Earlier this month, the New York Times published an interesting headline titled "BMW is the Unexpected Winner of Electric Vehicles", which gives you a glimpse into the complexity of today's electrification market from the hedge of the words "surprise" and "winner". In the article, The New York Times focuses on BMW's flexible EV production strategy, which is the much-criticized gasoline-electric production method in the domestic market, and argues that BMW should be "one of the few traditional automakers that can successfully challenge Tesla's dominance in the EV market."
The reality is basically the same as expected, and when the domestic media reprinted the article, the emotions were very mixed and the expressions were extremely divided. So, what exactly should we look at when the playbook for the global market and the domestic market are completely different?
Whether it is a consumer or a practitioner, many people will now definitely focus on the price war extending from 2023 to 2024, the whole market is in a state of blood, like the wave of O2O entrepreneurship frenzy of China's mobile Internet in 2015, everyone thinks that it is the right path to seize the share with low prices and then force the opponent to finally occupy the market - it is not surprising that there is such a crazy idea, after all, one of the representatives of the new forces, the head of Weilai, is the crazy godfather of shared bicycles.
However, when we look back in 2024, the mobile Internet innovation and entrepreneurship that claimed to be the world's leading at that time has no success at all except for causing a huge waste of social resources and leaving a lot of chicken feathers for the industry.
For an auto brand, how to adhere to long-termism at this juncture is the key to determining future success or failure, and the information disclosed by BMW at the 2023 annual financial report meeting just held is worth carefully studying as a textbook for everyone.
What exactly does this financial report say?
Despite the many commercial and non-commercial uncertainties, the BMW Group achieved its financial targets in 2023 as expected: Group revenue of 155.498 billion euros and delivery of 2,554,183 luxury cars worldwide, up 6.4% year-on-year. Among them, 824,932 BMW and MINI vehicles were sold in the Chinese market, a year-on-year increase of 4.2%.
In this earnings report, the focus of business growth is indeed on electric vehicles. In 2023, the BMW Group delivered more than 375,000 BEVs to customers worldwide, up 74.2% year-on-year, and achieved its target of approximately 15% of the Group's total BEV sales. Together with plug-in hybrid models, the BMW Group sold more than 560,000 new energy vehicles in 2023, a year-on-year increase of 30.5%. In the particularly brutal Chinese market, the BMW Group delivered around 100,000 BMW BEVs in 2023.
To say that the focus of this financial report is not profit, it doesn't seem entirely true, after all, profit is the most basic professional ethics of a commercial enterprise. Compared with many brands in the automotive industry that claim to put down their profits and go shirtless to enter the finals, BMW's performance is already so good that people are jealous. However, in this financial report, BMW also sent another signal of long-termism, which is also the cornerstone of supporting it to lead the development of the industry with innovation.
R&D is the real investment
Why do we say that the current automotive industry is distorted in the same way as the mobile Internet, because they have lost their careers and even have the same posture. In a technology-intensive industry, one of the important criteria for evaluating the quality of an enterprise's development is the payment of R&D costs. The current car price war, like the original coffee and shared bicycles, is remembered only for the price of breaking the defense, the technical system behind it is full of holes but no one cares, holding high the banner of "customer-oriented", repeating the simple labor of low-cost customer acquisition, marketing is not only the talk of users today, but also the biggest minefield for users in the future.
Let's see, how BMW does it.
The BMW Group's technological leadership is the result of its emphasis on research and development, which has been invested at more than 6 billion euros for three consecutive years. In the chaotic year of 2023, many companies are looking at how to focus more on marketing and price wars, and the BMW Group has significantly increased its investment in technology research and development to 7.538 billion euros, a year-on-year increase of 13.8%, accounting for about 5% of the entire group's revenue. These investments are mainly in three areas: the development of electrification and digitalization of models, the development of autonomous driving, and the development of new models, including the new generation of BMW.
In 2023, the BMW Group's capital expenditures on plants, equipment and fixed assets amounted to EUR 8,836 million, up 8.5 percent year-on-year. Electrification and autonomous driving facilities, power battery production, and the construction of a plant in Debrecen, Hungary are all key capital flows, and they are all laying a solid technical foundation for the next cycle of product upgrades.
In the Chinese market, R&D investment is focused on BMW's sixth-generation high-voltage battery project and the upgrading of the existing plant at the Shenyang production base, with a total investment of 10 billion yuan in the sixth-generation high-voltage battery project alone.
Corresponding to these specific figures, the BMW Group's R&D investment is more important to upgrade the system, especially in the Chinese market. China now has BMW's largest and most complete R&D network outside of Germany, with four R&D and innovation sites in Beijing, Shanghai, Shenyang and Nanjing. In July 2023, the Shanghai R&D center was upgraded again, and the second phase of the Shenyang R&D center expansion project has 19 new laboratories, 17 of which are dedicated to testing new energy vehicles. At the end of 2023, the upgraded EMC laboratory was inaugurated at the Shenyang R&D center, and in December 2023, BMW Group's vehicles equipped with Level 3 autonomous driving functions were licensed for autonomous driving tests on high-speed roads in Shanghai.
Real input is real output
If there is input, there should be output, and only real input will have real output, and the BMW new-generation X concept car unveiled at this annual financial report meeting is the best proof of this.
Previously, we focused on the first BMW next-generation concept car, and also saw how BMW applied a new design style and innovative digital interaction methods such as the "panoramic vision bridge" to its best mid-size four-door sedan, and the BMW next-generation X concept car shows the future technology setting of BMW in another important product area, SAV.
The 100% natural, plant- or mineral-based, petroleum-free interior materials in the cabin of the BMW Next-Generation X Concept are not only a definition of the future of luxury, but also a reflection of the BMW Group's core values of sustainability. The "Panoramic View Bridge" technology is back in the car, still presented in combination with the new multi-function steering wheel and central display, and the customisation of the technical features continues the previous setting. The concept car retains BMW's traditional kidney grille, but the size and shape are quite different from the current generation.
At the heart of electrification technology, the concept car will feature the sixth-generation BMW eDrive technology, which will increase the energy density of the battery cells by more than 20%, increase the vehicle efficiency by 25%, increase the range by 30%, and the charging platform will officially enter the 800-volt era, reducing the charging time of the vehicle from 10%-80% by up to 30%, and replenishing the range of 300 kilometers in 10 minutes. The software and hardware responsible for powertrain and driving dynamic management in the new electronic and electrical architecture are completely self-developed, and the computing power is increased by 10 times. BMW's core driving pleasure will be divided into two modes: "EASE" and "BOOST". BOOST is responsible for extreme sport and handling, while EASE focuses on comfort.
Only with real output can there be a real future
As 2025 approaches, the new generation of models will bring BMW another leap forward in brand and technology. In 2026, the new generation of models will be produced in Shenyang, and at least 6 models will be put into production within 24 months, the electronic and electrical architecture will be new, the concept and method of human-computer interaction will be new, the electric drive and battery system will be new, and the concept and level of circular sustainability will also reach a new height.
For BMW, which adheres to long-termism, continuous high investment in R&D is a differentiated core competitiveness that cannot be achieved by competitors. The pressure of fierce competition on short-term performance is equal for everyone, but the strategic determination and system strength are indeed determined by the endogenous genes of every enterprise. Who will have a real future, the market will not give an answer in 2024, and only by looking away from the hot search can we see the real power of the industry and the real choice of users.