BMW – The New Wave?

BMW has done what it can

• With the “Neue Klasse”, BMW has fixed many of the issues with electric vehicles, but with so many things still outside of its control, it is likely to be a while before this generation makes up a large proportion of the vehicles that BMW sells.
• The “Neue Klasse” is a new generation of electric vehicles, which starts with the new iX3, which is a midsize SUV with a saloon version coming soon and over time, this will become the electric range of BMW, covering all segments and trim levels.
• BMW makes some extravagant claims, such as a maximum range of 805km and the ability to add 372km of range with 10 minutes of charging at 400kW.
• The inside of the vehicle features a new driver UX, including the new panoramic screen that sits under the windscreen (see here) and forms part of the user experience interacting with the infotainment screen and the instrument cluster.
• This new screen is a clever complication, which if it delights users, will go a long way towards keeping the smartphone in the driver’s pocket and the digital ecosystems out of BMW vehicles.
• This new range of vehicles also features Snapdragon Ride for the first time, which is a crucial win for Qualcomm.
• Qualcomm is already the industry standard to power infotainment, but it has faced much stiffer resistance when it comes to ADAS and autonomous driving.
• BMW was already working with Arriver at the time that Qualcomm acquired it, and BMW is running a co-developed software stack running on the Snapdragon Ride platform.
• This serves as an anchor client and proof point for Snapdragon Ride, which is available with and without the stack that has been co-developed with BMW.
• Qualcomm’s software offering for ADAS will be this co-developed stack, and so I can see potential for some resistance from BMW competitors who won’t really want to have BMW technology in their cars.
• However, at a minimum, it will provide a proof point that Snapdragon Ride is a capable ADAS chip, and this should help it to win business with other OEMs over time.
• Where the new iX3 has problems is in the usual sorts of areas.
  • First, price: At €70,000, this is not a mass market vehicle, and the petrol equivalent from both BMW and other car makers is likely to be significantly cheaper.
  • Hence, this is not about to trigger the long looked for replacement cycle into electric vehicles.
  • Second, cost of fuel: where it remains more expensive to fuel a car with electricity than to fuel it with gasoline.
  • I recently rented a BMW 3-series hybrid for 3 weeks, where after one charge, I never charged it again, instead choosing the much cheaper and convenient option of filling it with unleaded petrol.
  • Third, availability of chargers: where BMW states that one can add 372km in 10 minutes by charging at 400kW, but as far as I can tell, there are fewer than 20 such chargers in the whole of Germany, and I don’t know how many of them will actually work with a BMW vehicle.
  • This means that it will be almost impossible to simply rock up, charge for 10 minutes and then continue, having stopped for about the same time it takes to fill a tank with petrol.
  • Hence, while this claim is true, it defies reality, bringing home that several factors will determine the success of the “Neue Klasse” that are outside of BMW’s control.
• The net result is that these new vehicles are starting to make some headway into creating the right environment to trigger the switch from petrol to electric, but a lot more is needed.
• I also think that BMW is not going to be troubled too much by its much cheaper Chinese rivals, as they do not do particularly well in the luxury segment of the market, and I remain far from convinced that they are operating economically.
• However, electric cars need to be cheaper to own and run, and there needs to be no anxiety around where and how to charge the vehicle outside of the home.
• I will not rent an electric vehicle when I am on the road for precisely this reason, even though the rental companies keep trying to tempt me with very cheap rental prices.  
• I still think that the electric transition will happen, and when it does, it will occur much faster than anyone expects, but it remains pretty far away.
• This is also a good day for Qualcomm, as BMW is a great proof point for the capability of the Snapdragon Ride, and I think it will gain more clients for the chip, although there may be some hesitance to take the driving stack as well.
• I hold a position in Qualcomm and remain very comfortable with it, as the growth trajectory remains underestimated and the shares are very cheap.