BMW CEO: electric vehicles won't be profitable at launch

BMW CEO Norbert Reithofer recently gave an interview in which he discussed the brand's future with electric vehicles, including profitability problems.

Tying into the speech given by National Automobile Dealer Association chairman Ed Tonkin yesterday concerning the potentially premature push for ultra efficient vehicles, BMW's CEO Norbert Reithofer shared some interesting facts about the expectations from the brands upcoming electric vehicles.

During Reithofer's speech to the Institute for the Automotive Industry, given in Nuertingen, Germany, via Auto News Europe, the CEO said, "It may be that you don't earn any money with such technologies during the first product cycle. Here, conventional drive has to cross-subsidize the new technology."

What Reithofer was saying was first that BMW may not earn any profit for the length of the first cycle for its new Megacity electric vehicle, despite him adding that BMW intends to charge a premium for its EVs. Reithofer also pointed out the fact that people expect government subsidies for electric vehicles due to their higher cost.

People aren't yet ready - in mass - to purchase alternative energy vehicles at their true cost levels, says Reithofer.

The CEO went on to explain how the premium is necessary as the automaker is utilizing vastly more expensive materials, such as carbon fiber, in order to achieve crucial weight savings that will allow more acceptable ranges for its electric vehicles.

Reithofer also explained that the brand is dedicated to continuing its own development of its electric drivetrain, refusing to follow the path of most automakers which outsource that aspect of the EVs. "We won't give that up," he added.

BMW's chief went on to predict that by 2020 five to 15 percent of new cars will be electric, saying, "So we will have a long transition." Reithofer believes that in the meantime automakers must find a way to "cross-subsidize new technology."

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