July 29 (Bloomberg) -- To avoid the fate of other slow-selling electric vehicles, Bayerische Motoren Werke AG will offer the new i3 -- a battery-powered compact car -- with a unique option: the use of a sport-utility vehicle.
Customers of BMW’s first electric model can book a conventional auto like the full-sized X5 SUV for several weeks a year for family trips or as a backup. The “add-on mobility” feature, for which BMW hasn’t yet revealed pricing, is part of the manufacturer’s effort to overcome a major concern about electric vehicles, namely getting stuck on the side of the road with a dead battery.
Other efforts to ease so-called range anxiety include an optional combustion engine to generate electricity on board, roadside assistance if the battery does lose charge during a trip, and a navigation system that shows charging stations. Those offerings are flanked by a sales force that makes house calls and special training for the car’s select dealers.
The point is to avoid a high-profile flop of the $41,350 i3, which was unveiled today at simultaneous events in New York, London and Beijing. The prestige project has cost BMW more than 2 billion euros ($2.65 billion), according to the Center of Automotive Management in Bergisch Gladbach, Germany.
Chief Executive Officer Norbert Reithofer is convinced the car, which the company says will be profitable from the start, will give BMW an edge as it seeks to meet ever tighter emissions rules and still outsell Volkswagen AG’s Audi and Daimler AG’s Mercedes-Benz. While driving the i3 last weekend, he spotted a model from a competitor in his rear-view mirror.
“He was driving left, driving right,” Reithofer said in an interview with Bloomberg TV. “He tried to overtake me, and then I accelerated and he was gone.”
BMW, the world’s largest maker of luxury vehicles, is beating its chief rivals to electrics aimed at their core customers. Audi, the No. 2, will introduce a plug-in hybrid version of the A3 compact next year. Mercedes will sell an electric version of the B-Class compact in 2014.
“The i3 is important in terms of image for BMW because it keeps alive the message that the company is daring,” said Carlos Da Silva, an analyst with IHS Automotive in Paris.
BMW’s push into electric cars started five years ago after Reithofer, who was in New York for the debut, set about shaking up the company’s horsepower-focused culture.
He invited former U.S. Secretary of State Madeleine Albright and one-time left-wing radical and German foreign minister Joschka Fischer to speak to company executives about challenges the world faces, including increasingly crowded cities, dwindling natural resources and pollution. These were all major issues for a company that builds performance-oriented cars engineered for German autobahns.
To confront the risks, Reithofer created a small team in 2008 led by Ulrich Kranz, the developer of the original BMW Mini, to look at what growing megacities might mean for the company. The effort was dubbed Project i and has since evolved into the BMW i sub-brand, the environmental counterpart to a high-performance line called BMW M.
The i3 -- a four-seat urban compact with a squat front end and plastic exterior -- is the first car for the sub-brand. Next will be the i8 plug-in hybrid supercar, which featured in the latest Mission: Impossible movie and will go on sale next year. More models may be on the way. BMW has trademarked i0 through i9, said Ian Robertson, BMW’s sales chief.
“We have a lot of ideas,” Robertson said at a media briefing ahead of the presentation in London. “We’re not entering this market to be a niche player,” even though there are no concrete additions under development.
By creating the i3 from scratch rather than converting an existing model, BMW’s approach to electric vehicles contrasts with rivals. A focus on reducing battery size -- and therefore costs -- led to the use of lightweight carbon-fiber components for the passenger compartment, magnesium supports for the dashboard and aluminum for the chassis.
The 230-kilogram (507-pound) lithium-ion battery -- 20 percent of the car’s total weight -- is positioned beneath the passengers and between the wheels, raising the seating position and improving handling by giving the car a low center of gravity.
The 170-horsepower electric motor, which makes almost no noise, accelerates to 100 kilometers (62 miles) per hour in 7.2 seconds, beating the 10.7 seconds for the base version of the 3-Series. Like other electric vehicles, the i3 doesn’t have a transmission, so acceleration is uninterrupted by gear changes. Energy recuperation from the car’s momentum starts as soon as a driver takes her foot off the gas, so hitting the brakes in normal city driving is almost unnecessary.
To gain extra range, the car features an ECO PRO mode, which slows acceleration and reduces the top speed to 120 km/h from 150 km/h. ECO PRO+ shuts off the flow of energy to the radio, heating and all other functions not needed for driving, extending the range 30 percent to about 200 km. A gasoline-powered range extender, which will add 4,500 euros to the price in Germany, allows the car to drive about 300 km before refueling.
The focus on efficiency extends to the design of the interior. The use of natural materials like hemp fibers in door panels and a contoured wood shelf in the dashboard helps give the car the feel of “a small loft on wheels,” Benoit Jacob, the i3’s designer, said after a test drive. The style differs intentionally from the sporty character of BMW’s conventional models and is intended to encourage a more economical driving style, he said.
The i3, which goes on sale this fall in Germany, will cost 27 percent more than the base version of the 3-Series sedan, when it hits U.S. dealers in the second quarter of 2014. Nissan Motor Co.’s Leaf, the best-selling electric car, is cheaper at $28,800, yet costs more than twice as much as the comparable Versa sedan.
The price for the BMW car “looks lower than we had expected,” said Philippe Houchois, an analyst at UBS in London. “We are pleased to see that the gap between conventional and electric cars is coming down.”
Even with the competitive price, sales are expected to be muted, with few consumers willing to pay a premium for a vehicle that doesn’t offer the performance they’re used to. About 93,000 electric cars were sold worldwide last year, according to BMW. That’s the equivalent of about 0.1 percent of the global car market.
IHS forecasts that BMW, which is targeting annual sales of 2 million vehicles a year, including Mini and the i-series, will sell only 15,000 to 20,000 of the i3 a year, in line with Tesla Motors Inc.’s Model S. That would trail the Nissan Leaf and General Motors Co.’s Chevrolet Volt, which the market researcher predicts will each sell as many as 100,000 vehicles annually.
Still, BMW is upbeat, with more than 90,000 consumers expressing interest in a test drive through company websites. The manufacturer also expects global electric-car sales to surge 61 percent to 150,000 vehicles this year. The sluggish starts of other electric models might in the end work to BMW’s advantage, said Juergen Pieper, an analyst with Bankhaus Metzler in Frankfurt.
“After the earlier hype about electric cars,” he said, “the expectations for the i3 are now so low that BMW is actually in a position to positively surprise with that car.”
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