BMW close to hitting this year's EV target already, will pump more cash into electric vehicles

BMW has stated that it is accelerating its investment in electric vehicles beyond what it had planned initially. However, the company is not ready to establish a specific date to halt the production of combustion engine cars due to strong sales in key growth markets such as China and the US BMW ahead of Porsche, Mercedes when it comes to EVs The carmaker is on track to achieve its goal of reaching 15 per cent of battery-electric vehicle sales this year, surpassing competitors Mercedes-Benz and Porsche, both of which have achieved around 11 per cent of electric vehicle sales. Despite being a strong advocate for investing in carbon emission-reducing technologies, CEO Oliver Zipse asserted that there is no sign of a complete abandonment of combustion engine vehicles in the world. Unlike Volkswagen and Mercedes-Benz, BMW declined to set a target end date for combustion engine production during a press call following their half-year results, deeming it premature. Declining net profit leads to a cautious outlook During the second quarter, BMW reported a 2.9 per cent decline in net profit, in line with analysts’ predictions. The boost from last year’s figures, which resulted from obtaining majority control of Chinese joint venture BMW Brilliance Automotive (BBA), was absent this time. The company’s second-quarter earnings were bolstered by higher pricing and increased sales, which rose by 11.3 per cent. These slight price hikes were a response to rising raw material costs, according to Chief Financial Officer Walter Mertl. In addition to other European carmakers, BMW adopted a cautious outlook on the global economy, cautioning that supply chain and inflationary challenges were still ongoing, even though they were showing signs of improvement. Nevertheless, due to strong orders and a better supply chain, the company adjusted its performance expectations slightly higher and projected growth in the European automotive market, robust sales in the US, and moderate growth in China for the rest of the year. The spanner in the works The integration of BBA and increased sales and pricing contributed to significantly higher revenues of 74 billion euros ($80.87 billion) for the first half. While earnings before interest and taxes (EBIT) for the first half showed a notable increase of 42.6 per cent, net profit declined to 6.6 billion euros, primarily due to a higher tax rate. The company prioritized research and development spending during the first half, focusing on electrification and automated driving, with a 15.4 per cent rise in expenses in this area. Capital expenditure also rose by 10.3 per cent. The first half results were affected by higher material and manufacturing costs, impacting the company’s overall performance.