Warning to Euro ICE Makers #BMW (Patreon)

TLDR

• BMW's CEO, Oliver Zipse, warns that the EU's plan to ban combustion engine vehicles is driving European automakers in the lower-priced segment into a price war with Chinese rivals, especially those specializing in electric vehicles like BYD.
• Zipse expresses concern that European manufacturers may not be able to compete effectively in the base car market segment, given the aggressive ambitions of Chinese EV brands and their dominance in battery supply chains.
• China, the world's largest car market, has rapidly developed its electric vehicle industry and is now looking to enter the European market, posing a significant challenge to European automakers.
• Zipse notes that premium car manufacturers like BMW are better positioned to withstand competition from Chinese manufacturers, as they primarily target buyers of more expensive vehicles.
• The EU's plans to phase out combustion engine vehicles by 2035 have faced criticism from the European car industry, raising concerns about access to raw materials for batteries and the slow rollout of charging infrastructure. Zipse questions whether the EU's deadline can be met and highlights the need for improvements in charging infrastructure.

BMW’s chief executive has warned that EU plans to ban combustion engine vehicles is pushing European makers of cheaper cars into a price war with Chinese rivals that they are unlikely to win.

“The base car market segment will either vanish or will not be done by European manufacturers,” said Oliver Zipse, pointing to the growing ambitions of Chinese car brands such as BYD, which specialise in electric vehicles.

China — the world’s largest market for cars — has in the past 15 years built up an electric vehicle industry that has cornered much of the world’s battery supply chains and is now, among increasingly fierce competition at home, trying to enter the European market.

“I want to send a message: I see that as an imminent risk,” Zipse said, adding that premium carmakers such as BMW were better insulated against competition from Chinese manufacturers — most of which target buyers of cheaper vehicles.

The EU’s plans to phase out combustion engine vehicles by 2035 have been criticised by the region’s car industry, which indirectly employs nearly 14mn people. Concerns have ranged from the lack of access to raw materials necessary to make car batteries to the slow rollout of charging infrastructure.

Zipse also questioned whether the bloc’s deadline could be met. In a nod to a review of the EU’s e-vehicle legislation planned for 2026, he argued that European charging infrastructure was still “far behind expectations . . . there are countries where they are not developing anything at all”.

“You wouldn’t do a review if legislators were certain that everything was in order,” he added.

Zipse, who oversaw BMW’s production lines before taking over as chief executive in 2019, was speaking ahead of the annual IAA Mobility conference in Munich that is set to be attended by more Chinese companies than ever before.

“I am not worried about BMW,” he said, adding that the company had not been affected by the price wars that have been pushing down margins for many car manufacturers in China.