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Monday, November 8, 2010

Never believe a politician

The NY Times ran a story Saturday (picked up by the Merc) about the dedication of the new BMW electric car factory in the former East Germany. If nothing else, it proved that political hyperbole is not just endemic to the US but apparently a disease that afflicts the would-be ruling class the world over.

Just as our president has visited the shiny new PV plant of the (now-troubled) Solyndra, so Chancellor Andrea Merkel was on hand for the opening of the Leipzig plant scheduled to crank out EVs starting in 2013. Merkel’s picture was used in the dead tree Merc (I don’t get the dead tree Times).

There were no quotes from Merkel in the story, but the Times found the prerequisite hyperbole from the local governor:
“We’re at the beginning of an auto revolution,” said Stanislaw Tillich, the prime minister of the state of Saxony.
Despite this glowing prediction, NYT Germany correspondent Jack Ewing interpreted the company’s announcement as predicting limited production of only tens of thousands of units each year. Politicians notwithstanding, BMW appears to see this as a limited niche for now. (Various web sources suggest that BMW sells about 1 million cars/year, the majority of those 3-series sedans.)

Also, the new car seems like it will be less of a BMW and more a new subbrand, Megacity, a sister to the BMW-owned Mini brand. The factory already produces the BMW economy car, the 1-series, that we don’t see here in the US. I don’t know if this is to start a new brand for electric cars or (more likely) protect the performance reputation of the main BMW brand.

The Merc headline (but not the story) also trumpeted this as competition for Palo Alto-based Tesla Motors. While the rumored volumes dwarf anything yet demonstrated by Tesla, it’s hard to see how an electric econobox will draw demand from the existing Roadster.

We would have to see the actual list prices of the vaporware Megacity — as well as Tesla’s planned sedan — to predict whether the former will cannibalize sales of the latter. Based on what I’ve heard so far, this would be like asking whether Camry drivers will trade down to a Yaris — it’s possible if there’s a $30k difference but probably not if there’s a $10k difference.

However, a planned BMW PHEV sounds like a direct competitor for the Roadster:
BMW said it had also decided to produce a plug-in hybrid sports car known provisionally as Vision Efficient Dynamics. The car, which has been displayed at auto shows as a design study, will accelerate from zero to 60 miles per hour in less than five seconds, but be more fuel-efficient than most economy cars now on the market, BMW said.
The fabled BMW image, engineering and track record (in both senses of the phrase) could give it an edge over the fledgling Silicon Valley firm.

The three-cylinder diesel BMW would not be available until “2013 or 2014” at a price above €100,000. So for now, the limited-range all-electric Roadster has some breathing room.

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