BMW Boosts Electric Car Spending to Catch Up With Tesla

Development Spending in Q2 Jumped by Nearly 20% to $2 Billion
BMW electric lineup
BMW's electric lineup. (BMW)

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BMW AG is stepping up spending on its electric car rollout after the luxury carmaker’s battery-vehicle deliveries more than doubled during the first half of the year.

The level of buyer interest in EVs means BMW is “investing more than originally planned in the global ramp-up of e-mobility,” Chief Financial Officer Walter Mertl said Aug. 3, adding that investments in batteries for the current and next generation of EVs are “massive.”

During the second quarter, development spending jumped by nearly a fifth to $2 billion.

Battery-powered car sales made up about 13% of group deliveries during the first half led by demand for models like the i4 sedan and iX3 SUV. Next year, the proportion of EV deliveries is set to rise to at least one-fifth, BMW said.


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Incumbent carmakers are battling to catch up to Tesla Inc., which is pulling away in the global EV sales race following aggressive price cuts. In China, the most important market for Germany’s Volkswagen, BMW and Mercedes-Benz, local manufacturers like BYD Co. are increasingly dominating in EV sales.

BMW kept global prices stable for its pure-electric models, CEO Oliver Zipse said in a call with reporters, adding that the company is currently “rather content” with its EV pricing in China.

All of BMW’s EV variants are turning in a profit, which will increase as the carmaker has now started to offer pure-electric variants in its higher 7-series and 5-series segment, Mertl said.

BMW also increased its car sales forecast for 2023 to now expect solid gains with the new 5-Series sedan and its electric sibling, the i5, which is set to help boost volumes during the second half of the year. The shares fell as much as 3.1% in Frankfurt trading.

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While demand for its luxury cars remains strong, BMW warned Aug. 1 that increased costs for parts are reducing its cash flow while also citing logistics issues as a constraint. The company will incur higher costs from increased inventories to ensure meeting customer demand, Mertl said Aug. 3 in speech notes.

Several carmakers face new logistics constraints after a shortage of semiconductors eased, allowing them to produce more vehicles. Volkswagen AG lowered its delivery outlook last week as shortages of trains and truck drivers left finished vehicles stranded at factories. Porsche AG had to restrict sales of its electric Taycan after grappling with sourcing certain components.