have a specialized platform] to achieve the desired product characteristics. Instead, you can accomplish these very well with an intelligent platform that fulfills all the requirements.

In November, BMW announced that it issued $10 billion in new battery-cell contracts and the company opened a Munich-based Battery Competence Center for conducting research and development.

BMW will close its main Munich plant this summer for six weeks. That will allow the company to retool and modify more than 1,000 robots to get ready for the production of the all-electric BMW i4 in 2021.

Meanwhile, what about Mercedes-Benz? It’s among the many automakers developing EV-specific platforms. The EVA2 platform will underpin the EQS sedan.

In recent months, Mercedes-Benz announced that it would postpone US sales of its EQC all-electric SUV until 2021 — and that total production targets for the model in 2021 would drop from 60,000 to 30,000 units. Daimler, the parent company for Mercedes-Benz, explained that the reduction is due to a shortage of battery-cell supplies from LG Chem.

EQC battery manufacturing in Kamenz, Germany

Electrek asked Mercedes-Benz what it was doing to ensure adequate battery supply for 2021. Here’s the response:

Mercedes-Benz has invested over $1 billion and created over 600 jobs in Tuscaloosa, Alabama, for electric-vehicle production — including a new battery factory. Battery systems for our EQ models will be built on around 90,000 square meters. The construction work should be completed in 2020, and our high-tech production facilities should be ready to move into.

The battery factory will be part of the worldwide battery production network of Mercedes-Benz Cars consisting of nine factories at seven locations on three continents in the future: two plants each in Kamenz (DE) and Stuttgart-Untertürkheim (DE), and one factory each in Sindelfingen (DE), Jawor (PL), Beijing (CHN), Tuscaloosa (USA), and Bangkok (THA). This will keep production flexible at all times, and able to respond efficiently to demand in the individual markets.

So, while BMW converts existing plants, Mercedes-Benz builds new dedicated EV facilities.

Electrek’s Take

In the end, the distinction between dedicated versus integrated production lines might be less important than securing battery supplies, which has been a problem this year for both Mercedes-Benz and Hyundai-Kia.

BMW might be taking a wait-and-see, flexible approach. But Jan Freimann, BMW’s manager of connected e-mobility, in November told Electrek:

We have long-term supply agreements in place with our partners, which gives us a reliable supply of cells up to 2025 and beyond.

Of course, EV-only companies such as Tesla don’t have these worries. But the way forward for legacy automakers trying to maintain their current product lines while preparing for a once-in-a-century shift in powertrain technology is full of risks and challenges. We won’t know how BMW and Mercedes-Benz manage these risks until their electric vehicles start showing up in volume in 2021. In the fast-moving EV world, that’s an eon away.