Our next business car can be electric and a luxury model. One of the leading names in luxury cars namely BMW, plans to reduce its annual purchasing bill by removing around two billion Euros from costs of parts such as transmission components, in order to fund their movement over to electric cars.
As one can imagine, this is obviously going to have major changes on the BMW share price, as investors are only too eager to see just how such a massive shift towards new and modernized technologies will affect one of the progenitors of the luxury vehicles we know today.
An Electric Ambition
BMW has set their sights on a figure of a minimum of twelve electric cars being released by 2025. The German car manufacturer would love nothing more than trimming around five percent of its expenses attached to car parts, which just happens a manufacturing process costing forty billion Euros a year.
Such figures are reflected off the compounded four billion Euro limiting that Daimler – one BMW’s biggest rivals – is also looking to compensate regarding fixed expenses, their various research and development experimentation, as well as a variety of capital expenditures.
A New Trend in the Automobile Industry
BMW is not the only automobile company that is vying for control of the electric car sector. Their competitors over at Daimler (who own Mercedes-Benz), as well as Volkswagen, are all making optimistic predictions regarding vehicles powered by battery making up well over a quarter of their collective sales figures towards around 2025.
The German automobile giants will be enforcing a cost-cutting initiative with the goals of improving fragile margins regarding electric cars. Daimler, on the other hand, has rather foreboding projections for BMW’s electric ambitions, claiming that their revolutionary actions could result in a halvening of their profitabilities compared to that of conventional designs.
What does this Mean for Investors?
While some investors are happily onboard with BMW, and have pledged their support to what they agree is going to be a massively rewarding venture towards satiating newfound consumer desires regarding electric cars, many agree with the above-mentioned Daimler warning regarding the loss of profits.
As one could imagine, if such ventures do indeed result in something as devastating as a fifty percent reduction in money making competencies, many investors could very easily be seen leaving BMW, selling their shares for as much as would be possible given the potential plummeting of their position in the market.
All we can really do is wait and see, while keeping a close eye on consumer trends regarding just how popular electric cars are becoming, and continue to speculate as to whether BMW would not be better off just sticking to what they have always done best: designing and creating some of the most beautiful cars with the best performances known to man.
Still, things like electric cars and combatting supplier monopoly are two of the very progressive new attitude that BMW has adopted, and many people are fascinated as to what it will come up with next.