BMW wants to build five giga factories for battery cells with partners.
Because of the Ukraine war, the car manufacturers lack components. This puts a strain on production and costs BMW returns. At the same time, the carmaker is ramping up its activities in the field of electromobility and also wants to build five battery factories with partners.
Together with partners, BMW wants to build five giga-factories for electric car batteries. At the annual press conference Board Member for Purchasing Joachim Post said that the purchasing strategy was basically structured in such a way that BMW had a global production network.
Joachim Post, said:
In the future, we will also operate giga-factories in the regions where we produce electric cars.
He did not give details. BMW has signed supply agreements for battery cells with various manufacturers, including the Chinese manufacturer CATL, Samsung SDI, Northvolt and Eve Energy.
Mercedes-Benz opened its own battery factory in the US state of Alabama. There, electric drives for the SUV versions of the luxury sedan EQS and the next smaller model EQE for the world market are to be produced.
Management Board expects lower profit margin
Meanwhile, BMW expects a noticeable dampener in business due to the war in Ukraine. For the current year, the Munich-based carmaker predicted a profit margin in the car business of seven to nine percent after 10.3 percent in 2021 – without the war it would have been eight to ten percent.
The carmaker assumes that there will be production interruptions in the coming weeks.
BMW uses its flexibility in production to keep the restrictions as low as possible. Furthermore, parts would also be sourced from the west of Ukraine. The situation remains extremely dynamic, which makes a more accurate forecast difficult, it said.
“Possible further longer-term effects of the war in Ukraine cannot currently be estimated and are therefore not included in the forecast.”
BMW Wants to Build Five Giga Factories for Battery Cells with Partners
BMW is the first of the German carmakers to explicitly quantify the effects on its own figures. With sales of just over 95 billion euros in the automotive division, one percentage point less margin corresponds to a negative impact on earnings of around 950 million euros.
In addition, the chip crisis remains an issue for the automotive industry. The supply situation for semiconductors is likely to remain tense, and as in the previous year, there is a risk that supply bottlenecks will occur.
BMW profit more than tripled in 2021
BMW had already presented the business data for 2021 last Thursday. Accordingly, the carmaker has increased its net profit to 12.5 billion euros and thus more than tripled. Sales improved by 12.4 percent to 111.2 billion euros.
For the current year, a significant increase in pre-tax profit is to be expected, the Munich-based company predicted: The reason for this is the full consolidation of BMW Brilliance in China, where BMW recently acquired a majority stake. Sales are also likely to increase as a result.
BMW had come under less pressure last year than its German competitors due to a lack of semiconductors and had even delivered more cars than in the previous year.
The parent brand BMW even regained the top position in global sales of premium cars from Mercedes for the first time since the middle of the last decade. Demand is high worldwide, the Group said, but due to the geopolitical situation in Eastern Europe, BMW now only expects car deliveries at the previous year’s level of around 2.5 million units.
Market opportunities for fully electric cars improved
CEO Oliver Zipse (58) is increasingly assessing the future market opportunities of fully electric cars. With their new generation of vehicles planned from the middle of the decade, the Munich-based company believes it is possible that the share of pure battery cars in total global sales will reach half of what was previously planned before 2030.
Since Zipse is aiming for a total sale of 3 million cars before the end of the decade, the annual number could then be over 1.5 million.
Until now, BMW had assumed that by 2030 at least 50 percent of the cars sold would only be powered by an electric motor. The condition for the stronger growth in fully electric cars is the expansion of the global charging infrastructure, BMW again demanded. This must be able to keep up with the model supply and the increased demand.
“New class” with new generation of battery cells
In the new model generation – which BMW calls “New Class” – a new battery-electric drive will also be used for the first time, which should significantly reduce the costs for the powertrain, the group said. BMW is currently developing a new generation of battery cells for this new electric drive.
BMW is not yet considered the most offensive carmaker when it comes to all-electric battery drive. Zipse continues to assume that conventional drives such as combustion engines will still be required in some regions of the world after 2030.
The situation is also expected to improve further in current business, with CFO Nicolas Peter expecting an inflow of free funds from the automotive business of more than 7 billion euros this year. Last year it was 6.4 billion euros.
The still difficult situation in the supply of electronic chips is unlikely to ease before the second half of the year, BMW said. The risk of supply bottlenecks persists in view of the high international demand for semiconductors.
In the Group’s view, the strong results of the financial services division are unlikely to be repeated in the new year. In terms of return on equity, BMW is aiming for a value of 14 to 17 percent, after the company achieved 22.6 percent last year.
BMW had benefited in particular from sharply rising used car prices, which favoured the resale of lease returns. This should normalize in the second half of 2022.
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BMW wants to build five giga-factories for battery cells with partners, March 16, 2022
