BMW accelerates the development of electric vehicles

Author | Wang Xiaojuan

Editor | Zhou Zhiyu

After voluntarily withdrawing from the price war for a month, BMW handed in its second-quarter report card.

On August 1st, BMW Group released its second-quarter financial report for 2024. During the quarter, BMW's overall sales revenue was 36.94 billion euros (approximately RMB 288.8 billion), a slight decrease of 0.7% year-on-year.

However, the revenue of the automotive sector, which accounts for the majority of revenue, did not decrease. The revenue of this sector was 32.07 billion euros (approximately RMB 250.8 billion), an increase of 1.4% year-on-year.

From a revenue perspective, BMW's fluctuations were not significant compared to the same period, but its profits declined.

In the second quarter, BMW Group's EBIT was 3.88 billion euros (approximately RMB 30.3 billion), a decrease of 10.7% year-on-year. The EBIT margin for the automotive business was 8.4%, a decrease of 0.8 percentage points from the same period last year's 9.2%.

BMW explained that the decline in profits was mainly due to increased production and personnel expenses, as well as increased IT project costs.

Throughout the first half of the year, BMW's R&D investment reached 4.169 billion euros (approximately RMB 32.597 billion), an increase of 22.8% year-on-year. This investment is significantly higher than the annual revenue of some new forces.

BMW expects that this year's R&D investment will also reach a historical peak, with R&D accounting for over 5% of total revenue.

Furthermore, the profit decline was also influenced by changes in demand and the macro environment.

Especially in its main market of China, BMW's price reduction strategy did not have the expected effect of boosting sales. The global total delivery volume in the second quarter was 618,700 units, a decrease of 1.3% year-on-year, with sales in the Chinese market reaching 188,500 units, a decrease of 4.7% year-on-year.

As a company that has dominated the automotive industry for a century, BMW also has its own confidence in the face of short-term storms.

Based on the second-quarter financial report, BMW's net profit was 30.3 billion yuan, equivalent to earning 3.3 billion yuan per day. In comparison, many in the automotive industry are starting to incur losses or have been consistently losing money, so BMW's situation is not bad.

Of course, BMW is not resting on its laurels but taking proactive measures. Adjusting production capacity, withdrawing from price wars, and supporting dealers to steadily prepare for future counterattacks.

Although the relatively late electrification process has led to criticism of BMW's electric vehicles being stuck in the "oil-to-electric" transition, this has also exposed a vulnerability in BMW's stable pricing strategy.

However, nowadays, BMW's electrification process is becoming more extensive and has not been affected by some car manufacturers slowing down their electrification processes, especially in China's electrification process.

The reason for this profit decline is attributed to the decline in sales volume in the Chinese market. However, currently, the Chinese market remains BMW Group's largest single market globally, accounting for over 30%.

This year, BMW plans to introduce 11 pure electric vehicle models to the Chinese market, with many set to be launched in the second half of the year. The new generation models in BMW's plan have already entered the peak period of R&D investment and are expected to be domestically produced in Shenyang by 2026.

BMW has invested a large amount of R&D funds this year, which have flowed into vehicle connectivity, autonomous driving, and software stacks, all of which are the most popular directions in the industry and the focus of car manufacturers' storytelling. It is worth mentioning that BMW is also one of the first companies to obtain an L3 pilot license in the domestic market Having been in China for 30 years, BMW has a very wide range of recognition as a luxury car. Even though many young consumers choose new energy brands at present, in second and third-tier cities, the fans accumulated by BMW in the past can still provide a considerable market for it.

China is also one of the most important strategic markets for BMW.

BMW has a very complete research and development system in China, with R&D centers in Beijing, Shanghai, Shenyang, and Nanjing. At the same time, the R&D team in China has tripled in the past three years, with over 3,000 R&D personnel currently.

Once, BMW earned a lot due to its accumulation in sports, performance, and other aspects.

Now, with a large amount of research and development funds already invested, BMW is still accelerating in this marathon in the automotive industry