BMW braces long road to EV, self-driving success

BMW has set up a "speed boat" unit to boost its self-driving expertise but will roll out autonomous car technology gradually, development chief Klaus Froehlich says. The executive spoke about BMW's electric-car and autonomous driving strategies, as well as the fallout from Volkswagen's emissions scandal with Automobilwoche, a sister publication of Automotive News Europe.

What is the industry learning from Volkswagen's diesel emissions scandal?

That it is not just a matter of following the law within its defined scope but its spirit as well. Every manufacturer has to regain trust with its actions. So the result is not really an occasion for BMW to celebrate.

Do more stringent emissions rules in the future mean added costs for BMW's engines?

That will inevitably be the case. In all, I expect we will spend significantly more than 1,000 euros in addition on [each of] our cars.

Will that amount be passed on to the customer?

We can't just pass on these costs. It's not feasible in this highly competitive market. The customer won't go along with it. The emissions rules offer no direct customer benefit. The total cost of ownership is the customer's most important calculation. In this matter, there is dissonance between public opinion and actual customer behavior.

If a premium manufacturer like BMW can't do it, then how can a high-volume manufacturer do it?

I think this issue will hit the basic manufacturer even harder. As BMW, we are in the fortunate position of being able to charge a price premium for our emotionally appealing, high-value products.

How do you plan to sell electric cars profitably? In the same way?

No, when it comes to electric mobility, we're talking about entirely different challenges and tasks.

Do incentives help electric car sales?

Compared to conventional cars, we are already accepting a reduction in the profit contribution of our electric cars. That means we are already promoting them massively.

What does an electric car need to be accepted in society?

First of all, we have to lower costs as an industry. Currently, we still have heavy advance investments. Secondly, electric mobility must not mean limitation or doing without. Electric cars have to be emotionally appealing and fun to drive.

Your i-models and your cars with internal combustion engines have different appearances. Are you sticking with your individual look?

We want to make electric cars recognizable on the road. People must be able to see electric mobility. Only then does it have a chance to become normal.

At what point will you feel that your fleet has really positioned you well for electric mobility?

We had originally anticipated a market penetration of 10 percent in 2020. But at the moment, we are not getting this penetration. So we have to continue to work on our strategy, and plug-in hybrids are an integral component of it.

Customers have had problems with the residual value of plug-in hybrids. Who buys a car that is sold as a "bridge technology"?

I would talk about an all-around product instead of a bridge technology. A long time will pass before purely electric vehicles have a truly large-scale presence in the market – far beyond the lifespan of our plug-ins.

What is China's importance to you in the electric-mobility field?

China is becoming the leading market for electric mobility. If regulators in cities such as Beijing or Shanghai only let purely electric vehicles inside, you can expect huge demand.

But in that case, you would need enough cars in your portfolio that are designed for this. China is in fact only promoting local manufacturing. So we will bring more plug-in hybrids and electric vehicles into series production in our local operations. The bottom line is that the worldwide availability of our plug-in hybrid models will reach double digits in 2020.

Is electric mobility also the driver for autonomous driving?

I am not inclined to see it that way. There are two drivers: One is the customer's need to not always drive the vehicle himself. Just think about traffic jams or searches for parking spots in large cities. New business models are the second driver. Companies outside the industry, in particular, need autonomous driving to optimize their business models. That's why it's not surprising that Google, Lyft and Uber in the U.S. are pressing for appropriate regulation.

When will autonomous driving go into series production at BMW?

On the autobahn, we can drive autonomously relatively easily. There are also cities where very few pedestrians are out and about, in the U.S., for example. So we are not waiting for every regulator in the world to clarify product liability and the same ethical standards. This means it will begin regionally. But it is also true that years will pass before we really penetrate large cities. That's why BMW is rolling out the technology piece by piece.

What does this mean for BMW?

I oriented my organization appropriately in April. The electronics issue is being significantly strengthened. There is a need for software standardization. In the future, more and more will be taking place at the backend. And I've set up a "speed boat": an organization designed to build competency in fully automatic driving in the shortest possible time.

What do you need for autonomous driving?

It starts with a highly precise map, which explains the acquisition of Here. We also need a sensor cluster in the vehicle. The environment has to be captured down to the last centimeter. There are no sensors that can do that today. The industry now has Lidar sensors, which rotate on cars' roofs and cost several thousand dollars. A great deal of development work is still needed in this area.

But isn't there reason for skepticism that the legal framework will actually become a reality in the near future?

This tends to be a German debate. The discussions on the balancing of legally protected interests will go on longer here. We Germans look at it this way: When an autonomous car notes that an accident is unavoidable, it has to make an ethically correct decision. In other regions of the world, people say a new technology should be promoted if it saves significantly more human lives than it endangers.

What are the consequences of this?

We Germans should not let the time slip away and reach the point where the key elements have long been implemented in America, China and Japan. The result would be that Germany and Europe could only adopt state-of-the-art technology that was established elsewhere.