sales growth is mostly electric as combustion engine ‘tipping point’ passes

By Victoria Waldersee and Christina Amann

BERLIN (Reuters) – BMW has passed the tipping point for combustion engine vehicle sales and now generates most sales growth from electric cars, its chief financial officer said in a media roundtable.

“The tipping point for the combustion engine is already there,” CFO Walter Mertl said, adding that in his view it had been passed last year.

“The current sales plateau for combustion cars will continue and then fall slightly,” he predicted, pointing to looming environmental regulation that will restrict sales of such vehicles.

Carmakers are under pressure to ramp up their EV offerings as regulatory deadlines from China to the European Union and some U.S. states will begin to ban sales of new fossil fuel emitting cars from the middle of the next decade.

BMW achieved a 15% all-electric sales share last year. It plans to raise that to 33% by 2026 as it rolls out six new models in its “Neue Klasse” EV-only line, a multibillion-euro effort to jump the technology gap with competitors.

Still, BMW’s margins for combustion engine and all-electric cars won’t reach parity before at least 2026, Mertl said, pointing to the higher costs of introducing new battery technologies for later models.

Discounting is also likely for cars in certain price ranges, Mertl said, without going into further detail.

The carmaker is sticking to its previously announced target of 3 million vehicles sold by 2030 with an 8-10% margin in its automotive segment, he added – a conservative goal sitting below its expected 2023 margin of around 10.3%.

BMW CEO Oliver Zipse said in September that the company would be “at least as profitable” when selling the “Neue Klasse” EVs at scale, bolstered by their lower battery costs and higher efficiency per kilowatt hour.

(Reporting by Victoria Waldersee, Christina Amann; Editing by Kirsten Donovan)