BMW prices i3 electric car below expectations to help fuel demand

MUNICH -- BMW will sell the battery-powered i3 city car at a lower-than-expected base price to encourage demand for its first electric vehicle as the automaker aims to keep rivals Audi and Mercedes-Benz at bay.

The i3 will cost 34,950 euros for the base model in Germany, the company said today in a statement. In the United States, the i3 will cost $41,350 before any federal or state incentives and without destination and handling charges, which currently are $925, BMW said.

The i3's price has been keenly awaited because analysts say the high price of electric vehicles is deterring potential customers.

"With this leading-edge vehicle and attractive price, we will provide customers with a compelling offer for electromobility," BMW sales and marketing chief Ian Robertson said in the statement.

Commerzbank analyst Sascha Gommel said: "The price is very competitive. "It seems realistic that BMW could grab a decent share of the electric-car market" with the i3.

Reports had said that the i3 would have a starting price of just below 40,000 euros.

Second-car buyers targeted

With the compact-sized i3, BMW is targeting second-car buyers in urban regions in the world's main auto markets, Robertson said last week.

BMW has not given a sales target for the i3, although Robertson has said it aims to be "a significant player" in the market for electric vehicles which he has pegged at about 150,000 cars worldwide in 2012.

BMW says the i3 is the world's first premium car designed from the ground up to be powered by an electric drive system. The car uses the industry's first mass produced carbon fiber reinforced plastic (CFRP) passenger cell mounted on an aluminum chassis. It weighs 1195kg (2634 pounds), 300kg less than other electric cars of the same size.

The i3 has a maximum range of 200km (124 miles) driven in power-saving mode and 160km (100km) in what BMW calls "comfort" mode. A variant with a two-cylinder, 650cc gasoline engine to extend the i3's range to 300km is also planned. The range-extended version will cost nearly 4,000 euros more than the regular EV, BMW sources say.

The i3 will be unveiled on July 29 in London, New York and Beijing and will go on sale in November in Europe. It will arrive in U.S. showrooms in the second quarter of 2014.

BMW has invested 600 million euros in production facilities for the car, including installing annual capacity of 40,000 units at its Leipzig, Germany, plant, and building a new factory in the United States at Moses Lake, Washington, that makes carbon fiber for the passenger cell.

Internet sales

BMW will offer additional services such as at-home charging stations and car sharing to ease concerns about the limited range of the vehicle. The company will sell the i3 through the Internet, sales people that visit customers in their homes and through select dealers.

BMW created a separate "i" sub-brand to market electric vehicles and is counting on the i3 and the i8 plug-in hybrid sports car, due to hit dealerships early next year, to give it an edge in innovation, a key attribute for premium auto manufacturers.

BMW Group, which also includes Mini and Rolls-Royce cars, is stepping up investment on new vehicles and technologies as German rivals Audi and Mercedes seek to snatch the luxury-sales crown by the end of the decade.

Volkswagen-owned Audi, which eclipsed Mercedes as the world's No. 2 premium-auto maker in 2011, narrowed the gap to BMW to no more than 24,000 cars after six months from 85,000 at the end of 2012.

Reuters and Bloomberg contributed to this report