Statement Oliver Zipse, Chairman of the Board of Management of BMW AG, Conference Call Interim Report to 31 March 2021

BMW:Statement Oliver Zipse, Chairman of the Board of Management of BMW AG, Conference Call Interim Report to 31 March 2021

Good morning, Ladies and Gentlemen.

The BMW Group is a global company.

We leveraged this strategic strength both during the financial year
2020 and in the first quarter of 2021.

When the market situation is difficult in individual regions of the
world, the other markets carry us through.

Since the start of the pandemic, we have done everything possible to
create a safe working environment for our employees. We also offer
safe and contact-free delivery of vehicles to customers.

In more than 60 markets we have set up Mobile Sales Offices. Our new
Customer, Brands and Sales System is taking advantage of the momentum
and growing acceptance of digital services that has been building over
the past year.

Our strong results underline the viability of our business model –
even during one of the worst crises the global economy has faced. It
is robust, in demand all over the world and full of innovations.

In many areas, we have picked up the pace once again.

I would like to give you a brief overview, focusing on three main points:

  1. We are on course for growth – and we are growing profitably.
  2. We are growing sustainably and have a clear roadmap into the future.
  3. We are shaping the technology for tomorrow’s mobility.

Let’s start with the first point.

The BMW Group delivered excellent results in the first quarter of 2021.

  • Markets worldwide are recovering.
  • Our diverse product portfolio is reaching large groups of customers.
  • And our ongoing efficiency measures are paying off.

This shows clearly: our strategy is having a real impact.

The Automotive Segment delivered an EBIT margin of 9.8 percent in the
first quarter – back within our strategic medium-term target range for
the first time in ten quarters. As in the past, this EBIT margin does
not include the at-equity result from our BBA joint venture in China.

Another indicator of our operating strength is our free cash flow of
2.5 billion euros in the Automotive Segment – our best figure ever for
a first quarter.

Our first-quarter deliveries also reached a new all-time high.
Compared with the first quarter of 2019 – in other words, the
comparable period before the crisis – Group sales increased by six percent.

Our total market share worldwide has climbed up to 3.3 percent –
from 2.9 percent in the same period 2019.

Our performance in the Chinese market stands out, in particular.
Compared to the first quarter of 2019 – again, pre-crisis – our China
sales increased by more than 36 percent.

We recently presented our model line-up for our largest market at
Auto Shanghai 2021. With highly innovative, digitalised, electric and,
above all, exceptionally high-quality products, like the BMW iX3, the
BMW iX and the BMW i4, we intend to sustain our growth in China.

Our electrified models are also in high demand globally. In the first
quarter, we were the biggest manufacturer of plug-in hybrids worldwide.

With more than 70,000 electrified vehicles sold in the first three
months of 2021, we are on track to have a total of one million
fully-electric vehicles and plug-in hybrids on the roads by the end of
the year.

This also illustrates the success of our flexible architecture strategy.

The BMW iX3 is receiving consistently outstanding ratings from the
automotive press: not only because of its many impressive
characteristics – such as its quality, comfort, connectivity,
operating ease and dynamic performance – but also its range.

Its efficient drive train puts it on a par with electric models with
the highest ranges among all brands within its segment.

Just yesterday, I met with journalists testing pre-production models
of the BMW i4. This car will put e-mobility right at the heart of the
BMW brand.

I am extremely confident we will be able to build on our e-mobility
successes with the BMW i4 and BMW iX.

Growth remains our industry’s strongest currency.

Before the end of the decade, we want to reach the milestone of three
million delivered vehicles annually. As far as the BMW Group is
concerned, we are also growing profitably and sustainably – and we
will make sure this continues.

That brings me to my second point:

We are growing sustainably.

Sustainability is the new language that connects the world.

The three major world markets, Europe, the US and China, as well as
other industrial nations, have set themselves ambitious goals on the
road to climate neutrality. They have recently confirmed – and even
stepped up – these targets.

The next big, binding step will be the year 2030 – also for the BMW Group.

We have geared our company entirely towards sustainability. By 2030,
we aim to reduce our actual carbon footprint per vehicle by at least a
third from 2019 levels – in a verifiable and transparent manner,
everywhere around the world.

During our Annual Conference, we published an integrated BMW Group
Report for the first time, which documents our progress and, most
importantly, gives equal weighting to our sustainable development and
financial indicators.

A company does not become sustainable simply by flipping a switch or
buying certificates. What counts is not alleged sustainability – but
verifiable measures that deliver a real impact.

That is why we joined the Science Based Targets Initiative.

We think about sustainability in a way that goes far beyond emissions.

Energy and resource consumption will be the next, much bigger issue.

Raw materials are becoming more expensive. Water and many mineral
resources are scarce and valuable commodities.

We are seeing that especially right now. This is why it is so
important to think in terms of a circular model and reduce our use of
materials from the outset.

To achieve this, we are relying on partnerships and collaboration
across our industry, with NGOs as well as political institutions.

This requires hard work, investment and an ongoing commitment.

We firmly believe: we will add value for society in this way, and
also become a stronger company in the long term. 

Let me give you a few examples from the last few months alone:

  • We significantly overfulfilled our CO2 fleet targets in Europe
    last year – and we are strategically on course to meet the goals for
    2021 and beyond. Both further development of our conventional drive
    trains and our electromobility offensive will play a big part in this.
  • With support from the strategic EU programs IPCEI – which stands
    for Important Projects of Common European Interest – we are involved
    in another project that is advancing battery technology. We are
    conducting research into a new generation of sustainable batteries
    optimised for use in a circular model – for vehicle use, then for
    stationary energy storage and, finally, for efficient dismantling
    and reuse of materials.
  • Our suppliers rely on 100% green power to produce battery cells;
    at the same time, we are increasing our use of secondary material.
    To give you a concrete example: In the BMW iX, we are reducing
    carbon emissions in the supply chain by 17%, compared to the same
    vehicle produced without these measures.
  • We have signed multi-year supply contracts for sustainable lithium
    from South America with the American company Livent. Livent uses a
    special method that minimises the impact of lithium extraction on
    the surrounding ecosystem.
  • With immediate effect, we will be sourcing half the aluminium
    needed by our light metal foundry in Landshut from Emirates Global
    Aluminium. The aluminium is produced using electricity from one of
    the world’s largest solar parks.
  • With an investment in Boston Metal, we are also promoting green
    innovations in steel production. Boston Metal is working on
    industrialisation of electrolysis processes in production of liquid
    iron. We aim to reduce our CO2 emissions from steel by about two
    million tonnes by 2030.
  • Additionally, we have launched an initiative to protect the deep
    seas with the WWF, Google, Samsung SDI and the Volvo Group. We will
    not source minerals from deep-sea mining until there has been a full
    scientific investigation into the impact.

All these examples show that:

Sustainability cannot be taken for granted. It takes a lot of
different measures to achieve a large-scale effect – as well as a
conscious openness towards choosing the most effective technology in
each case.

Our ambition is clear:

The greenest electric car will be a BMW.

However, we also know that we always have to – and we will – combine
sustainability with technology, innovation and inspiring products for
our customers.

That is the BMW way. And we will continue full speed ahead.

That brings me to my third and final point:

We are shaping the technology for tomorrow’s mobility.

  • We are once again upping the pace of our electromobility offensive
    and plan to deliver more than 100,000 fully-electric vehicles to
    customers this year.
  • By 2023, we will have at least one fully-electric model on the
    roads in all key segments – from the compact segment to the
    ultra-luxury class.
  • By 2030, at least half our global sales will come from
    fully-electric vehicles.

We are electrifying all our brands to achieve this.

  • MINI will release its final model with a combustion-engine variant
    in 2025.
  • At Rolls-Royce, electric driving will soon define a new form of luxury.
  • At BMW, we are ready for a strong market ramp-up for the i4, iX,
    7 Series, X1, 5 Series and other models.

We will also be introducing our new and self-developed BMW Operating
System 8 with the BMW iX: a new generation of performance, user
experience and intelligent driver assistance.

In combination with high-performance hardware, we are capable of
processing more data live than ever before. The data transfer is 10 to
20 times faster than in previous systems.

We have also enhanced our award-winning and safe display and
operating concept. 

BMW Operating System 8 is designed for 5G connectivity, with complete
functionality for applications like our powerful cloud-based
navigation software BMW Maps. 

Third-party services can be fully integrated into the operating
system.
This applies, for instance, to services from Apple,
Google, Tencent and Spotify, which can transform the vehicle into the
perfect digital companion.

We already introduced over-the-air updates for our vehicles with
BMW Operating System 7. More than one million vehicles have already
received upgrades.

This was a huge success that we will continue to build on. In many
cases, our vehicles can be configured with functions on demand at a
later date.

By the end of the year, we will have the largest connected fleet in
the world, with around 2.5 million vehicles with Remote Software
Upgrade capabilities.

And we are already planning the next big step.

At the Annual Conference, we unveiled the broad strokes of our
vehicle strategy from the middle of the decade:

the Neue Klasse – electric, digital and circular.

It will be key to the future success of the BMW Group. We are putting
all our know-how and considerable investment into this development.

The Neue Klasse will establish a new generation of technology modules
– targeting maximum synergies and scalability for our entire vehicle portfolio.

We will be introducing a new digital architecture and a new
generation of electrical system.

We will also be taking the next leap with our electric powertrain and
leveraging the opportunities of the new architecture to redesign our
batteries. At our Battery Cell Competence Centre, we are currently
testing different cell chemistries, formats and modules.

We aim to realise an automotive-compatible solid-state battery in
collaboration with the battery specialist Solid Power by the end of
the decade. We will present an initial demonstrator vehicle with these
batteries well before 2025.

Ladies and Gentlemen,

The BMW Group is on course for success.

We are growing and reaching more customers than ever.
We are
focused on our goal of reaching three million units sold in a single
financial year within this decade.

In recent years, we have been working hard to get back on a
profitable track. Today, we are seeing the benefits of this strategy.

We are setting the standard with our sustainable global business model.

We will eliminate mobility as a climate factor in the long term – by
implementing impactful and transparent measures in the BMW style.

And we are paving the way for the next leaps in technology – that
will inspire our customers even ten years from now.

Thank you for your attention.

Original Press Release