BMW Joins Volkswagen and Sets Ambitious EV Target; Expects Profit Margin to More Than Double

By Mariliana Fotopoulou Wednesday, March 17, 2021

German car company BMW has announced plans to have electric vehicles (EV) represent half of the total sales by the end of the decade.

Closeup of the BMW logo.

Significant Profit Growth Expected

BMW said it is projecting to record profit margins between 6% and 8% this year, which is significantly higher than the 2.7% recorded in 2020. The car business is likely to report higher profit before tax amid strong demand recently after pretax profit slumped 35% in 2020 amid the COVID-19 pandemic.

“The BMW Group has entered 2021 with ambitious targets for growth and profitability and will be putting the first forerunners of its far-reaching technology offensive on the roads in the coming months. At the same time, it has set the course for a comprehensive realignment,” the car company said in the statement.

The “comprehensive realignment” refers to a strong push into EV models and sustainability sectors. The company has committed to having about 90% of market segments have fully electric models by 2023.

Moreover, the car business is working to see fully EV deliveries growing by more than 50% annually on average by 2025.

“We have a clear roadmap for making the transformation of our industry a real competitive advantage for BMW in the coming years: uncompromisingly electric, digital and circular,” said Oliver Zipse, Chairman of the Board of Management of BMW AG.

The German car business is looking to achieve the target of 2 million EV models delivered by 2025, a number that is expected to rise to 10 million by 2030 to account for at least half of all deliveries worldwide. This represents a much stronger push into the EV market as the car company previously said it expects 20% of sales to be fully electric or hybrid vehicles by 2023.

“We are intent on ensuring that the ‘greenest’ electric car on the market is made by BMW,” Zipse said.

The car business is also reintroducing the “New Class” concept, reminiscent of a set of models made in the 1960s. These models will be built of recyclable materials to the highest degree possible with a higher focus on digitalization as well.

The “New Class” project will start in 2025 and will represent the third phase of the business transformation, the car company said. The project has three pillars: completely new IT and software systems, high-performance electric vehicles with new batteries, and a higher focus on sustainability across the entire vehicle’s life cycle.

Today’s presentation from BMW comes just a day after its big rival, Volkswagen, announced an ambitious push into the EV industry and also presented new upgraded profitability targets.

Shares of BMW AG are trading over 4% higher in Germany today. The car company has a market capitalization of over €54 billion ($64.3 billion).

Summary

Major car company BMW announced it expects to record business profit margins between 6% and 8% this year. Moreover, the company is joining its rival Volkswagen, Tesla, GM, and others, in the EV sprint race.

About the Author


Headshot of Mariliana Fotopoulou

Mariliana has an MSC in Consumer Analytics and Business Strategy. She has a special interest in fast-moving industries and Big Data.

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