BMW’s new electric vehicle sub-brand – the BMW i – is going where some have failed and many do not dare venture without government support. It is coming here.
The German carmaker is preparing to launch the electric BMW i3 and its hybrid super sportscar sibling (the BMW i8) here in 2013.
‘This is a megacity. Five million people live in Singapore. It has many of the attributes of a major city – congestion is a problem and the environment is something that is increasingly gaining awareness,’ Ian Robertson, a board member at BMW Group, told BT.
The launch of an electric vehicle will have to navigate a unique set of challenges here. To date – not counting Tesla – no other carmaker has brought in electric cars apart from Mitsubishi, although Renault is expected to do so by year-end.
Even so, Renault will be doing so under the auspices of the government, as part of a test-bedding initiative, while five units of the Mitsubishi i-MiEV have been brought into Singapore for a trial run by the Energy Market Authority (EMA)
BMW, however, is bringing in the BMW i sub-brand on a commercial basis. It believes that there is a segment of the population here that will walk into its showroom and drive off with a plush marvel of engineering marked by the quiet whirring of an electric motor. If nothing changes between now and then, the eco-friendly BMW driver might have to pay full sticker price for the i3 or i8. As far as Mr Robertson knows, there are no government subsidies lined up for the sub-brand.
While no price has been finalised, Mr Robertson told BT: ‘If you look at the electric vehicles that have hit the market, we will be a premium product.’
While there is a Green Vehicle Rebate scheme that includes electric cars, this currently applies to vehicles registered between Oct 1, 2006 and the end of 2012. The BMW i brand will be launched here in 2013, regardless of whether the scheme is extended.
Nasdaq-listed Tesla learnt the limits of environmental consciousness last year. After it failed to qualify for a tax break on the Tesla Roadster – an electric sports car costing more than $325,000 – it failed to sell a single unit. Tesla has since left town.
It might not be fair to compare the i3 – geared towards zipping around in the city – with the Tesla. The Tesla range, as Mr Robertson noted, is ‘very expensive’. And while both the Tesla and the i8 are ‘very unique’ vehicles, he said that ‘the i3 will be appropriate to a broader population group’.
Also, nothing is set in stone where green vehicle subsidy policies are concerned, post-2012. Mr Robertson is holding out hope that some things will change in Singapore.
‘The government could, for example, say that the (cost of) a certificate of entitlement (COE) for an electric car will be less than the COE for a diesel or a petrol car,’ he said.
And while the future of electric vehicles in Singapore is in its gestation period, the groundwork is being laid for it. The government has ventured $20 million on test-bedding electric vehicles here and Bosch has been roped in to set up charging stations.
The sticking point for the consumer will be cost. The i-MiEV, even when tax-exempt, will cost about $90,000. BMW’s electric offering, with its carbon-fibre body, will be light compared to a car with a steel body – but heavy on the wallet.
It will take time for people to warm to the idea, Mr Robertson conceded. ‘Then there will be a group of people who will wait for some government incentives. Over time, you will get the wider population being more interested in it, but that’s a little further into the future,’ he said.
Meanwhile, BMW is determined to overcome the routine objections to electric vehicles. Assuming a range of about 150 kilometres, an electric vehicle will be adequate for city use, in which the average urban commute is less than 35 km a day, Mr Robertson pointed out.
When more is required of a set of wheels, leasing another car might be an option. ‘Part of your leasing contract may be that one or two weeks a year, you could change that vehicle for something else. If you want to go on holiday across the Causeway into Malaysia, then you get an X5 for a week,’ he said.
What is more, Mr Robertson is insisting that the BMW i brand will be profitable.
‘We go into business to make profit. I can assure you, for BMW, we have a business case. We’re developing technology which will be utilised across a wide range of cars, and that is something that has to have good business sense behind it,’ he said.
Be that as it may, BMW AG chief executive Norbert Reithofer has said before that the costly development of technology for its first product cycle of electric vehicles will have to be subsidised by conventional-drive cars.
At Nissan, where the company has had to turn away orders for the electric Nissan Leaf, its then-head of operations in the Americas – Carlos Tavares – has said that it does not expect to see a profit on the Leaf initially.
Even in the gilded luxury car market, business is brutal. In the first quarter of this year, BMW Group managed a profit margin of just 7.6 per cent – and this, in a quarter of record-breaking sales for all three of its brands: BMW, Mini and Rolls-Royce.
For an industry that depends on volume, it is difficult to imagine equivalent or better margins from a sub-brand with a higher cost structure and relatively novel concept.
Where using a vehicle like the i3 is concerned, Mr Robertson said: ‘When a consumer wants something, we as a manufacturer have to find solutions – and it’s possible. There isn’t anything that’s not possible.’
For now, it remains to be seen whether enough consumers want a sustainably driven car for the venture itself to be sustainable.
