BMW is not having a good time. Like other German automakers, its sales are collapsing in China, and the rest of the world can't make up for that lost profit.
BMW's first-quarter earnings plunged 23% this year. And that was before U.S. auto tariffs went into effect. One of the only bright spots came from the company's EV business, which saw a 32% year-over-year gain last quarter.
Despite that, BMW thinks regulators are pushing too hard for EVs. Its CEO wants everyone to slow down.
"We take ambitious political goals seriously, but we don’t believe in technically one-sided regulations that limit supply," CEO Oliver Zipse said during last week's annual shareholder meeting. "The same principle applies to the circular economy. Here, too, only a comprehensive approach can enable and stimulate investment. Because, as a standalone technology, e-mobility leads down a dead-end street—that much is now clear. The differences are simply too great, even just within Europe."
The differences he's referring to are in adoption rates: He went on to note that while EVs make up 60% of sales in Belgium, they're only 4% of the market in Italy. As I covered recently, this business is becoming less global and more regional. That leaves automakers scrambling to ensure they have competitive internal-combustion products for some markets and flagship-class EVs for others. It's a tough balance.
BMW is among the better-positioned companies, with internal-combustion and electric products that I'd consider near the top of their respective classes. Still, its position as a luxury brand means its volumes are small, making it harder to invest simultaneously in ICE, hybrid and EV options. It's reaping the rewards of being an early innovator in the EV space now, but it's unclear whether it can remain on the cutting edge.
Yet there's another undercurrent here. Sure, automakers have always opposed tighter regulations, but they have certainly gotten more vocal about it in recent months. I blame tariffs and China's ascendance. Western automakers were already struggling to make EVs profitably and struggling to convince U.S. consumers to buy them.
But now they're fully aware that they can't really compete in China's home market, that the U.S. is taking a far slower path to electrification than expected and that many of their existing products are going to get 25% more expensive in one of their largest markets.
They are being squeezed in every direction. China's automakers won't let up. Neither, it seems, will President Donald Trump. So they're leaning on regulators, making a case that strict regulations around electrification could torpedo their businesses.
American regulators will likely be sympathetic. But the calculus in Germany is different. On the one hand, electrification is going better in Europe, with far more EV penetration and a political environment that recognizes climate change as a threat they need to address.
On the other hand, Germany's economy is reliant on its auto industry, which has been struggling with high labor costs, high energy costs and stringent regulations. The industry accounts for 5% of the country's Gross Domestic Product (GDP), a measure of overall economic activity.
Since Germany has seen two straight years of national GDP decline, the country may be more willing to throw its political weight behind EU plans that ease pressure on its three struggling auto giants.
BMW clearly wants that to happen.
"Political goals must reflect market realities – and also be viable for businesses," Zipse said. "Global investment is already looking ahead to 2030, and especially 2035. That is why the upcoming review of EU targets will be so decisive. It is our chance to improve the system. Europe needs a top-performing automotive and supplier industry. We are fighting for this and pushing back against negative developments."
And that's from an automaker that's doing better at this stuff than most. But it doesn't change the fact that the crucial path to zero-emission transportation won't be easy for any car company.
Contact the author: Mack.Hogan@insideevs.com.
