Since electrification and digitalization entered the automotive industry, how to successfully transform and how to balance between electrification and the original business has become an eternal topic around every traditional car company.
For traditional car companies, will the transformation conflict with the existing business?
"Radical transformation and beautiful financial performance can go hand in hand."
At the BMW Group's 2021 annual financial report annual meeting on March 16, BMW Group Chairman Chiptzer gave this answer. The reason why he replied this way may be because of the "report card" of BMW's 2021 financial report.
In 2021, the BMW Group delivered more than 2,521,500 units worldwide, an increase of 8.4% year-on-year, occupying the first place in the high-end car market. Thanks to the increase in sales and the steady growth of new and used car prices, BMW achieved a doubling of revenue and profit for the whole year. Total revenue for the year amounted to 111.239 billion euros, pre-tax income was 16.06 billion euros, an increase of 207.5% year-on-year, and net profit was 12.463 billion euros, an increase of 223.1% year-on-year, both of which also set a record high for BMW.
If the beautiful financial performance allows us to see the past achievements of the BMW Group, then the continuous investment in electrification and digital transformation allows us to see BMW's increase in the future: now and in the future, we must win.
iFACTORY, redefining automobile production
"How we produce things governs not only how we work, but also what we buy, how we think, and how we live."
- "The Machine That Changed the World"
In the era of intelligent electric vehicles, we always emphasize the changes in the power system of automobiles, and the blessing of intelligence makes it not only a means of transportation, but the third space of life. Similarly, when the attributes of the car change and quietly change our lives, its needs for design and production also change.
Just as a hundred years ago, the automobile production line replaced pure manual manufacturing, and finally replaced by large-scale production and lean production, when the car became a smart electric vehicle, it also needed a new production method. Therefore, at the annual meeting of the earnings report, BMW proposed the concept of iFACTORY.
For electric vehicles, the new factory we are most familiar with may be Tesla's Giga Factory, which operates efficiently through 100% automation, and even Volkswagen Group CEO Diess is envious of it. However, for BMW, the new factory needs more than efficiency, lean, green and digital, all of which are indispensable.
Unlike the light product matrix of Tesla and the new forces, as a "century-old store", BMW carries the experience accumulated over the past century, as well as a huge product network and diversified technical routes. The competition of intelligent cars is not a single combat, but a team competition, and the systematic ability is the advantage accumulated by traditional car companies for hundreds of years.
Taking the new 7 Series unveiled at the earnings conference as an example, as the flagship sedan to be launched this year, the new 7 Series has also launched an internal combustion engine version, plug-in hybrid and pure electric drive, which requires the factory to not only produce efficiently and precisely, but also to meet different drive technologies and vehicle architectures, with sufficient high flexibility.
If in the past, low-carbon emission reduction and sustainable development were a choice of questions for enterprises, now they have become mandatory questions, and green has become a factor that cannot be ignored in automobile production.
In 2021, BMW will include sustainability in the group's financial report for the first time, not only to reduce the carbon emissions of bicycles by 40% throughout the life cycle by 2030, but also to reduce carbon emissions by 80% at the production level. This 80% carbon reduction task requires new factories to achieve in the production process through state-of-the-art technology, minimal resource consumption and a circular economy model.
At the same time, for a smart car, digitalization is not just the smart cockpit and intelligent driving at our fingertips, but the whole life cycle of a car. The planning, design, and production of products can use data science and artificial intelligence to integrate the envisioned virtual effects with the real world, modify them at any time, and complete development and planning more efficiently.
"This is a real change, our response to the metaverse."
Dr. Nordkovoch, director of production at the BMW Group, described iFACTORY as saying that all BMW Group plants will eventually become BMW iFACTORY, whether it is three vehicle plants at the Centennial Plant in Munich, three vehicle plants at the Shenyang production site and one powertrain plant. The revolution triggered by production is a revolution in the automobile and an electrification accelerator.
What gives BMW the confidence to be fearless of transformation?
2021 can be said to be the first year of traditional car companies in the field of electric vehicles, and it is also the first year of competition in the high-end electric vehicle market. Before that, traditional car companies seemed to have only tasted the waters in the field of electrification, until 2021, when we finally saw sincere products entering the Chinese market. What about the results of the first year?
Last year, bmw group global sales of new energy vehicles were 328,300 units, an increase of 70.4% year-on-year, accounting for 13% of total sales; of which new energy models in the Chinese market sold more than 48,000 units, an increase of 69.6% year-on-year.
For China, the world's largest new energy vehicle home, this number does not seem to bring too many surprises. However, it should be known that 2021 is only the first full sales year of the BMW iX3, and the iX was only released at the Guangzhou Auto Show at the end of the year.
Therefore, instead of calculating whether the "starting" is fast enough, it is more important to whether the subsequent products and technical reserves of a company are enough to support BMW to run the "marathon" of this intelligent electric vehicle.
For BMW, what are the reserves of "hard power"?
01
From individual combat to group competition
When the market for smart electric vehicles is only a few hundred thousand, one or two million, it can be fought individually. However, electrification is not a short-lived flash, and electric vehicles are ultimately aimed at the current huge fuel vehicle market. Therefore, the success of one or two blockbuster models is important, but the success of the brand depends more on the strength of the team.
The electric vehicle market has "boomed" in the past few years, and we are accustomed to the rhythm of one or two new models per year by new forces, but this is obviously not the rhythm of traditional car companies. Taking BMW as an example, in 2022, BMW will mass-produce and trial production of 15 pure electric vehicle models; of which 5 pure electric models will enter China, including the innovative BMW iX, the innovative BMW i4, the BMW iX3, the BMW i3 produced in Shenyang, and the new generation of BMW 7 Series pure electric models - BMW i7.
By the end of 2023, that number will be 13 models, and by 2025, a quarter of all models will be pure electric vehicles.
Rome is not caused by a day, can launch several models at the same time, or even a dozen electric models, relying on BMW's investment in research and development and production again and again, to create a systematic ability of team combat.
02
Rooted in China,
Continuously building "hard power"
"China has always provided a strong driver for BMW's digital innovation." Chiptzer, chairman of the BMW Group, described China's importance to BMW.
In 2021, the BMW Group invested more than 6.299 billion euros in research and development, an increase of 10.7% year-on-year. This investment is mainly used in the transformation of electrification and digitalization, such as new vehicle architectures, electric products, digital functions and autonomous driving research and development. China, on the other hand, is undoubtedly an important place for digitalization and electrification investment.
Take the power battery as an example. In the past year, the shortage of batteries and the increase in the price of raw materials have limited the production capacity of car companies to a certain extent. In the third quarter of 2021, we can still hear from time to time that BMW has cut production and been forced to stop work due to chip problems, but it does not seem to affect BMW's final sales last year. This is due to the control of the supply chain by traditional car companies like BMW.
In order to ensure an adequate supply of batteries, the BMW Group has increased the purchase of cells equipped with the fifth-generation eDrive electric drive system from 12 billion euros to more than 20 billion euros to ensure the expansion of subsequent electrified models and the expansion of demand for batteries. At the same time, in order to ensure the demand for the design and performance of power batteries in its own electric models, BMW Brilliance has set up the first joint venture power battery center in China to produce power batteries according to its own requirements for battery design, performance and sustainability, and the 100,000th high-voltage power battery has been off the production line in July 2021.
While increasing investment in research and development, there is also continuous investment in the charging links that directly affect the use of electric vehicles. By the end of 2021, the BMW Group has set up 360,000 charging piles in China, including 200,000 DC fast charging piles; dealer charging stations have expanded to 350 to improve the user experience through self-built energy replenishment networks.
A joint venture software development company was established in Nanjing to further strengthen BMW's strength in China's digitalization; increase cooperation with BMW Brilliance, and include BMW Brilliance's financial report in the annual financial report of BMW Group, etc.
These continuous investments have allowed BMW to sprint towards electrification. At the same time as sprinting, he also set a flag for himself:
By the end of 2025, the bmw group plans to deliver a total of 10 million pure electric vehicles to customers by 2030, with annual sales of 1.5 million. At that time, the other three major brands of the BMW Group will also be fully electrified: the Rolls-Royce brand will complete the electrification of all products; the BMW Motorrad urban mobility series will be fully electrified; and the MINI brand will also move from the beginning to fully electrification.
At last
For BMW, 2021 can be said to be a "win-win" year: on the one hand, beautiful sales and financial performance; on the other hand, the investment in electrification and digital transformation for many years has begun to bear fruit. More critically, this investment continues to increase and continues to release its energy.
In today's hot and noisy automotive industry, our eyes are often briefly attracted by the products that have taken the lead, but the hard power of product design, research and development, and production can accompany the products to go further.