# BMW’s Strategic Shift: Embracing Flexibility in the EV Landscape


In the rapidly evolving automotive industry, BMW has emerged as a frontrunner in adapting to the electric vehicle (EV) market, demonstrating that flexibility is now a critical industry standard. This shift comes in stark contrast to earlier perceptions of the brand as a laggard in hybrid technology.

## The Vision of Oliver Zipse

Before taking the helm as CEO in 2019, Oliver Zipse, then head of production, emphasized the importance of a cautious approach to electric mobility. Speaking at an event at the Mini plant in Oxford, he stated, “Flexibility is key. Predicting the success of the 3 Series is straightforward, but forecasting the future of electro-mobility is much more challenging.”

Fast forward five years, and BMW’s prudent strategy is paying dividends. In July, the company surpassed Tesla in electric vehicle sales in Europe, according to Jato Dynamics, a leading market research firm.

## Adapting Existing Models

Despite this success, BMW’s electric offerings remain adaptations of their combustion engine counterparts, produced on the same assembly lines. This contrasts sharply with competitors like Volkswagen, which launched its dedicated all-electric MEB platform, showcasing a commitment to a fully electric future.

Zipse’s cautious approach was a gamble; rather than completely redesigning vehicles for electric drivetrains, BMW opted to offer electric as an additional option. “You won’t feel a difference as a customer,” he remarked in 2019, highlighting the minimal changes in weight that would not significantly influence purchasing decisions.

## A Profitable Path Forward

Today, BMW stands as Europe’s second-largest EV seller, trailing only Tesla, with a remarkable profit of €3.7 billion in the second quarter of the year, translating to a 10.5% profit margin. Zipse confidently stated, “We bet on the right strategy to be as flexible as possible,” during the company’s earnings call.

This adaptable strategy is now viewed as a benchmark for other automakers recalibrating their production in response to fluctuating EV demand. Ingo Stein, head of Bain & Company’s automotive division, noted, “Car companies are currently forced to work with multiple drivetrains—BEV, hybrid, or ICE. Flexibility allows for easier demand balancing compared to companies producing distinct vehicles with separate drivetrains.”

## Industry-Wide Shifts Towards Hybrid Models

In both Europe and the U.S., manufacturers are increasingly pivoting towards hybrid production as the anticipated EV boom has not materialized as quickly as expected. For instance, Hyundai has altered its plans for a new electric-only “Metaplant” in Georgia, USA, to include hybrid production to address what it describes as the “chasm” in EV demand. President and CEO Jaehoon Chang stated, “We’ve seen a clear market trend demanding more hybrids, so we decided to be flexible.”

Similarly, Ford has delayed its plans for an all-EV plant in Tennessee, focusing instead on a flexible manufacturing strategy that accommodates various vehicle types. CEO Jim Farley emphasized the need for a compelling product roadmap and adaptable manufacturing processes.

## The Broader Industry Response

Other manufacturers are also adopting this flexible approach. Stellantis, for instance, produces a fuel-cell version of its ‘K-Zero’ line of midsize vans alongside electric and diesel models, reflecting its commitment to an inclusive energy transition.

However, the unplanned flexibility can lead to increased costs. Jaguar Land Rover (JLR) recently announced an increase in its five-year investment plan from £15 billion to £18 billion, necessitated by slower-than-expected EV adoption. Chief Financial Officer Richard Molyneux explained that this adjustment was essential to maintain operations for both combustion and electric vehicles longer than anticipated.

## The Path to Dedicated Electric Platforms

Despite the current reliance on flexible production, automakers are gradually committing to dedicated electric platforms to fully capitalize on the cost and technological advantages of a streamlined approach. BMW, for example, is set to launch its first models on the new Neue Klasse electric platform next year, with significant investments in battery production and assembly operations in Hungary.

The Neue Klasse vehicles promise advanced features, including an 800-volt architecture for rapid charging, aiming to attract a broader customer base and sustain production facilities.

## Conclusion: Navigating an Uncertain Future

As the automotive industry continues to grapple with the unpredictable nature of the EV transition, BMW’s strategy of maintaining profitable combustion engine models for as long as possible may prove advantageous. The lessons learned from this period of adaptation will undoubtedly shape the future of electric mobility and the strategies of automakers worldwide.