BMW's Push into Electric Cars

Frankfurt - For years, BMW resisted building hybrid cars, believing that more efficient gasoline or diesel models were a smarter bet. But as the hybrid gives way to the all-electric vehicle—at least in the eyes of optimists—the German automaker aims to be at the front of the pack. BMW is spending more than $1 billion to develop a small car for urban drivers that will include an electric-powered version. "We [in the auto industry] have the internal combustion engine so strongly fixed in our minds that we think it will last forever," says BMW Chief Executive Norbert Reithofer. "I don't believe that."

Although Reithofer is vague on the timing, BMW is working on the electric vehicle under an initiative called Project i. Reithofer says he may even create a new brand for high-end city cars, in addition to the company's current BMW, Mini, and Rolls-Royce nameplates. To gauge interest and test the concept, in New York and Los Angeles BMW is leasing 500 Mini sedans that have been modified to run on batteries.