BMW is not well known for having cost-effective vehicles. However, according to the German luxury automaker’s CEO, Oliver Zipse, BMW will not abandon the lower-priced auto segment as it enters a new electric era.
Are lower-priced BMW electric vehicles coming?
Talking at an event hosted by Bosch, the leading auto parts supplier, BMW’s CEO stated:
We are not leaving the lower market segment. Even if you consider yourself a premium manufacturer, it is wrong to leave the lower market segment – that will be the core of your business in the future.
The comments are interesting, to say the least, with BMW’s status as a luxury automaker. BMW released its Q3 earnings last week, reiterating that it expects to double electric vehicle sales again in 2022 though remaining cautious as rising material costs and interest rates are pressuring orders.
On top of this, BMW has several high-profile EV (expensive) releases like its first electric seven series, the BMW i7, launching this month (starting price over $119,000), and the recently revealed Rolls Royce Spectre, starting around $400,000.
BMW’s comments starkly contrast with recent statements from German luxury rival Mercedes-Benz, which plans to allocate three-fourths of its investments into top-end and core luxury segments.
With a $1.7 billion investment in October, BMW looks to add EV and battery manufacturing capabilities in the US to take advantage of the growing demand fueled by climate initiatives. BMW aims to introduce an electric vehicle in all segments, with at least six pure EV models coming by the end of the decade.
Although comments from BMW’s CEO and actions from the automaker seem to be conflicting, Zipse may be on to something here.
It is wrong to “leave the lower market segment” with many car buyers looking for affordable zero-emission options.
With many automakers – legacy and startups – looking to claim the high-end luxury EV market, BMW may be wise to include a “lower market segment” EV. Rising interest rates and energy prices are cutting into consumer budgets, which don’t seem to be alleviating any time soon.
At the same time, building a cost-effective luxury electric vehicle is easier said than done. Higher material prices are already cutting into tight margins.
It is possible, as several automakers have shown, but making it profitable is the challenge.
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