BMW targets ICE margin parity with Neue Klasse

German OEM BMW has launched the concept for its next-generation Neue Klasse EV range, with deliveries due to begin 2025.

BMW is bullish about the pricing and operational structures that keep its EV division relatively profitable, and the automaker says it hopes the range can meet margin parity with ICE vehicles.

“Margin parity will only begin with the step-by-step ramp-up of the Neue Klasse,” says BMW Group CFO Walter Mertl.

The firm is aiming to produce the next-generation EV range at margins similar to the 9.8pc operating margin it reported for full-year 2023. The company also guides towards an 8-10pc range for the upcoming year.

“The Neue Klasse will significantly accelerate our ramp-up of e-mobility once again. But BEVs – along with our models in the upper premium and luxury segment – are already our biggest growth drivers. Last year, we sold more than 375,000 all-electric vehicles,” said BMW Group CEO Oliver Zipse at the company's results meeting today.

The Neue Klasse will be the first to use BMW's sixth generation battery cells. The firm says the cells will bring "quantum leaps in energy density [and] will provide our customers 30pc more range and 30pc faster charging.”

Joachim Post, Head of BMW's Purchasing and Supplier Network, appeared to rule out the BMW making any further investments into vertical integration of its battery supply chain.

“In battery cell production and also the supply chain, we do have a focus on creating a well-developed supplier market that exists there […] and that is why we decided to use the full potential of the market with multiple sourcing strategies,” he said on the results call.

Demand outlook

BMW management struck a positive tone on the call with regard to its outlook for EV demand.

Despite European sales growth slowing year-on-year, and the firm's home market of Germany slipping to a 15.4pc year-on-year decline in BEV registrations, CEO Oliver Zipse says he expects BMW's BEVs to see "significant double-digit growth", and that the automaker soon expects to surpass 1mn total global BEV sales.

“The reality in the market is much better than the sentiment,” added BMW Group's Head of Customer, Brand, and Sales Jochen Goller. “That is why we see strong growth for BEVs in all regions worldwide.”

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