BMW takes an Individual Strategy with Electric Car Developments

BMW accelerates a shift to battery-powered cars for their fleet. Various reports have already been released about the intention of BMW to make lightweight cars with more carbon parts. They have also made steps to lower their costs and spending to recover from last year’s economic difficulty. All of these moves are a part of an individual attempt to make profits higher.

The recent merger between Porsche SE and Volkswagen AG, share swaps between Renault SA and Nissan Motor Co.. and Fiat SpA buying shares in the Chrysler Group are proof that while others link together to save their business, BMW does it alone.

Reithofer sets the goal high. He aims to cut 6 billion euros or $7.4 billion in costs by 2012, be the leader in electric cars, and to develop a front-wheel drive technology for the Mini.  The front-wheel drive cars, as we have reported yesterday, are a deviation from BMW tradition of rear- wheel drive vehicles. But these are definitely cheaper to manufacture. BMW shies away from mergers and other link ups and has only made purchasing agreements with Mercedes to cut costs. A team up with SGL Carbon SE for carbon materials necessary to make the electronic cars lightweight has also been made. But BMW wants no more than these kinds of agreement that go according to their plans.

This stance that BMW is taking together with CEO Norbert Reithofer has made their investors very happy. In fact, BMW shares had gained 58% in last year. The only challenge as of the moment is to maintain the momentum and prove that this strategy will work, even if other automakers get bigger and increase their research and development.

The German industrial family Quandts, who owns 46% of BMW, have always wanted BMW to remain independent. The Quandts are still sitting on BMW’s supervisory board so it is most likely that BMW will take this strategy on full force.

Shareowners like SEB Asset Management in Frankfurt which owns 2.45 million shares in BMW believes that BMW has been taking the right moves in brand strategy for the past two decades. This assures the faith of the shareholders and support in BMW’s current individual strategies.