BMW management to skip Paris show over electric car impasse

[WannabeOwner]

Any other companies you coded for that went EOL?

VW, BMW and MB maybe?

 

[gregd]

No, it's the German spelling of D.E.C. (look it up youngsters )

Yeah, I see your point, but I think Kodak is the better comparison. Both DEC and Kodak refused to see the changes coming, but DEC had the ability - the core competences - to adapt, yet didn't and lost. Listen to Marc Tarpenning's analysis of the existing automotive companies in his MIT talk, starting about 37 minutes in:

(

The big auto makers have out-sourced everything in the making of their cars except what they considered to be the essence of the car: the ICE engine. But now, with the EV, they don't own that core competency, just like Kodak's business model was invested in film and wet processing when the world went digital.

So, what do you (the established auto industry) do when someone like Tesla comes along and changes the playing field, so you no longer own the intellectual property that keeps you competitive? That's what has them freaked out. Worse, Tesla has open-sourced their patents, so that others can enter the market and compete too.

It's a whole new ball game.

 

[Alfred]

BMW management sees as yet no way of becoming able to launch a competitive EV before about 2025. They consider in particular that having no access to batteries in the right price/performance bracket and with inadequate charging infrastructure there is no chance of getting anywhere soon:

"Hinsichtlich des Produktionsvolumens des i3 soll BMW vor 2025 keine allzu großen Sprünge erwarten. Erst dann seien Batterie-Technologie, Ladeinfrastruktur und Breitbandnetz ausgereift genug, um Elektroautos mit hoher Konnektivität den Durchbruch in den Massenmarkt zu ermöglichen, sind die BMW-Manager überzeugt."

From several interviews I also gained the impression that they misjudged - as many others - how easy it would be to develop the necessary new engineering skills in realms electrical. They also might have left the cooperation with AC-Propulsion a bit early. For now they seem to follow up more actively cooperation with others in China - just like Daimler and VW. Hefty subsidies foster there a more rapid market penetration than elsewhere - also with vehicles that would be too expensive or inadequate otherwise.

BMW fans might soon have to learn Chinese to read their car manual...

 

[cwerdna]

Too bad brilliant engineering of all the constituent components doesn't guarantee an excellent end product.

The i3's engineering is hardly brilliant, IMHO.

Rather than re-type and rehash everything, see my post from last year at BMW i3.

To top it off, their stupid J1772 charging lock which locks the handle to the car every time then must unlock later is apparently unreliable. Uhh... if they didn't automatically lock each time w/o giving a driver a choice about that (unlike the Leaf, which began having a charging lock w/model year 2013 and provided 3 choices from day 1), they wouldn't be placing so many unnecessary cycles on that unreliable mechanism.

 

[trils0n]

The i3's engineering is hardly brilliant, IMHO.

The engineering is impressive. Most of their design choices, however, lead to a sub-par vehicle. See weird doors, low range, under-powered REX, weird styling, etc.

 

[Jeff N]

The big auto makers have out-sourced everything in the making of their cars except what they considered to be the essence of the car: the ICE engine. But now, with the EV, they don't own that core competency, just like Kodak's business model was invested in film and wet processing when the world went digital.

So, what do you (the established auto industry) do when someone like Tesla comes along and changes the playing field, so you no longer own the intellectual property that keeps you competitive? That's what has them freaked out. Worse, Tesla has open-sourced their patents, so that others can enter the market and compete too.

As far as I can tell, the idea that the big auto makers have outsourced their electric powertrain designs vs Tesla is mostly false.

As far as I can tell, BMW designs and builds their own innovative electric motor in the i3. I've never heard that Nissan outsourced the design and manufacturing of their LEAF motor. Honda and Toyota design and probably manufacture their own electric motors for the Prius/Mirai and Accord/Clarity. GM designed and manufactured the electric motor in the Spark EV, designed but had Hitachi manufacture the electric motors in the Volt, and designed but had LG manufacture the motor in the Bolt EV.

And, Tesla outsources the manufacturing of major components of their motors like the stator and probably the rotor also but designs them and does the windings and final assembly in-house.

Toyota (and Ford) initially designed but outsourced the manufacturing of their original hybrid transaxles around 15 years ago. That doesn't seem to hurt their innovation or competitiveness in that part of the car market.

 

[gregd]

As far as I can tell, the idea that the big auto makers have outsourced their electric powertrain designs vs Tesla is mostly false.

As far as I can tell, BMW designs and builds their own innovative electric motor in the i3. I've never heard that Nissan outsourced the design and manufacturing of their LEAF motor. Honda and Toyota design and probably manufacture their own electric motors for the Prius/Mirai and Accord/Clarity. GM designed and manufactured the electric motor in the Spark EV, designed but had Hitachi manufacture the electric motors in the Volt, and designed but had LG manufacture the motor in the Bolt EV.

And, Tesla outsources the manufacturing of major components of their motors like the stator and probably the rotor also but designs them and does the windings and final assembly in-house.

Toyota (and Ford) initially designed but outsourced the manufacturing of their original hybrid transaxles around 15 years ago. That doesn't seem to hurt their innovation or competitiveness in that part of the car market.

Ok, this is good news. So, in the nearly 10 years since Marc's analysis was done, at least some of that core IP has been re-built within the major auto makers. I was taking the Bolt's outsourcing to LG as an indicator of the contrary, but maybe they're just trying various business models in order to compete in this new version of the old industry. Still, it is a new playing field, so will continue to be interesting to watch how the players react and compete. Back to the topic of this thread, BMW's actions appear not all that encouraging. Or, are they just being cagey?

 

[BluestarE3]

You know about not traveling with Tom Hanks? Well, I wrote software for DEC, Wang, and Polaroid.

I can also make roses wither with a glance.

LOL. I didn't really get this post until I looked up the reference to "traveling with Tom Hanks".

 

[Camera-Cruiser]

What are you all talking about? My nearly 4 hour obsession with the i3 got me to buy a Tesla. I think it's brilliant. No?

 

[EarlyAdopter]

And, Tesla outsources the manufacturing of major components of their motors like the stator and probably the rotor also but designs them and does the windings and final assembly in-house.

Do you have a source for that? Because according to Tesla's Annual Reports since 2012, post-Roadster, they state:

In addition to the design, development and production of the powertrain, we have created significant in-house capabilities in the design and engineering of electric vehicles and electric vehicle components and systems. We design and engineer bodies, chassis, interiors, heating and cooling and low voltage electrical systems in house and to a lesser extent in conjunction with our suppliers. Our team has core competencies in computer aided design and crash test simulations which we expect to reduce the product development time of new models.

We manufacture the Model S and Model X and certain components that are critical to our intellectual property and quality standards at the Tesla Factory. The Tesla Factory contains several manufacturing operations, including stamping, machining, casting, plastics, body assembly, paint operations, seat assembly, final vehicle assembly and end-of-line testing. In addition, we manufacture lithium-ion battery packs, electric motors, gearboxes and components for our vehicles at the Tesla Factory. Several major component systems of our vehicles are purchased from suppliers; however we have a high level of vertical integration in our manufacturing processes at the Tesla Factory. We machine various aluminum components at our facility in Lathrop, California and are nearing completion of a site expansion to include an aluminum castings operation.
​

This doesn't necessarily rule out outsourcing of some components that go into the motors, as you suggest, but it does weigh heavily against it. A credible source for your assertion would be welcomed.

 

[MDinFL]

Have they considered the possibility that i3 sales were lackluster because they designed a lackluster car?

lackluster = ugly. Like a Whirlpool washing machine. I just bid my 2011 535 a fare adieu. Happy to be in my 2013 P85.

 

[Jeff N]

This doesn't necessarily rule out outsourcing of some components that go into the motors, as you suggest, but it does weigh heavily against it. A credible source for your assertion would be welcomed.

There has been much controversy about this topic including seemingly non-credible claims from "Avenger" and acknowledgement from some critics of those non-credible claims that bills of lading at ports do show motor parts listings including stators and rotors being imported:
Fukuta supply role to Tesla

Tesla goes to some lengths to keep their supply chains secret as we saw recently:

Tesla reportedly fined Korean supplier $1 million for breach of NDA

I don't claim to have copper, steel, or even mere iron clad evidence of exactly what motor parts Tesla outsources but there appears to me to be a consensus that they outsource some significant motor components yet do the windings themselves and assemble the final motor in Fremont. I would love to see this topic clarified but Tesla does not seem to be in any hurry to shed light on this.

 

[EarlyAdopter]

There has been much controversy about this topic including seemingly non-credible claims from "Avenger" and acknowledgement from some critics of those non-credible claims that bills of lading at ports do show motor parts listings including stators and rotors being imported:
Fukuta supply role to Tesla

Tesla goes to some lengths to keep their supply chains secret as we saw recently:

Tesla reportedly fined Korean supplier $1 million for breach of NDA

I don't claim to have copper, steel, or even mere iron clad evidence of exactly what motor parts Tesla outsources but there appears to me to be a consensus that they outsource some significant motor components yet do the windings themselves and assemble the final motor in Fremont. I would love to see this topic clarified but Tesla does not seem to be in any hurry to shed light on this.

Oh I remember that thread quite well. The best that "Avenger" could come up with were some Bill of Ladings showing small quantities of lightweight parts or 2566 kg servo motors shipping from Fukuta to Tesla. The latter are clearly not destined for cars (hint, the car weighs less than 2566 kg). What makes anyone believe the former are? Most reasonable assumption from the weight of those motors is Fukuta is supplying parts and motors for the manufacturing line (the machine that builds the machine).

Nothing here to rule out Tesla getting motor parts from someone else, but this ain't it.

 

[ggnykk]

Quotes from that article:

"...BMW has been torn about whether to accelerate development of new electric cars, given its expensive early investments into the area which resulted in only lackluster sales of its i3, which saw only 25,000 deliveries last year. Norbert Reithofer championed the i3 project while CEO of the carmaker and, in his new role as chairman, is keeping up pressure on new CEO Harald Krueger and BMW management to expand the company's electric program. But some other senior executives are unwilling to plow more resources into electric cars until i3 sales improve and there is a clearer business case for such investment..."

Some in BMW management appear to realize that EVs are the future and they need to expand their EV product line, but other senior management still don't get it. If they think i3 sales are going to "improve" they are sadly mistaken. What they need to do is build a more broadly compelling EV but they are afraid it will take sales from their profitable ICE vehicles.

BMW management are idiots or what? No one wants to buy an expensive but ugly car that looks super weird like a bug. Their mindset is still stuck in the 1930s.

 

[Spidy]

BMW management sees as yet no way of becoming able to launch a competitive EV before about 2025. They consider in particular that having no access to batteries in the right price/performance bracket and with inadequate charging infrastructure there is no chance of getting anywhere soon:

"Hinsichtlich des Produktionsvolumens des i3 soll BMW vor 2025 keine allzu großen Sprünge erwarten. Erst dann seien Batterie-Technologie, Ladeinfrastruktur und Breitbandnetz ausgereift genug, um Elektroautos mit hoher Konnektivität den Durchbruch in den Massenmarkt zu ermöglichen, sind die BMW-Manager überzeugt."

From several interviews I also gained the impression that they misjudged - as many others - how easy it would be to develop the necessary new engineering skills in realms electrical. They also might have left the cooperation with AC-Propulsion a bit early. For now they seem to follow up more actively cooperation with others in China - just like Daimler and VW. Hefty subsidies foster there a more rapid market penetration than elsewhere - also with vehicles that would be too expensive or inadequate otherwise.

BMW fans might soon have to learn Chinese to read their car manual...

BMW probably wanted to make a certain profit on EVs. Now they realize the market is moving faster and are just going to jump on the ship even if the financials aren't where they want them to be.

 

[dauger]

The BMW board is debating a choice between losing its profitability or losing its technological edge. Their dilemma was entirely predictable:

Tesla Disrupts Different - Incumbents' Shackles

What this board doesn't seem to realize losing their edge means permanently losing profitability, and pursuing BEVs means a drop in profitability is temporary. As a former BMW M3 owner, I'd want them to pursue BEVs fully, but I'm not convinced they will. This debate is consistent with Clayton M. Christensen's quote: "By doing what they must do to keep their margins strong and their stock price healthy, every company paves the way for its own disruption."

 

[dauger]

This is illustrative of why it will take so long for major car companies to shift to electric. It won't happen until the culture of the company changes which could take as long as waiting for the current generation to retire. Tesla clearly already has that culture.

Agreed. There's a quote that seems to fit this behavior perfectly:

The reason is that good management itself was the root cause. Managers played the game the way it was supposed to be played. The very decision-making and resource-allocation processes that are key to the success of established companies are the very processes that reject disruptive technologies: listening carefully to customers; tracking competitors’ actions carefully; and investing resources to design and build higher-performance, higher-quality products that will yield greater profit. These are the reasons why great firms stumbled or failed when confronted with disruptive technological change.
- Clayton M. Christensen, The Innovator’s Dilemma

Juicing M sales fits with his "yield greater profit" point. It's like they're following Christensen's script to the letter. The reluctant members of the board seem to think they can do what they've been doing for decades. The problem is pure gas car tech is, for all practical purposes, perfected, so it has very little room to improve:

Tesla Disrupts Different - Echo Chambers

 

[jgs]

What this board doesn't seem to realize losing their edge means permanently losing profitability, and pursuing BEVs means a drop in profitability is temporary.

I had a coworker who was fond of summing up this kind of situation by saying "if somebody's going to eat my lunch, I prefer it be me."

 

[jelloslug]

The i3's engineering is hardly brilliant, IMHO.

Rather than re-type and rehash everything, see my post from last year at BMW i3.

To top it off, their stupid J1772 charging lock which locks the handle to the car every time then must unlock later is apparently unreliable. Uhh... if they didn't automatically lock each time w/o giving a driver a choice about that (unlike the Leaf, which began having a charging lock w/model year 2013 and provided 3 choices from day 1), they wouldn't be placing so many unnecessary cycles on that unreliable mechanism.

My i3 had the following issues over my two years of ownership (it goes back tomorrow):
Problems at delivery:
Debris in the headlight housing
Flaking paint on the kidney grills
Defective 2nd charger (KLE) (only allows half speed charging)
Rattle in glovebox

Later problems:
Intermittent clicking in accelerator pedal
Grind/squeak in steering wheel
Popping noise from drivers seat back
Stripes of main display screen failed
Rear seat back release strap popped out
Motor mount bolt recalled
Charging plug lock seized up (fortunately in the unlocked position)
Software update broke the preconditioning settings

 

[cwerdna]

My i3 had the following issues over my two years of ownership (it goes back tomorrow):
Problems at delivery:
...
Defective 2nd charger (KLE) (only allows half speed charging)
...
Later problems:
...
Motor mount bolt recalled
Charging plug lock seized up (fortunately in the unlocked position)

The 1st and last item were pretty common. The motor mount broke for some folks, including 1 guy at least twice, causing major expensive (for BMW) damage that necessitating a whole bunch of labor and replacement parts. Finally they seem to have converted it into a service campaign or recall besides the mitigation in BMW i3 Software Update 15-11-502 Fixes Flaws, Adds Features.

The guy at https://www.facebook.com/groups/BMWi3/permalink/962206930519835/ (you'd need to be in that FB group) mentions his i3 being in the shop for 3 months in a January, stating he began his lease in April. https://www.facebook.com/groups/BMWi3/permalink/796165680457295/ is another guy with 5 CELs (check engine light) and him posting his drivetrain malfunction. Later on in his comments, he posts pics of a new REx engine. But, the replacement engine also threw a CEL. Then further on, supposedly BMW analyzed the gas in his area (SE Idaho) and concluded it sucks. They said they tried 10 different grades and brands and it only runs well w/Chevron.