LOS ANGELES -- BMW expects sales of its electrified cars to surge in the next decade as the technology hits the mainstream, putting it in a race against Tesla and Mercedes-Benz.
Plug-in hybrids and all-electric cars across the BMW and Mini brands could account for between 15 percent and 25 percent of sales in about 10 years, BMW CEO Harald Krueger said in a Bloomberg Television interview.
To put it in context, that's potentially more than half a million cars based on 2015 sales of 2.25 million vehicles, and compares with a 2 percent share of deliveries now.
"With more range and more infrastructure being available, you will see more electrified vehicles," Krueger said during a visit to Los Angeles. "We need some time for this movement and development, but it's nothing that will go away."
Automakers are under pressure to sell more battery-powered vehicles to make good on heavy investment in the technology and meet tightening emissions regulation. Volkswagen Group and General Motors are among automakers readying models that can drive several hundred miles on a single charge. Renault and Nissan are extending the ranges of their Zoe and Leaf electric cars.
Volkswagen's I.D. concept -- due to go on sale by 2020 -- will have a range that's almost twice as long as Tesla's upcoming Model 3 sedan.
BMW has an i3 all-electric car and an i8 plug-in hybrid that make up its more environmentally friendly i subbrand BMW was one of the first European manufacturers to produce a standalone electric vehicle. Last month, the company unveiled plans for a battery-powered model for its urban Mini brand and an all-electric version of the BMW X3 SUV, indicating that the company considers the technology ready for a mainstream rollout.
After claiming the first-mover crown among major carmakers, BMW's efforts slowed, as limited driving range and high costs made buyers wary. The i3 electric city car, which came to market in 2013, costs about $42,400. The manufacturer also offers seven models with plug-in hybrid technology, such as the 7-series sedan and the i8.
As ranges improve and costs drop, competition is intensifying. Mercedes, which is set to overtake BMW this year as the world's best-selling luxury-car maker for the first time in a decade, predicts that electric vehicles will account for as much as 25 percent of its deliveries by 2025.Mercedes plans to produce at least 10 all-electric models by then, and is working on a coupe-style SUV that's part of a new standalone subbrand dubbed EQ.
Automakers are responding to the threat posed by Tesla, which has proved that cars can be eco-friendly and cool at the same time. Tesla is boosting output at its U.S. factory with the aim of making 500,000 vehicles a year by 2018.
Tesla's more established rivals have emphasized plans to manufacture electric models on production lines that also make cars with combustion engines, setting them up for a flexible response to growing demand.
"Electric cars are very important for the future -- if you'd like to offer sustainable mobility solutions then you need electrified products," said Krueger. "But in the next couple of years you'll still have combustion engines."