BMW Takes A Profit Hit As It Pushes Hard For Electric Cars And Tech

Illustration for article titled BMW Takes A Profit Hit As It Pushes Hard For Electric Cars And Tech

1st Gear: Paying The Cost To Try And Be The Boss

BMW has had something of a rough go lately. While it’s a luxury giant, it isn’t owned by a massive parent company the way rivals Audi and Mercedes-Benz are, so it tends to have a smaller R&D budget. And in recent years, we’ve seen its “i” division shift from electric city cars to autonomy and some of its newer sedan products falter in a marketplace increasingly dominated by trucks and SUVs.


To make matters worse, it just posted its weakest profits in six years, according to Bloomberg:

Amid higher spending on next-generation technologies, BMW’s automotive profit margin fell to 8.9 percent in 2016 from 9.2 percent a year ago, according to a statement on Thursday. Groupwide earnings before interest and taxes dropped to $9.92 billion (9.39 billion euros), missing the average analyst estimate of 9.82 billion euros, according to data compiled by Bloomberg. The shares fell as much as 4.2 percent, the most in four months.

“We are fully focused on implementing our strategy,” which involves pivoting to self-driving, electric vehicles, Krueger said in the statement. “From 2019 onwards, we will be firmly embedding all-electric, battery-powered mobility in our core brands.”

It also lost its sales race to Mercedes last year. While its lineup is generally excellent—if you’d kick an M2 out of your garage I don’t want to be friends with you—it seems BMW has a lot more work to do, especially when it comes to making money off all the tech it’s investing in.

2nd Gear: We Drove The Cars A Lot

Here at Jalopnik, we have a saying about what we do: we drive the cars. Evidently we aren’t the only ones doing this! Who knew. The feds report that Americans drove 3.2 trillion miles last year.

Wow Wednesday (I’m a day late on this) indeed! Also traffic fatalities are way up. Great.


3rd Gear: Cyber Security Sucks

We’ve worked hard not to be as alarmist as some outlets on the subject of car hacking, which should not be confused with car tampering, and that the idea of ISIS teens with laptops sending our cars flying into the ocean en masse is a bit farfetched. But that doesn’t mean cars shouldn’t be secure.


On the heels of the report that the CIA has been looking into car hacking for some time—they’re looking into everything-hacking, because they’re the fucking CIA—there are renewed concerns about cybersecurity in vehicles. And as this Reuters story points out, nothing is really being done yet:

In January, U.S. lawmakers introduced a bill calling for cyber security standards for new cars but so far U.S. regulators have issued recommendations, not rules, on how carmakers should shield their computer systems from hackers.

The industry is “years away” from solving the cyber security problem, Lanctot said, noting that the first generation of cars built after the Jeep hack that include some kind of detection capabilities will not be seen until early in 2018.


4th Gear: A Chinese Car Plant In America?

We’ve already gotten a taste with Buick and Volvo, but it’s only a matter of time before Americans get Chinese cars, including from Chinese brands and not just Chinese factories. But in light of the new presidential administration’s beef with NAFTA and Mexico, Chinese automaker is reconsidering a new Mexican plant. It could come to the U.S. instead. Via a Bloomberg wire story not online yet:

Great Wall Motor Co., led by billionaire Chairman Wei Jianjun, may choose the U.S. instead for its first North American plant, General Manager Wang Fengying said in an interview. The company has a research center in Los Angeles and will accelerate preparations to develop U.S.-certified versions of its Haval SUVs for sale by 2020, Wang said.

“Your decisions should always adapt to the dynamic changes,” said Wang, a delegate at this week’s National People’s Congress in Beijing. There used to be many carmakers building plants in Mexico but Trump’s changes have affected their decision making, Wang said.


If it does it will be interesting to see which state it ends up in.

5th Gear: Turbos May Not Be The Answer To Fuel Economy

First downsizing gets disproven, now turbos are in question too as far as efficiency gains. This Detroit News story on turbos has a lot of stuff you already know about them, but it raises some of their problems too:

Consumers, though, have had issues with turbocharged engines across several brands, [David Amodeo, a senior manager at J.D. Power] said, and fuel economy has been a particular sore point.

“The caveat is that on the EPA’s test cycle, these engines look fantastic from a fuel efficiency standpoint for the window stickers, but some consumers are saying, my fuel economy is horrible, because they have to sink their foot into it more because the engine has to work harder to generate that power,” Amodeo said.

In J.D. Power’s 2016 Vehicle Dependability Study, which is based on 2013 vehicle owner responses after three years of ownership, turbos had nearly 30 percent more complaints than nonturbos. That includes all types of complaints, such as responsiveness and fuel economy, not just mechanical failures or warranty claims.


Reverse: Adopt A Highway


Neutral: Car Hacking

You worried? How big a deal is this? What should regulators and the industry be doing?

Editor-in-Chief @ Jalopnik, 2015-2019.



5th Gear:

A big “no shit, Sherlock!” from everybody who paid attention in high school chemistry. The ideal stoichiometric ratio for combustion of gasoline did not change, and N/A engines have enjoyed similar gains in all other areas of efficiency gaming.

I mean, what is a blower really doing except increasing the cubes, anyway?

The old adage holds: no replacement for displacement. Eat it, EcoSnooze!