In a statement today from BMW’s top management, the company said clearly – electric vehicles are the future. Oh, and “digitalization” meaning the integration of advanced computer systems and networked connections into cars. The statement by Harald Krüger is attributed to a quarterly conference call dated Sept 30, 2015.
As we’ll see below, the impact of this statement isn’t clearly said, but it’s that BMW is heading towards offering transportation services using autonomously driven cars. BMW is hardly the only company heading in the same direction. The technology is carrying the whole car industry inevitably towards a shift from selling cars to individuals to offering Transportation As A Service using autonomous vehicles.
Krüger organized his statement in four segments:
- The current performance of the BMW Group.
- Efficient Dynamics.
- Electric mobility.
The first had to do with sales growth targets for BMW, which is fine but isn’t what we’re interested in. What we want to discuss instead is the transformation underway at BMW and perhaps the rest of the car industry.
The second point, Efficient Dynamics, is BMW’s marketing buzz-phrase for fuel efficiency.
Krüger claims the only way BMW could achieve CO2 emissions limits was with Clean Diesel technology. Which gets us touching into the Dieselgate scandal, which Krüger avoids directly mentioning in the statement. Volkswagen’s implementation of Clean Diesel was not in any way shape or form actually Clean Diesel. Krüger wants us to understand this about Diesel:
Diesel is one of the cleanest and most efficient drive trains in the industry. Without diesel powertrains, we would not have been able to meet the strict CO2 limits in Europe.
For us at the BMW Group, it remains a matter of course that we strictly adhere to the legal regulations and existing test cycles in every country. We act according to the mandatory procedures and compliance guidelines we have established. As I see it, a company’s corporate and leadership culture is a crucial aspect in this context. Allowing for discussions and open discourse, as well as a clear corporate compliance policy, is an important element to prevent fundamental misconduct.
I would say that Krüger just shot across Volkswagen’s bow with this statement. In any case, it means BMW is reaffirming they have no Dieselgate problem, and that they strictly adhere to the law.
Electrification & Digitalized vehicles
It’s the third and fourth points where we really get into the transformation of the car industry. It’s one thing to stick with Diesel technology because you’ve been making Diesel vehicles for years. It’s another to shift to newfangled electric drive trains and digitalized information systems and control systems.
Without saying exactly why, Krüger says BMW is “committed to our pursuit in developing alternative drivetrains.” And for that purpose they created the BMW i brand for electric mobility.
We can think of a couple reasons why BMW would head in this direction:
- Improving electric drive train technology means electric vehicles will shortly have a clear advantage in cost economics over any fossil fuel powered internal combustion anything
- The inability to keep improving emissions on internal combustion engines means inability to keep up with ever-tightening government regulations
- Failure to shift away from fossil fuel vehicles runs a strong risk hugely painful problems in coming years
What Krüger said is:
We will invest further in our BMW i family and therefore we will launch another model under BMW i. As previously announced, we are consistently transferring BMW i’s innovative drive systems to our BMW series models. In 2016, we will launch plug-in hybrid versions in high-volume model series – namely the BMW 7, 3 and 2 Series. The X5 with eDrive has been available in the U.S. since early October and will be launched in Germany and further markets this month. No other carmaker in the world offers customers such a wide range of alternative drive trains and highly efficient combustion engines.
Then for “Digitalization” he said:
The future of the automotive industry will be decided in the fields of vehicle connectivity and autonomous driving.
It’s going to change BMW’s entire business model. It’s more than just supplying smart phone apps, which BMW is starting to do.
Given what I wrote earlier today about the Big Brother issues lurking in modern cars, I like this statement:
Obviously, it is not in the interest of our customers to give third-party providers access to their data. For us, the protection of our customers’ data is top priority.
But, still, talking about privacy protection and smart phone apps doesn’t add up to Krüger’s statement that Digitalization means “transforming our entire business model”. The statement doesn’t explicitly spell this out, so let’s practice reading between the lines.
The “vehicle connectivity and autonomous driving” sentence immediately preceded his saying this would transform BMW’s entire business model. That makes the two thoughts connected, so let’s tease that apart.
All the car companies are working on these two things, and many of them are talking about this business model:
- Transportation-as-a-Service:- meaning car companies building Transportation Service companies rather than just selling cars
- Autonomously driven cars at the center of a Transportation Service
- Using remote data connections and remote control of vehicles to provide this transportation service
Electric vehicles are a great choice for an autonomous car fleet deployed in a transportation service. Why? One reason is the ease of automated refueling. With a wireless recharging system the car can automatically drive itself to a charging pad, park for awhile for a recharge. Doing the same with a gasoline or diesel vehicle is much harder and far more prone to catastrophic accidents.
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