Electric Cars BMW Eats Tesla's E-Dust

BMW’s image as an electric mobility pioneer is suffering, as U.S. rival Tesla steals the German carmaker's mantel of innovation and its business.
BMW's Harald Krüger smiling while sitting still in an i3.

BMW chief executive Harald Krüger is in a race to catch up to Elon Musk, the founder of the U.S. electric car maker Telsa. And the going isn't easy.

Mr. Musk has his sights set on being the king of the road when it comes to electric cars, and the billionaire has the money to help make that happen.

In the fourth quarter of 2014, Tesla’s Model S was the second most popular electric car worldwide after the Nissan Leaf. BMW's compact i3 and the sports car i8 failed to make it into the top five.

Mr. Musk is the ultimate salesmen, pitching his energy storage system Powerwall as huge innovation, which remains to be seen.

"We see it as our duty as a serious manufacturer to observe this battery over the long term," said Julian Weber, head of innovative e-mobility projects at BMW, which offers a similar battery.

The company has also developed a scheme for recycling the used batteries. It heads a project in Hamburg's Hafen City district where thousands of old batteries have been wired together to be use as recharging stations and for solar energy storage.

But whether BMW can counter Tesla's appetite for risky bets and quick market entries in the nascent market for e-cars is unclear.



"In terms of how people perceive e-automobiles as a lifestyle product, Tesla is far ahead," said Konrad Wessner, chief financial officer at the Puls market research institute in Nuremberg. Customers spend more money on Tesla than on any other e-brand, he said.

Mr. Wessner isn't alone in that assessment. "Tesla's Model S has managed in just three years to become the most-bought luxury car in the United States," warned Martin Stemmler from the Korn Ferry consultancy.

That is why the development of BMW's i series is crucial, according to Mr. Wessner, who doesn't expect the i5 and i9 models to be ready before 2020 - which could be too late. "The influence of the i series on the BMW brand is enormous," he said.

Mr. Krüger faces a dilemma. Electronic cars are selling slowly, compaed to gas-guzzling SUVs, which are making big profits. But from 2020 onwards, cars in a manufacturers total lineup of modes can emit on average only 95 grams carbon dioxide per kilometer per vehicle in the European Union. Otherwise, manufactures face  substantial penalties.

For now, Mr. Krüger may view the i3 and i8 models as mere investments in e-mobility and use that expertice for  SUVs. But some experts he will have no choice but to bring out a flashy electric model to compete with Telsa, even if it doesn't make sense financially.


This article first appeared in Wirtschaftswoche. To contact the author: [email protected]