On Tuesday, the German luxury carmaker said second-quarter revenues were up 4.5 per cent to €25bn, while earnings before interest and taxes rose 7.9 per cent to €2.73bn — slightly ahead of forecasts. Net profit in the period rose 11.4 per cent to €1.95bn.
Harald Krüger, chief executive, said BMW’s strong financial position would allow it to fund innovation in power-train technologies and digitalisation, while partnering with tech groups Intel and Mobileye in automated driving. “The strength of our core business today is the foundation of our future success,” he said.
BMW’s emphasis on innovation and strong financials is set to contrast with the performance of Tesla, the market leader in all-electric cars, which is expected to post a second-quarter loss on revenue of $1.6bn on Wednesday.
Electric cars cost more to make but the market is expected to grow rapidly as battery technology improves and carmakers scale up their manufacturing. BMW, which launched the “i” sub-brand of hybrid and electric cars in 2011, said it is already making profit on each car sold, though analysts question whether the entire project is profitable once up front costs are accounted for.
“We would expect electric cars to become profitable in the early 2020s,” noted Stuart Pearson, analyst at Exane BNP Paribas. “Plug-in hybrids may never be.”
BMW’s overall operating margins in the quarter were 9.5 per cent, up from 8.4 per cent a year ago and slightly above forecast. It was the 25th consecutive quarter in which they were within the group’s 8 to 10 per cent target range.
Even so, some investors have expressed concern about a potential margin squeeze and peak in sales. On Tuesday morning, BMW shares fell more than 1 per cent, pushing their year-to-date decline to almost 23 per cent.
Mr Krüger pointed out that BMW already sells seven electric and hybrid cars — the “broadest range” on the market. Its latest i3 model — an all-electric city car that now has a range of up to 160km — went on sale in July. In a month, it has secured 7,158 signed European orders, 5,190 more than when the first i3 launched in 2013.
BMW also said its planned production run of “iPerformance models” — a range of plug-in hybrid cars — is already sold out for 2016, although Mr Krüger would not disclose numbers.
“This proves that when technical conditions and the right regulatory framework are aligned, electric-powered vehicles enjoy greater popularity,” he said.
Earlier this year, the German government agreed to spend €1bn on incentives to help put 1m electric cars on the autobahn by 2020. BMW considers such schemes “vital” to grow the market.
In the Netherlands, which has had subsidies in place for several years, almost 15 per cent of all BMW vehicles sold in June were electric or hybrid, the carmaker said. In Scandinavia, the equivalent figure was 13.2 per cent.
By contrast, electric cars accounted for about 1 per cent of new sales in the EU, according to the European Automobile Manufacturers’ Association.
BMW also reaffirmed its outlook for the full year, expecting “slight increases” — and new record figures — for both sales and profit before tax.
It said sales from its core BMW, Mini and Rolls-Royce brands rose 5.7 per cent in the second quarter to 605,534 units. Half-year sales were up 5.8 per cent to 1.163m units.
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