Profitable first half-year – BMW Group stays on course in difficult environment

In a highly volatile environment, the BMW Group remained on course in the first half of 2022. With flexibility and expertise, the company encountered challenges including continued supply chain disruptions and bottlenecks for semiconductors and specific supplier parts.

in BMW  Group, 03-08-2022


  • 1st half-year: Group EBT totals € 16.2 billion (EBT margin: 24,5%)
  • 1st half-year: EBIT margin Auto of 8.5% (excluding consolidation effects related to BBA: 12.6%)
  • 2nd quarter: Free cash flow of €3 billion in Auto Segment
  • Annual outlook for EBIT margin in auto segment confirmed: 7-9%
  • BEV sales more than double in 1st half-year (+110.3%)
  • Persistent supply bottlenecks ? solid sales volume growth in 2nd half-year yoy expected
  • Zipse: “High degree of resilience and flexibility”
  • NEUE KLASSE defines what BMW Group stands for

In a highly volatile environment, the BMW Group remained on course in the first half of 2022. With flexibility and expertise, the company encountered challenges including continued supply chain disruptions and bottlenecks for semiconductors and specific supplier parts.

The BMW Group’s underlying strength and operational excellence was reflected in its profits for the first six months: Despite the volatility, the company earned a Group EBT margin of 24.5% (Q2 2022: 11.3%). The revaluation of the previously held shares in the Chinese joint venture BMW Brilliance Automotive Ltd. (BBA) contributed to the high return. This revaluation due to full consolidation on February 11 increased the financial result by € 7.7 billion.

The Automotive EBIT margin in Q2 was 8.2% (HY1 2022: 8.5%). In the first two quarters of the year, the full consolidation of BBA dampened Automotive Segment earnings. Excluding the effects from its full consolidation, the BMW Group posted an EBIT margin in the Automotive Segment of 12.0% in Q2 (HY1 2022: 12.6%) – well above the long-term strategic corridor of 8-10%.

“Especially under unfavourable conditions, the BMW Group is characterized by a high degree of resilience. The company recognizes changes in the economic environment at an early stage and counteracts them accordingly. Our high degree of flexibility and operational performance have proven time and again to be an effective combination to ensure the BMW Group’s successful course even in rough waters. This strength will now be important again, as we see an increasing economic headwind coming up in addition to the ongoing supply shortages,” said BMW AG CEO Oliver Zipse in Munich on Wednesday.

To the long-term success of BMW Group contribute its pioneering spirit and consistent focus on innovation. An upcoming proof-point of its innovative strength is the pure electric NEUE KLASSE. It will be fully geared towards sustainability and circular economy, using new technologies and production processes from the middle of the decade onwards. The all-electric products of NEUE KLASSE will make a significant contribution to BMW Group sales volumes from the middle of the decade onwards and will further accelerate the ramp-up of e-mobility.

“Emotional products and innovative technology are and will remain the backbone of our business success. Our rapidly growing range of all-electric vehicles with the BMW Operating System 8 impresses customers and experts alike — and is already a central driver of our sales today,” said Zipse. “From 2025, we will make the next big leap with the NEUE KLASSE: The NEUE KLASSE defines what the BMW Group stands for in the future. At the start, we are planning a compact sedan in the 3?series segment and a sporty SUV. By the end of the decade, the NEUE KLASSE is expected to account for more than half of our sales.”

Deliveries of fully-electric vehicles more than double

In the first half of 2022, the BMW Group was able to more than double its sales of pure electric vehicles to 75,890 units (2021: 36,087 vehicles/+110.3%; Q2 2022: 40,601 units; +85.2%). During the same period, sales of electrified vehicles increased significantly, climbing 20.4% to 184,468 units (2021: 153,243 vehicles; Q2 2022: 94,799 units; +14.2%). Electrified vehicles’ share of total deliveries rose to 15.9% (HY1 2021: 11.4%).

The BMW iX3* (2022: 21,548 vehicles; HY1 2021: 10,009 vehicles) and the MINI Cooper SE* (2022: 18,428 vehicles; HY1 2021: 13,454 vehicles) remained the most in-demand fully-electric models, reporting significantly higher sales than in the prior-year quarter. 69% of these fully-electric vehicles were delivered to customers in the European region. The innovative BMW iX and BMW i4, which are still being launched in the markets, have also been well received and contributed to the outstandingly high order bank of BMW Group. Further sales growth is expected in the second half of the year – on top from the fully-electric BMW i3 built in China, but also from the BMW iX1* and the BMW i7* luxury sedan.

Lower sales due to supply bottlenecks – base effect from prior year

Ongoing semiconductor supply issues and supply chain disruptions following Covid lockdowns in China, impacted production and deliveries during the first six months. With a total of 1,160,094 vehicles, BMW Group sales failed to reach the all-time high of the previous year (HY1 2021: 1,339,047 units; -13.4%; Q2 2022: 563,187 units; -19.8% from Q2 2021). The company nevertheless expanded its leading position in the global premium segment.

Significantly higher Group revenues in first half-year

Despite negative sales growth, Group revenues climbed 19.1% in the first six months of 2022 to € 65,912 million (HY1 2021: € 55,360 million; Q2 2022: 34,770; +21.6%). The full consolidation of the Chinese subsidiary BBA was one of the main contributing factors, bringing in revenues of around € 11 billion.

The Group cost of sales also rose significantly for the same reason, reaching € 54,399 million (HY1 2021: € 44,109 million; +23.3%; Q2 2022: € 28,780 million; Q2 2021: € 22,521 million; +27.8%).

Group earnings before tax totalled € 16,156 million after six months (HY1 2021: € 9,736 million; +65.9%), a new all-time high. This includes a tailwind of € 7.7 billion from the revaluation of previously held BBA shares at fair market value.

In the second quarter (Q2 2022: € 3,929 million; Q2 2021: € 5,979 million; ?34.3%), Group EBT was lower than for the same period of last year. On the one hand, this reflects the one-time gain of € 1 billion in the second quarter of 2021 from the partial reversal of the provision for the EU antitrust proceedings. On the other, headwinds from the full consolidation of BBA in the second quarter of this year impacted Group EBT by around € 1.1 billion.

The Group EBT margin for the first six months came in at 24.5% (HY1 2021: 17.6%; Q2 2022: 11.3%; Q2 2021: 20.9%).

Group net profit amounted to € 13,232 million (HY1 2021: € 7,623 million; +73.6%; Q2 2022: € 3,047 million; Q2 2021: € 4,790 million; -36.4%).

Group research and development costs (IFRS) for the first half-year totalled € 3,128 million (HY1 2021: € 2,737 million; +14.3%; Q2 2022: € 1,560 million; Q2 2021: € 1,304 million/+19.6%) and were therefore significantly higher than the previous year. Spending was mainly focused on new models, as well as further electrification and digitalisation of the line-up. Upfront investments were also made for the NEUE KLASSE and automated driving.

The R&D ratio (HGB) of 4.5% (HY1 2021: 4.6%; Q2 2022: 4.5%; Q2 2021: 4.5%) was on a par with the previous year. The R&D ratio for the full year is expected to be within the target range of 5-5.5%.

Group capital expenditure was at a significantly higher level during the first six months at € 2,929 million (HY1 2021: € 1,709 million; +71.4%; Q2 2022: € 1,831 million; Q2 2021: € 950 million; +92.7%). The increase is primarily due to upfront expenditures for the ramp-up of e-mobility and investments at BBA. The capex ratio stood at 4.4% at the end of the first half-year.

“Our investors know that the BMW Group has the financial strength to invest today in the success of tomorrow. We are steering the company through the current transformation with strategic foresight. We are positioning it in such a way that we can leverage our employees’ innovative capabilities and expertise to play a leading role in sustainable mobility today and in the future,” stated Nicolas Peter, member of the Board of Management responsible for Finance.

Full consolidation affects financial figures for Automotive Segment

The financial key figures for the Automotive Segment show significant effects from the full consolidation of BBA during the reporting period. Segment revenues rose significantly to € 56,741 million (HY1 2021: € 47,745 million/+18.8%; Q2 2022: € 30,015 million; Q2 2021: € 24,982 million; +20.1%).

As before, the BMW Group continued to benefit from positive pricing and product mix effects and from growth in its aftersales business. Revenues were also lifted by currency translation effects. In particular, the positive situation on the used car markets in the USA, UK and Germany led to higher revenues from the sale of end-of-lease vehicles.

The segment cost of sales rose to € 48,093 million (HY1 2021: € 39,060 million/+23.1%; Q2 2022: € 25,464 million; 2021: € 20,344 million/+25.2%), with the BBA cost of sales a major contributor to this increase. In addition, headwinds from full consolidation, such as depreciation and amortisation from the purchase price allocation and elimination of inter-company profits, totalled around € 2.3 billion. Rising raw material and energy prices, as well as expenses due to higher prices and research and development costs, also increased the cost of sales. The growing percentage of electrified vehicles this year also raised costs compared to 2021.

Earnings before financial result (EBIT) totalled € 4,830 million for the reporting period (HY1 2021: € 6,189 million/-22.0%; Q2 2022: € 2,463 million; Q2 2021: € 3,953 million; -37.7%). The Automotive Segment EBIT margin was 8.5% (HY1 2021: 13.0%; Q2 2022: 8.2%; Q2 2021: 15.8%). Excluding the headwinds from the full consolidation of BBA, the segment EBIT margin came in at 12.6% for the half-year and 12.0% for the three-month period.

The segment’s financial result totalled € 8,116 million (HY1 2021: € 1,337 million; Q2 2022: € 63 million; Q2 2021: € 797 million). This includes the tailwind from the revaluation of the previously-held BBA shares in February already referred to. The at-equity result, since 11 February no longer including BBA earnings, stood at € 137 million and was therefore significantly lower (HY1 2021: € 975 million; -85.9%; Q2 2022: € -123 million; Q2 2021: € 546 million).

Due to the effects described above, segment earnings before tax (EBT) for the first six months of 2022 amounted to € 12,946 million (HY1 2021: € 7,526 million; Q2 2022: € 2,526 million; Q2 2021: € 4,750 million; -46.8%).

Free cash flow in the Automotive Segment reached € 7,770 million for the reporting period (HY1 2021: € 4,902 million; Q2 2022: € 2,954 million; Q2 2021: € 2,380 million). The acquisition of BBA’s liquid funds, less the purchase price transferred in February, contributed € 5,011 million to this amount. In view of the strong demand for all-electric vehicles, the BMW Group will increase its investments in electromobility from the second half of the year. In addition, the company expects a slight decline in deliveries for the full year. This will only be partially offset by positive price and mix effects and the development of the used car markets. As a consequence, it will now be targeting a free cash flow in the Automotive Segment for the full year of at least €10 billion.

Earnings slightly higher for Financial Services Segment

The Financial Services Segment managed a total of 5,411,274 financing and leasing contracts with retail customers at the end of the second quarter (31 December 2021: 5,577,011/-3.0%). The limited availability of new cars – combined with intense competition in the financial services sector – was also reflected in the number of new contracts. In the first half of 2022, a total of 815,448 new financing and leasing contracts were concluded with retail customers (HY1 2021: 1,029,345; -20.8%; Q2 2022: 382,019; Q2 2021: 540,279; -29.3%).

Thanks to the high-quality product mix, the financing volume per vehicle increased, partially offsetting the reduction in new contracts. The volume of new business from all financing and leasing contracts with retail customers amounted to € 28,442 million (HY1 2021: € 32,445 million) and was therefore only 12.3% lower than for the same period of last year.

High income from the resale of end-of-lease vehicles, especially in the US and Europe, paired with positive currency translation effects, benefited both segment revenues and earnings.

With growth of 2.3%, earnings before tax (EBT) in the Financial Services Segment increased slightly to € 1,981 million (HY1 2021: € 1,936 million; Q2 2022: € 974 million; Q2 2021: € 1,149 million; -15.2%).

The percentage of BMW Group new vehicles leased or financed by the Financial Services Segment stood at 44.4% at the end of the second quarter (2021: 50.2%/-5.8 %-points).

Motorcycles Segment increases deliveries and revenues

In the first half of the year, the sales volume in the Motorcycles Segment remained at the same high level as in the strong prior year. A total of 107,555 BMW motorcycles and scooters were delivered to customers. (HY1 2021: 107,610 units; ?0.1%; Q2 2022: 60,152 units; (Q2 2021: 65,018 units; -7.5%). Revenues were up slightly at € 1,663 million (HY1 2021: € 1,621 million; +2.6%; Q2 2022: € 864 million; Q2 2021: € 868 million; -0.5%).

Segment earnings before financial result (EBIT) totalled € 235 million (HY1 2021: € 284 million; -17.3%; Q2 2022: € 127 million; Q2 2021: € 149 million; ?14.8%), with an EBIT margin of 14.1% (HY1 2021: 17.5%; Q2 2022: 14.7%; Q2 2021: 17.2%).

Outlook – high volatility expected to continue

The BMW Group expects business conditions to remain difficult in the second half of the year. The ongoing supply bottlenecks, particularly for semiconductors, the war in Ukraine and interruptions in supply chains have led to a decline in deliveries in the Automotive segment in the first half of the year. Although the company expects sales volumes in the second half of the year to be solidly higher than in the same period of the previous year, this will not fully compensate for lost volume in HY1 2022. As a consequence, deliveries for the year are expected to be slightly below previous year.

The percentage of electrified vehicles should still increase significantly and sales of fully-electric vehicles are expected to more than double.

CO? emissions in the EU new car fleet can still be expected to be slightly reduced. The significant increase in the proportion of electrified vehicles in total deliveries of the BMW Group is decisive for this.

As before, the company anticipates significantly higher Group pre-tax earnings, due to the full consolidation of BBA.

In the Automotive Segment, the EBIT margin is forecast to be within the range of 7 to 9%, as before. The expected decline in deliveries should be partially offset by positive price and mix effects and the continued good development of the used car markets. RoCE in the automotive business is also expected to remain in the range of 14 to 19%.

A slight increase in deliveries is projected for the full year for the Motorcycles Segment. The EBIT margin is expected to be in the target range of 8 to 10% and the segment ROCE in a corridor of 19 to 24%.

In the Financial Services segment, the consistently good performance in the used car markets led to a rising segment result. Accordingly, Return on Equity (RoE) is now expected to be in the corridor of 17 to 20% (previously: 14 to 17%).

Based on current assessments, the Financial Services segment has recognised appropriate levels of provisions/ allowances to cover residual value and credit risks.

The targets outlined above are intended to be achieved with significantly higher employee numbers, resulting from the full consolidation of BBA. The proportion of women in management positions in the BMW Group should rise slightly regardless of the full consolidation.

Ongoing inflation and interest rate hikes will continue to shape the macroeconomic environment in the coming months and impact demand.

Accordingly, the above-average order bank — particularly in Europe — is expected to normalize towards the end of the year.

Further significant tightening of sanctions against Russia or reactive measures by Russia, an interruption of the gas supply impacting own plants and suppliers’ locations, as well as the possibility of the conflict spreading outside of Ukraine and further extended and ongoing Covid lockdowns are not factored into this guidance.

The actual business performance of the BMW Group may differ from current expectations given the numerous uncertainties and existing risks and opportunities.

 

The BMW Group in figures: Q2/ 2022 Q2
2022
Q2
2021
Change in %
Deliveries to customers
Automotive 1 units 563,187 702,441 -19.8
thereof: BMW units 496,432 617,667 -19.6
 MINI units 65,188 83,165 -21.6
 Rolls-Royce units 1,567 1,609 -2.6
Motorcycles units 60,152 65,018 -7.5
     
Employees                                      (as of 31 Dec. 2021) 118,909  
Automotive Segment EBIT margin % 8.2 15.8 -48.1
Motorcycles Segment EBIT margin % 14.7 17.2 -14.5
EBT margin BMW Group 2 % 11.3 20.9 -45.9
     
Revenues € million 34,770 28,582 21.6
thereof:   Automotive € million 30,015 24,983 20.1
Motorcycles € million 864 868 -0.5
Financial Services € million 8,765 8,200 6.9
Other Entities € million 2 1
Eliminations € million -4,876 -5,470 -10.9
     
Profit before financial result (EBIT) € million 3,426 5,005 -31.5
thereof:   Automotive € million 2,463 3,953 -37.7
Motorcycles € million 127 149 -14.8
Financial Services € million 982 1,128 -12.9
Other Entities € million -142 1
Eliminations € million -4 -226 -98.2
     
Profit before tax (EBT) € million 3,929 5,979 -34.3
thereof:   Automotive € million 2,526 4,750 -46.8
Motorcycles € million 128 149 -14.1
Financial Services € million 974 1,149 -15.2
Other Entities € million 277 124
Eliminations € million 24 -193
     
Income taxes € million -882 -1,189 -25.8
Net profit € million 3,047 4,790 -36.4
Earnings per share (common/preferred) 3  € 4.30/4.31 7.23/7.24 -40.5/-40.5

1 Deliveries including Joint Venture BMW Brilliance Automotive Ltd., Shenyang.

2 Group profit before tax as a percentage of Group revenues.

3 Common/ Preferred shares -earnings per share of preferred stock are calculated by distributing the earnings required to cover the additional dividend of €0.02 per preferred share proportionally over the quarters of the corresponding financial year.

 

 

The BMW Group in figures: HY1/ 2022 HY1 2022 HY1  2021 Change in %
Deliveries to customers
Automotive 1 units 1,160,094 1,339,047 -13.4
thereof: BMW units 1,016,228 1,178,210 -13.7
 MINI units 140,675 157,848 -10.9
 Rolls-Royce units 3,191 2,989 6.8
Motorcycles units 107,555 107,610 -0.1
 
Employees                                      (as of 31 Dec. 2021) 118,909
       
Automotive Segment EBIT margin % 8.5 13.0 -34.6
Motorcycles Segment EBIT margin % 14.1 17.5 -19.4
EBT margin BMW Group 2 % 24.5 17.6 39.2
 
Revenues € million 65,912 55,360 19.1
thereof:   Automotive € million 56,741 47,745 18.8
Motorcycles € million 1,663 1,621 2.6
Financial Services € million 17,251 16,106 7.1
Other Entities € million 3 2 50.0
Eliminations € million -9,746 -10,114 -3.6
 
Profit before financial result (EBIT) € million 6,817 8,030 -15.1
thereof:   Automotive € million 4,830 6,189 -22.0
Motorcycles € million 235 284 -17.3
Financial Services € million 1,948 1,895 2.8
Other Entities € million -174 -5
Eliminations € million -22 -333 -93.4
 
Profit before tax (EBT) € million 16,156 9,736 65.9
thereof:   Automotive € million 12,946 7,526 72.0
Motorcycles € million 237 284 -16.5
Financial Services € million 1,981 1,936 2.3
Other Entities € million 962 265
Eliminations € million 30 -275
 
Income taxes € million -2,924 -2,113 38.4
Net profit € million 13,232 7,623 73.6
Earnings per share (common/preferred) 3  € 19.63/19.64 11.49/11.50 70.8/70.8

1 Deliveries including Joint Venture BMW Brilliance Automotive Ltd., Shenyang.

2 Group profit before tax as a percentage of Group revenues.

3 Common/ Preferred shares. Earnings per share of preferred stock are calculated by distributing the earnings required to cover the additional dividend of €0.02 per preferred share proportionally over the quarters of the corresponding financial year.

 


 

*Consumption/emissions data:

  • BMW iX3: Power consumption in kWh/100 km combined: 18.9-18.5 WLTP.
  • MINI Cooper SE: Power consumption in kWh/100 km combined: 16.9-14.9 NEDC, 17.6-15.3 WLTP.
  • BMW iX1: Power consumption in kWh/100 km combined: 18.4-17.3 WLTP (forecast value based on vehicle’s prior development status).
  • BMW i7 xDrive60: Power consumption in kWh/100 km combined: 19.6-18.4 WLTP.

 


 

GLOSSARY – explanatory comments on key performance indicators

  • Deliveries to customers | A new or used vehicle is recorded as a delivery once its handed over to the end user (which also includes leaseholders under lease contracts with BMW Financial Services). In the US and Canada, end users also include (1) dealers when they designate a vehicle as a service loaner or demonstrator vehicle and (2) dealers and other third parties when they purchase a company vehicle at auction and dealers when they purchase company vehicles directly from the BMW Group. Deliveries may be made by BMW AG, one of its international subsidiaries, a BMW Group retail outlet, or independent third-party dealers. The vast majority of deliveries – and hence the reporting of deliveries to the BMW Group – is made by independent third-party dealers. Retail vehicle deliveries during a given reporting period do not correlate directly to the revenues that the BMW Group recognises in respect of that particular reporting period.
  • EBIT | Profit before financial result. Profit before financial result comprises revenues less cost of sales, less selling and administrative expenses and plus/minus net other operating income and expenses.
  • EBIT margin | Profit/loss before financial result as a percentage of revenues.
  • EBT | EBIT plus financial result.

 

 

Industry uses Ukraine war, other disruptions to create inventive, lasting solutions

Automakers are already simplifying lineups to reduce complexity as they look to satisfy demand amid tight supply.

in Automotive News Europe, by Nick Gibbs, 02-08-2022


Uncertain world

Major disruptions that have affected the automotive industry since 2020

  • COVID-19
  • Ukraine war
  • Semiconductor shortage
  • Rising raw materials prices
  • Higher inflation
  • Tougher CO2 rules, which are speeding up the EV shift
  • New car-retail models

 


Disruption has taken many forms within the European automotive industry over the past two years.

The most dramatic and immediate was endured by suppliers in war-torn Ukraine. Among them was Leoni, which makes wire harnesses at two factories in western Ukraine.

“If rockets are flying around, you don’t know where they will land. You have to be able to get your people into a bomb shelter in 15 minutes,” Leoni CEO Aldo Kamper told the Automotive News Europe Congress in July.

The knock-on effect was that automakers such as the Volkswagen Group were forced to slow production as supply of yet another part became critical.

Leoni scrambled to restart production as the danger from Russia’s invasion of the country in March lessened in the west of the country, but disruption was still just a siren away.

“After a few weeks, we were working three shifts once again. Like in normal times almost, except every now and then you grab your bag, and you go to the shelter for two hours,” Kamper said.

The delicate global web of parts connections created by automakers and their suppliers has been torn many times in the last two years, both by the war and the pandemic. But that’s not the only disruption automakers have faced.

Newcomers led by Tesla have exposed outdated business models by applying a digital mindset to an industry previously more focused on the physical.

Emissions regulations have forced automakers to plan the end of internal combustion engines earlier than many had hoped.

And rising raw materials costs have pushed up the price of everything, not least the electric cars that are poised to replace gasoline and diesel models.

Forced to get inventive, automakers are finding solutions that both solve current problems and aim to create a path to a financially sustainable future in an uncertain world.

For example, the reason Leoni was unable to quickly transfer production to the company’s factories elsewhere in Europe such as Romania was the sheer complexity of the harnesses it was making. And the reason for that was because automakers over the years had offered customers more and more options, especially the German premium brands.

That made each harness unique, Kamper said.

“It was nice for the customer, and it was nice for the automaker, but it came at a huge complexity not only for the harness maker, but for everybody that supplies to the car,” he said. “In this crisis, we now realize that if you standardize, you get more output. I think we will see less hardware variety and more software variety.”

Automakers are already simplifying lineups to reduce complexity as they look to satisfy demand amid tight supply.

Tesla is reportedly only building Model Ys at its new plant near Berlin in one of just two colors: black or white.

Meanwhile, Renault is offering so-called “fast-track” delivery for its Arkana SUV to customers who choose black, pearl white or grey.

As well as forcing automakers to streamline manufacturing, the crises are encouraging them to reassess where exactly parts are coming from.

Unknown links in the supply chain

“Our supply chains can be really complex, and we will quite often know the top of the supply chain and the bottom of the supply chain. But the bit in the middle, it’s quite grey,” Sue Slaughter, Ford’s purchasing director for global material cost and supply chain sustainability, and the former chief purchasing officer for Ford of Europe, told Automotive News Europe.

The crisis has given Ford another variable in its quest to future-proof its supply chain — risk.

“One the of the things that the pandemic taught us is that it’s not just carbon neutrality we need to look at but also the risk assessment of our supply chains,” Slaughter said.

The company had increasingly turned to the Far East for particularly electronics but is now reassessing that.

“Historically, we were just looking at cost. But we all saw that it’s pretty risky when you only have one source around the world,” Slaughter said. “Certainly, we would be looking to move some of the electronics onshore.”

‘Just-in-time plus’

Toyota, a longtime leading influencer when it comes to just-in-time manufacturing, now operates what it calls “just-in-time plus” to allow for a buffer of stock for some items to offset shortages rather than having the supplier deliver direct to the assembly line.

“Nowhere in the Toyota Production System does it say you have to have zero in-house inventory,” Marvin Cooke, head of manufacturing for Toyota Europe, told the Automotive News Europe Congress. “You have to have the right amount of inventory to have a continuous flow of production pulled by the customer.”

Cooke said Toyota went into the pandemic “better off than some of the competitors” due to changes it had made following the parts shortages caused by the March 2011 natural disasters in Japan, but he said there was more to do.

“We recognize we have some vulnerabilities where we would need to either have parallel sourcing or keep inventory,” Cooke said.

New business models

The clear message is that the automotive industry can’t stick to a model that predates the pandemic, particularly when it comes to sourcing from long-distance locations. For one thing, companies need to factor in fast-rising shipping costs.

“We have had to re-examine every one of those [off-shore] business cases because the input costs from before are obsolete,” Doug Del Grosso, CEO of seat maker Adient, told Automotive News Europe.

However, that doesn’t necessarily mean every component needs to be “re-shored.”

“It’s always a function of return on capital. You are duplicating capacity that already exists in an attempt to offset input costs,” Del Grosso said. “The automotive industry has been notorious in duplicating capacities to look for material savings. That’s not a very attractive financial model to pursue.”

He said Adient will continue to source globally, but also with the option to expand local production.

Volvo Car CEO Jim Rowan also pointed to parts sourcing as an area he wants to improve.

“I would love to be further ahead in our local sourcing strategies and have a little bit more supply chain resilience globally,” he told Automotive News Europe. “We are working on that, but that doesn’t happen overnight.”

Crucial question

One crucial question that both suppliers and automakers need to ask: Do they need the same capacity post pandemic as they did before COVID struck.

Only 6.5 million cars were registered in Europe during the first half, according to data from industry association ACEA, down 14 percent on the year before. It’s unclear whether the region will ever return to the 15 to 16 million annual sales seen prior to the pandemic, Philippe Houchois, automotive analyst at the bank Jefferies, told the Automotive News Europe Congress.

He cited the rapid exit by automakers from the affordable minicar sector and raised the specter of shutting plants. “We may have to redesign the industrial footprint if structural demand doesn’t return,” he said.

If it does return, there’s no guarantee customers will choose the incumbent brands.

Less ‘free’ capital

Disruption inflicted on the automotive industry by new players has been a strong theme of the last few years, accelerated by the pandemic amid huge interest in the stock listing of innovative startups.

That has led established automakers to rethink their strategies as they counter the likes of Tesla and other potential threats from EV newcomers, particularly from China.

The money generated by listing in the U.S., particularly from deals with special-purpose acquisition companies (SPACs), allowed innovative automakers to fund lengthy development programs.

However, the subsequent collapse in share prices for startups has severely curtailed their access to new money and that could relieve the pressure on established automakers.

“It’s a very capital-intensive industry and for the last 10 years capital has been for free, pretty much,” Arndt Ellinghorst, a former automotive analyst and now a director at data analyst firm QuantCo, told the audience of the MOVE mobility event in London in June. “That’s changing right now.”

Investors becoming more cautious amid rising interest rates will have one key effect. “It will slow down the path of innovation quite dramatically I think,” Ellinghorst said. “Innovation rarely comes from the automakers; it almost always comes from smaller companies.”

Departing Volkswagen Group CEO Herbert Diess openly praised Tesla CEO Elon Musk and borrowed many of the U.S. company’s ideas, including vertical integration on electrification, software and sales.

The ousting of Diess by the supervisory board in late July and the naming of Porsche CEO Oliver Blume as his successor could indicate that the era of being led by startups is over.

Generally, Europe’s automakers move as one when embracing new trends, but there are signs that some companies want to slow the pace of disruption.

For example, Renault has said it won’t follow the likes of Stellantis, Mercedes-Benz, BMW and VW and move to a direct-sales agency model for its dealers.

“We decided to stay with dealer network contracts and capitalize on a very valuable asset,” Renault Italy CEO Raffaele Fusilli told the Congress. The company has enough on its plate with the move to electrification, supply chain disruption and rising commodity costs. Said Fusilli: “We don’t need another stress test in the system.”

 

Bloomberg

 

Grupo Simoldes e Vasco da Gama CoLAB produzem primeiras «coin cells» de ião de sódio em Portugal

O Grupo Simoldes, através da Simoldes Plásticos, em colaboração com o Vasco da Gama CoLAB, desenvolveram e produziram as primeiras “coin cells” de ião de sódio em Portugal as quais foram apresentadas no passado mês de julho nas instalações da Simoldes, em Oliveira de Azeméis, integradas num demonstrador.

in Molde Online, 02-08-2022


Totalmente concebidas e produzidas nos laboratórios do Vasco da Gama CoLAB, estas primeiras “coin cells” de ião de sódio permitiram validar a química do cátodo e do eletrólito, a construção dos elétrodos e a construção das baterias. A tecnologia de ião de sódio permite a construção de baterias com maior densidade de potência comparando com as baterias de lítio NMC, mais seguras e mais baratas e que usam materiais abundantes, com processos de extração com menor pegada ecológica e facilmente reutilizáveis.

O Vasco da Gama CoLAB é a primeira associação nacional que visa juntar players estratégicos para a criação de sinergias e enfrentar os desafios críticos da sociedade no que diz respeito ao sector energético, nomeadamente a colheita de energia a partir de fontes renováveis, redes inteligentes, energia eólica, fotovoltaica e transporte.

 

SABER MAIS >>>

 

 

Bosch sees chip crisis lasting deep into 2023

Bosch Global Chairman Stafan Hartung says the supplier will look like a different company in 15-20 years as it adapts to electrification and increased automation.

in Automotive News, by John Irwin, 01-08-2022


Stefan Hartung took over as global chairman of Robert Bosch, the world’s largest auto parts supplier, at the beginning of the year at a critical moment in the company’s history.

Hartung is charged with steering Bosch through a range of short-term challenges, such as a semiconductor shortage, war in Ukraine and the potential for a recession, while also ensuring that Bosch remains an industry leader as vehicles electrify and become more automated.

Last month, Bosch pledged $3 billion in investment in more of its own microchip production, research and support activity.

In his first one-on-one interview with a U.S. news outlet as Bosch chairman, Hartung spoke with Staff Reporter John Irwin at the supplier’s new semiconductor plant in Dresden. Here are edited excerpts.

Q: How much longer do you believe the global semiconductor shortage will last?

A: You can’t solve it this year. It’s impossible. It will be better at the end of this year than now, but it can’t be fully solved until beyond then. There will be another important step next year because there will be a change in the economy in general that will impact the demand side of the question. And then hopefully, at the end of next year, we’ll have a much clearer view of how to move ahead with the demand growth.

As Bosch invests billions of euros in its semiconductor business, does it plan to supply more chips to other companies, including supplier competitors?

Most of the investments have been made to fulfill our own demand. But in some areas, we do direct sales of semiconductors — especially in the area of micro-electromechanical sensors. We’re a big player in the MEMS market, and that goes not only to automotive but into wide-scale consumer electronics. We invest in MEMS because it has huge potential, not only in automotive but for consumers. Still, for most semiconductors, we buy. Other people produce for us. It varies by segment.

Bosch is also investing heavily in hydrogen fuel cell technology, even though it’s a relatively niche product. When do you see those investments paying off?

With electrification, we saw a big move happening that more and more car manufacturers are engaging in building platforms for it. But then came the question: “OK, you have the electrified drivetrain, but as you go to the heavier trucks, how is that going to work? How many tons should the battery weigh?”

More and more, you were seeing manufacturers clearly starting initiatives on hydrogen because that is the path for heavy, long-range trucks to become CO2-free. So we started on fuel cell systems.

We saw there were a whole bunch of components linked to it — not just the stack and the system, but also some very technically challenging components. And we like those kinds of things. This is what we’re good at.

Your question is about speed. We’ll have to see. On hydrogen, we know that you’ll see a lot more vehicles with it, but the question is what share is it going to reach and how fast will it go there? That’s still an open question. But I think since it’s a CO2-free technology, it will be used. I’m a big fan of any CO2-free technology.

As Bosch adapts to emerging technologies, how different will the company look in the future?

In 15-20 years, this will be a different company, definitely. There will be different product ranges, and new engine technologies will be much further down the road. There will be way more software engineers. There will be way more computational power in each vehicle, so there will be much more software. And that means completely different setups of teams and collaboration models.

We’ll probably have other partnerships on top of that. We’ll work with more semiconductor companies and work more with software companies and platform companies. Our partnership system will probably explode.

And we’ll probably have to play much more locally. We’ll have stronger local footprints in the United States, in China, in Europe, and also be able to serve customers in these different regions because they’re going to have different demands.

 

 

BMW Group | E-drive production expands in Leipzig: Second battery module line goes on stream

  • E-component production expands
  • Manufacture of battery modules for BMW i4
  • €70 million invested
  • 250 new jobs created
  • Plant Director Petra Peterhänsel: “Plant Leipzig remains electrified”

in BMW Group, 01-08-2022


Today sees the launch of BMW Group Plant Leipzig’s second battery module production line. Further expanding e-component production in the German state of Saxony, the new system manufactures modules for the fully electric BMW i4*, made in Munich. Plant Leipzig’s first such production line went on stream in May 2021 and supplies the battery modules for the BMW iX*.

“Today’s launch of Leipzig’s second battery module production line makes an important contribution to delivering the battery components needed to make a growing number of electrified vehicles,” said Markus Fallböhmer, Head of Engine and E-Drive Production at the BMW Group. The gradual expansion of e-component production is taking the BMW Group ever closer to its goal for 2030, when fully electric models are expected to account for at least half of the BMW Group’s sales.

Ensuring the future viability of Plant Leipzig

The new battery module production line alone comes at an investment of around €70 million. As the expansion of e-component production continues, new jobs are being created as well, with some 250 people working on the new line by the end of 2022, in addition to the current 700-plus already in e-component production in Leipzig.

Plant Leipzig’s second battery module production system occupies an area of approx. 4,250 m² and uses BMW i production areas that are now vacant after the BMW i3 was phased out on 30 June. Each battery module passes through 196 production stations in total before it is complete and ready for further processing.

“Plant Leipzig remains electrified,” said a delighted Petra Peterhänsel, Plant Director. “Now that BMW i3 production has wound down, we can use the skills and experience of our employees elsewhere and offer them secure jobs for the long term,” she commented, adding that this would continue to ensure the future viability of the plant.

To prepare for the steady increase in electrified vehicles,, e-drive production in Leipzig will become even more extensive and flexible as early as next year, with upcoming stages of the expansion programme creating further new jobs. Another major milestone will be production of the successor to the MINI Countryman, due to roll off the production lines from 2023. The crossover model will be available with combustion engines as well as an all-electric drive.

From battery cell to high-voltage battery

Production of high-voltage batteries can be broken down into two stages: module production and high-voltage battery assembly.

Module production is a highly automated process in which the lithium-ion cells first undergo plasma cleaning, before being coated by a specially developed system to ensure optimal insulation. They are then combined to form larger units known as modules. The BMW Group sources its battery cells from partners who produce them to the company’s exact specifications.

The completed battery modules are then installed in an aluminium housing, together with the connectors and the control and cooling units. The size and shape of the housing and the number of battery modules used differ depending on the vehicle variant. So, each high-voltage battery can be optimally adjusted to suit the car it will power.

Global production network for e-drives focused in Germany

To meet rising demand for e-drive component production capacity, the BMW Group draws on a worldwide production network. The high-voltage batteries and battery components for the full range of electrified BMW and MINI vehicles are made at the company’s own battery facilities, in Dingolfing, Leipzig and Regensburg in Germany, as well as Spartanburg (USA) and Shenyang (China). There is also localised production of high-voltage batteries in Thailand, for the plant in Rayong. In Munich, the BMW Group operates an e-drive pilot plant and a Battery Cell Competence Centre, where battery cell value creation processes are analysed in full and technologies for production processes are refined. Just outside Munich, the BMW Group is soon to open a Cell Manufacturing Competence Centre.

Located in Parsdorf, just to the east of the city, the new facility will be a pilot plant for battery cell production. It will model series production of lithium-ion battery cells and validate the feasibility of their large-scale manufacture, especially with regard to quality, time and costs.

In Dingolfing and at BMW Group Plant Landshut, the BMW Group manufactures electric motors in the Competence Centre for E-Drive Production. The casing for the highly integrated fifth-generation e-drive is made at BMW Group Plant Steyr.

 


CO2 EMISSIONS & CONSUMPTION.

* Consumption and range:

BMW i4: Power consumption in kWh/100 km: 22,5-16,1 (WLTP, combined); Electric range (WLTP) in km: 416-590

BMW iX: Power consumption in kWh/100 km: 24,5-19,5 (WLTP, combined); Electric range (WLTP) in km: 394-607