Supply Chain Matters draws reader attention to a published report profiling luxury auto maker BMW’s strides in  electrical vehicle production.

 

Performance in Electric Vehicle Production

The New York Times published report, BMW Is a Surprise in Electric Vehicles (Paid subscription or metered view) is a noteworthy and insightful read.

The report highlights the luxury automaker’s production approach where electronic powered model vehicles not only have the same appearance of gasoline powered models, but are produced on the same production line in Munich, Germany.

The approach is one of flexible manufacturing, practiced by other global manufacturers including Toyota Motor. Such flexibility allows BMW the ability to dial-up or dial-down EV production of different types of vehicles including power configuration.

What impressed us was that the auto maker reportedly sold 376,000 EV’s in 2023, a 75 percent increase from the previous year. Additionally, EV’s accounted for 15 percent of BMW’s 2023 vehicle sales, an increase from 9 percent the previous year. As a comparison, Tesla sold 1.8 million vehicles in 2023. Further reported is that BMW has reported achieved profitability on the EV’s being sold, unlike major U.S. automaker’s that are losing money on each EV being sold.

Specifically observed: “BMW’s approach could show a path to other automakers that have been manufacturing automobiles for decades but have made little headway in the transition to battery powered vehicles.” The auto maker also provides prospective buyers hybrid powered power options for models allowing buyers the ability to select power plant within a list of available vehicle options.

A further observation noted is that: “buyers prize the familiarity and workmanship of longstanding carmakers and remain wary of newer brands.” The company’s model line-up including EV‘s have garnered positive brand and vehicle  reliability ratings from Consumer Reports, above those of Tesla.

A further observation is one that Supply Chain Matters has also touched upon.  Namely, that Tesla with its engineering and software development capabilities has proven that such vehicles can fuel customer demand, but continues to struggle with new product development cycles along with sustained manufacturing volumes. As observed: “The established car companies had decades of experience in manufacturing but faced steep learning curve with batteries and software.”

Both observations speak to the core of business and supply chain transformation.

Results of Operations Anchored Leadership

We submit that BMW’s performance to date is not one of chance but rather rooted in senior and operational leadership.

Back in 2019, Supply Chain Matters highlighted the appointment Oliver Zipse to be the company’s then new chief executive. At the time of his appointment, Zipse had  served as senior leader of operations since 2015 and had further been a member of company’s operations committee providing engineering leadership experience as-well.

In our posting we highlighted that the automaker’s electric vehicle development strategy differed from other luxury auto makers in that it adds electric and hybrid powered options to existing platforms, rather than development of an entirely new EV platform.

Zipse’s appointment at the time brought reaction that he would be one of the youngest executives tapped to lead this iconic German based automaker.

In an April 2023 update commentary, we highlighted CEO Zipse’s speaking remarks delivered at the Shanghai Auto Show where he described the adoption of “a completely new approach” to the company’s supply chain strategy.

Our commentary further highlighted a recorded Bloomberg video interview in April 2022 where this CEO emphasized: “whatever you do (as a company), flexibility is critical”  along with articulation of the importance of the proximity of critical materials to key markets being served or the needs for supply chain resilience to market changes. Other statements related to the ability to increase supply as market demands warrant, and with the ability to respond.

We highlight such prior history because of what we believe is the relevance to what is now occurring at BMW.

These efforts stemmed from a leadership change that occurred five years ago with an executive that is anchored in supply chain management strategy and production flexibility concepts. The fruits of that direction are now coming to the industry forefront.

We value specific reader observations as well.

 

Bob Ferrari

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