It’s a little early to predict that Tesla will drive the giant global automakers, one by one, into bankruptcy. However, there’s no question that some brands are already feeling the shockwaves from the electric automaker’s rise, especially in certain market segments.
Every automaker has its own mix of products, so the companies have varying degrees of exposure to the coming wave of disruption. As known Tesla bear Seeking Alpha argues, BMW could be in the most vulnerable position of all. Unlike the Big Three, BMW doesn’t sell pickup trucks, and unlike VW and the Asian carmakers, it doesn’t offer cheap entry-level runabouts (at least not in the US market). The Bavarian brand’s bread and butter consists of high-end sporty sedans and luxury SUVs – precisely the market segments in which Tesla is beginning to mop up the competition.
BMW’s troubles aren’t just theoretical – Seeking Alpha writer ValueAnalyst notes that sales of the company’s flagship sedan, the 7 Series (which BMW has produced since 1977), are in decline. As shown by tables from CarSalesBase.com, 7 Series sales jumped in 2016 after a redesign, but fell significantly in 2017. If current trends continue, yearly sales in the US for 2018 could see the lowest sales since 1992.
Tesla’s Model S has dominated the large luxury segment for a couple of years now, as a table from Statista makes clear. Tesla’s gains have come at the expense of legacy brands such as BMW and Mercedes, which has seen a year-to-date 15% drop in sales of its S Class.
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Above: Large luxury car sales in the United States in 2016, by key model in units (Source: Statista)
The news could get worse for the German sedan-meisters. According to SA’s ValueAnalyst, there are several indications that Tesla may be planning another redesign of Model S, and the latest specs for the upcoming Semi and Roadster make it sound as if battery improvements may be on the way too. When Model 3 comes into its own, it’s expected to offer stiff competition for BMW’s best-selling 3 Series. Considering all these factors, ValueAnalyst believes that “BMW can very well face an existential risk as early as 2018.”
In fact, in an earlier article entitled BMW Will Be the First to Go, ValueAnalyst characterized the company as “floundering in the face of severe competitive pressure and industry disruption.” BMW recently announced a $240-million investment in battery research, but that’s only a fraction of the billions that Tesla has invested over the last decade. “BMW may be years behind Tesla in battery technology.”
The company’s woes are not limited to competition from Tesla. Reuters recently reported that German prosecutors have begun an inquiry into allegations that BMW indulged in the same sort of diesel emissions shenanigans that have cost Volkswagen a few billion bucks. And BMW is in worse financial shape than VW was, with lots of debt and little cash on its balance sheet.
Taking it all into account, our Alpha Seeker expects BMW to be “the first traditional automaker to be significantly impacted by Tesla’s growth, as it has no segment that will not be under severe disruption by 2019.”
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Note: Article originally published on evannex.com, by Charles Morris
Source: Seeking Alpha
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On a completely unrelated note... that photo of @gene P85 was at the same parking lot as our S and Roadster picture in my profile from National Drive Electric Week from Huntington Beach a few years ago!
But on the other hand BMW seems to be on the edge of mass producing carbon fibre chassis - that would be a technological breakthrough. And they are very good regarding their management, their ability to have very efficient factories and to be very fast in getting new cars to market, take their entry level SUV X1.
And BMW does already produce electric cars in a certain volume. However, apparently their i3 does have one real design flaw - there simply is not enough space for a bigger battery.
US market for BMW is rather small.
You always compare to Mercedes S or BMW 7.
In Germany they would rather compare Tesla S to a Mercedes E or a BMW 5.
I do not know US sales figures, but in Germany Mercedes E or BMW 5 get sold roughly 50.000 times each per year.
Not that I disagree with the fact the Munich-based carmaker does have a lot of catching up to do, and sooner rather than later (i.e. by 2020!!), yet to speak of bankruptcy seems a bit overdone, IMHO...
Sorry about your $6K bill, I am reminded of my purchase of a 3 year old car with 3 thousand miles on it. The dealer offered a bumper to bumper on it as the manufacturers warranty had expired. I knew it was a scam, yet as I drove off the lot the transmission fell out of the car. Another three thousand dollars later and I was back in business. Sometimes it's smart to get the extended warranty.
-Randy
