BMW Down on EVs, Does It Matter?

As an advocate of electric vehicles, it is somewhat disappointing to read about BMW’s CEO of North America, Jim O’Donnell, detailing limitations of the technology and predicting limited appeal for electric cars in the future. BMW has put considerable skin in the EV game, so symbolically at least, his comments appear to chop the legs off his company’s own push into the  market. But at the same time, I think it would be dogmatic to take the stance that EVs have absolutely secured themselves as the near-term future of personal transportation in the US, so with this in mind, perhaps it’s useful to reflect on O’Donnell’s comments as objectively as possible.

More detailed comments from him were reported here in The Detroit News, explaining BMW’s plans and stance on the EV market, so in I’ll address the key points as follows:

Richard Steinberg, BMW’s manager of electric vehicle operations and strategy for North America, states the company plans to sell 10,000 – 20,000 BMW i3 EVs when they launch the car in 2013. This is in line with Nissan’s and Chevrolet’s EV volumes, so even if O’Donnell is down on the cars, BMW still plans to be a significant player in the market.

CEO O’Donnell takes issue with the federal tax credit of $7,500 for EVs. As a believer of the free-market economy, he doesn’t feel the tax-payer should be put in a position financing the government’s bet on EV technology. Fair enough. The news from congress this week is that even the GOP might finally be open to discussing ending tax breaks for oil companies, and suggests that if that happened, gas prices would likely increase even more than they already have. Perhaps unwittingly, O’Donnell’s views on leveling the playing field via tax policy, will help sell more EVs, as gas prices climb ever higher. Lucky for him, BMW will have vehicles in place to benefit.

O’Donnell disagrees with Renault-Nissan CEO, Carlos Ghosn’s prediction that 10% of vehicles will be electric by 2020. I think  O’Donnell’s might be a reasonable position, especially if we look to the adoption rate of hybrids as a proxy for the adoption rate of EV technology. Hybrids have been around for well over 10 years, but as reported last year, they only made up 2.6% of US sales for January 2010.  EVs are going to have to do a whole lot better in going to scale than hybrids, if Ghosn’s prediction comes to fruition.

O’Donnell’s final blow is his assertion that EVs won’t work for 90% of the population based on battery range. Since he works for the company that has field tested EVs via the Mini E brand (which BMW owns), I wonder to what extent he has drawn this conclusion from his company’s own data? This piece about Mini E trails in the UK reports favorable findings from user field tests which just ended in March. It was thumbs up, pretty much across the board, and although yes, range was one of the few drawbacks noted, users nevertheless found it to be less of a problem than expected going into the tests.

In any case, BMW and O’Donnell will get more user data to work with, since the company just launched an iPhone app that is designed specifically to allow conventional vehicle drivers to ascertain if they could live with an EV. Drivers can open the app every time they get in the car and GPS technology will log their real-time driving data, which they can then upload and share with BMW. Users will get intelligence without buying an EV, as to whether range anxiety is real or imagined for their specific driving habits. This is pretty smart!

In the final analysis, as skeptical as BMW may be, and as deflating as O’Donnell’s comments are, maybe they are not that important for the eventual outcome of EV sales both in general, and for BMW as a company. In many ways, BMW still seems to be doing the right things in handling the roll-out of their EV technology, and maybe can even be credited for not prematurely over-hyping it.

Phil Covington holds an MBA in Sustainable Management from Presidio Graduate School. In the past, he spent 16 years in the freight transportation and logistics industry. Today, Phil's writing focuses on transportation, forestry, technology and matters of sustainability in business.

2 responses

  1. A quibble here – the Prius was initially introduced in the U.S. in 2001 (though 1997 in Japan). Had the first privately-owned one in my county. That’s not “well over 10 years” relative to a U.S. number for 2010. Just trying to keep our history in sharp focus, since I think that counts for thinking forward precisely.

    Another number to remember might be that right about a million Priuses sold in the U.S. during its first ten years in the U.S. market, which is great forward change.

    And also, just a tiny drop in a ruptured bucket.

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