The two identical BMW saloons driven slowly on to a stage in Munich last week were met with confusion from the assembled crowd. Until an executive at the launch event pointed to them individually, it was unclear which car was electric, and which carried a traditional petrol engine.
That is very much by design. Unlike domestic rival Mercedes, which chose a bespoke chassis for the battery-powered version of its flagship S-Class, German carmaker BMW is bucking the industry trend by merely offering different innards — electric, hybrid, or combustion engine — for one of its most popular models, in the hope that elite clients hardly notice the electric transition.
“Customers tend to prefer established concepts,” said chief executive Oliver Zipse. While many wealthy BMW owners “want to drive electric”, he added, “their willingness to accept compromises is very low”.
Zipse stands out among German auto executives for his reluctance to name a date for the phase out of the combustion engine, and for a cautious approach to the rollout of electric models. Unlike Mercedes, which has pledged to be all-electric by 2030 “where market conditions allow”, executives at BMW believe combustion engine models will still make up half of all sales by the end of the decade, ever stricter EU emissions rules notwithstanding.
“There is no regulator who has officially passed a law that in eight years’ time, meaning in 2030, you’re not allowed to sell other [combustion engine cars],” Zipse said. “There are announcements, there’s political will,” he added, but “we are a scientifically-led company — we want to understand before we decide.”
While it waits to see how the electric market will develop, and whether sufficient charging infrastructure will be put in place to make emissions-free cars attractive to average consumers, BMW will produce electric, hybrid and combustion engine cars on the same assembly lines, by the same staff. The strategy, Zipse said, would ensure not a single job worldwide was lost during the transition.
Yet leading institutional investors in Germany say BMW’s profit margins are weighed down by its indecision over electric, and are concerned that multibillion-dollar investments in chassis and power architectures for battery-powered cars lie ahead of the company.
The new 7 Series is Zipse’s attempt to prove that an electric-first strategy is not a prerequisite to making a mark in the battery era. While an emissions-free version of the car is almost €29,000 more expensive than a diesel one, at €136,000, it has not been built to offer major power-saving aerodynamic advantages, nor has excess bonnet weight — unnecessary in the absence of an engine — been drastically trimmed.
Zipse, a former head of the carmaker’s Mini plant in Oxford, admits that such design choices come with trade-offs. But BMW is betting that 45 years after the luxury model’s debut, the executives and world leaders who tend to buy the car will want the same driving experience from the latest incarnation of the 7 Series, rather than an alien, if exciting, electric one.
“We don’t see customers in the luxury sedan segment willing to make a compromise between driving electric and the comfort of rear seating, or headroom, or space,” he said of the vehicle.
“The saying that there is a disadvantage if you don’t use a specific [electric] architecture is simply not true.”
BMW’s reluctance to experiment comes after the group posted a net profit of €12.5bn in 2021, a 150 per cent increase on 2019, and a 106-year record. “If you look at simple unit sales growth, it has done better than all competitors for the last two years, except Tesla,” said Jürgen Pieper, an auto analyst at Metzler who believes that BMW remains undervalued.
But he added that the 7 Series, which features a 31-inch cinema screen so that passengers can watch movies or video conference as they are chauffeured between meetings, may not be the car that will attract Tesla drivers, who will not see a “spectacular new product”. The BMW approach, Pieper said, “is not stupid . . . but I think the alternative is better”.
For Zipse, it is BMW’s reliability, rather than thrills, that will make the electric 7 Series a success. He hit out at “competitors who do not fulfil the promise for quality,” which he said was “shortsighted”.
While he did not mention Tesla by name, customers receiving the first models that rolled off the US company’s German plant last month took to social media to complain about gaps in the bodywork, the lack of which is a point of pride for German manufacturers like BMW.
Yet BMW, like its luxury rivals, is offering customers the choice of taking delivery of cars without all of the features promised, due to persistent bottlenecks in semiconductor supply. While the 7 Series will not be available until November, BMW sales chief Pieter Nota said he did not expect chip shortages to ease significantly until next year.
The rollout of BMW’s other electric vehicles, the iX and i4, has also been held up by supply chain problems, with demand outstripping the company’s ability to produce. But neither early customers’ enthusiasm, nor the acceleration of competitors has led Zipse to rethink his electric plans, under which cars based on an entirely new battery-first design will not roll off assembly lines until the middle of the decade.
“Wouldn’t it be a pity,” he said, “if every car manufacturer would do exactly the same thing?”