BMW notices little of the plummeting demand for e-cars

The world’s largest builder of premium cars, BMW, is not affected by the waning interest in electric cars, but has seen its operating profit plummet by a quarter.

Of the almost 600,000 cars that the BMW group

(BMW, Mini and Rolls-Royce) sold in the first three months of this year, 83,000 were fully electric. This is an increase of 28 percent compared to the first quarter of last year, putting the Bavarian group on track to achieve its goals: at least one in five new cars off the production line should be fully electric by the end of this year. By 2025, this should have risen to one in four.

Demand for electric cars is under pressure in Europe and the United States. The persistently high interest rates hit buyers of electric cars particularly hard. After all, they are still a lot more expensive than cars with a combustion engine.

High interest rates make financing considerably more expensive. The consequences of this are especially noticeable among brands that only sell fully electric cars. Tesla saw its sales, revenue and profit collapse in the first quarter, a rarity for a company that has only been used to explosive growth in recent years.

All of this has passed BMW by for the time being. The growth is partly due to the success of the compact electric SUV iX1. That car is a hit in our country, where the model is one of the most popular commercial vehicles.

In addition, BMW has started delivering the first fully electric versions of the 5-series business sedan. At the same time, the British subsidiary Mini is rapidly switching to a fully electric range. Its ultra-luxury sister Rolls-Royce is the electric leader in the group. In the first quarter, more than a third of all Rolls-Royces delivered were fully electric Spectres.

Last year, BMW seemed to escape the main struggle of classic car makers: making as much profit from the sale of electric cars as from cars equipped with a combustion engine.

And although the operating profit margin remains more or less the same despite the rapidly rising share of electric cars at 8.8 percent, BMW’s operating profit fell by a quarter in the first quarter to 4.05 billion euros.

According to CEO Oliver Zipse, this is mainly the result of the rising costs of both materials and wages. The persistently high inflation is increasingly leaving its mark.

In addition, the financial division of the German car giant is affected by the declining residual values ​​of the BMWs and Minis that BMW has put on the market through its own leasing companies. During the corona crisis, residual values ​​rose enormously due to shortages of new cars, but the second-hand car market has now normalized again.

The residual values ​​of electric cars in particular appear to be considerably lower than expected. This is because large and expensive electric cars in particular come onto the market after an average lease period of four years. While the supply is increasing rapidly, the demand for it is limited. That puts pressure on prices.

Despite the plummeting operating results, Zipse is sticking to its previous forecasts for the entire year: a slight growth in the number of cars sold and a slight growth in the operating results.