Saturday, May 21, 2022

Statement Oliver Zipse, Chairman of the Board of Management of BMW AG, Conference Call Quarterly Statement to 31 March 2022

Ladies and Gentlemen,

Strong products and desirable brands are the foundation of the BMW
Group’s success as a company. With our customer-centric portfolio, we
have experienced very robust demand in recent years, despite the
difficult circumstances. We are seeing this trend grow even more this year.

Never before in the history of our company have our pre-orders been
higher than they are today. The markets signal that this high demand
will continue. Our order books are full several months out –
especially for our fully-electric vehicles and in particular our
innovation drivers, the BMW i4 and BMW iX.

A few weeks ago, we unveiled another milestone in the expansion of
our fully-electric line-up: the BMW i7*. I presented it in person to
our retailers in the Americas and journalists in the US. The response
from around the world has been tremendous. The new 7 is tech magic at
its best. It is the only luxury sedan to offer the full range of drive
technologies: as a BEV, plug-in hybrid or with modern combustion
engines. Our customers choose whatever suits their needs best –
without having to compromise.

Over the coming months and years, this rapid pace will continue. The
iX1* will be released late this year. This means one of our
highest-volume models in the premium compact class will also be
available as a pure electric vehicle. Next year, we will be
electrifying another core BMW-brand product: the 5 Series.

This year, we will already have eight fully-electric models on the
roads, with plenty more ready to go. Including pre-production
vehicles, we will be building 15 fully-electric models this year. This
will give us a pure-electric option in about 90 percent of our segments.

The large number of new launches and strong demand for our products
shows that: We inspire people, develop innovations that are successful
in the marketplace, and create desirability.

This is the basis for the growth we have planned for the coming
years. Not only in the purely electric vehicle segment, but across our
entire portfolio.

We will continue to rely on our open-technology approach in the
future. It is the right concept for our customers worldwide right now
and accounts for different developments in different regions of the
world. This enables us to offer the latest, most climate-friendly
drive technology for various needs, and thus further increasing our
contribution to a positive climate impact.

This breadth of technology enables us to meet both the demands of our
customers and the expectations of our stakeholders during the current
phase of the transformation. In this way we are further optimizing all technologies.

We are transforming the BMW Group effectively and quickly. Our focus
is on e-mobility, digitalisation and a holistic approach to sustainability.

What sets us apart: We are performing while transforming. This is
also shown by our strong first quarter.

The figures for the first three months benefited from the full
consolidation of our Chinese joint venture BMW Brilliance Automotive.

This was an important strategic move for us.

  • It will strengthen our long-term cooperation with our partners in China.
  • We are expanding production capacity at our existing locations in
    Shenyang. This is how we continue to increase our ‘local for local’ share.
  • And we are systematically increasing localisation of other models
    – including New Energy Vehicles.

The fully-electric BMW 3 Series Long-version, developed exclusively
for the Chinese market, is a good example of this.

We also have a long-wheelbase version of the X5 that has been
tailored to the unique needs of Chinese customers. Both the electric 3
Series and the X5 Long-Wheelbase version are produced locally in
China. This puts us in an even better position to meet strong demand
for these two models.

As a global company, the BMW Group operates at the intersection
between different conditions in major regions of the world. The
current picture could hardly be any more varied.

A few weeks ago, I visited the US. We presented our products for the
next two years to over a thousand retailers from across the Americas.
They were very impressed and are committed to investing billions in
the future with us. The mood was positive and full of optimism.

This is also reflected in the sales figures for the first three
months of the year. We continued to grow on the American continent,
compared to the prior-year quarter. This applies to the US, in
particular, which posted growth of 3.7% – once again earning the BMW
Group a leading position in this key market.

We are able to respond flexibly to growing demand across the region
from our plant in Spartanburg – our biggest in our global production
network – as well as our other plants in San Luis Potosí in Mexico and
Manaus and Araquari in Brazil.

Europe is overshadowed by the impact of the Ukraine crisis. Energy
supplies across the continent have been jeopardised by the war and the
resulting tensions with Russia.

Inflation remains high and the costs of food, energy and fuel are
rising. As a result, economic forecasts are constantly being revised
downwards. The war in Ukraine is also significantly impacting the
local automotive supplier industry– and leading to production
downtimes at our European plants.

We have been working with our partners and leveraging our ability to
respond quickly, our high level of flexibility and agile methods to
make up component shortages as a result of the war as quickly as
possible. We are still relying on supplies from Ukraine.

This continues to give those employed by our local partners a
perspective for the future.

The supply situation has eased in the meantime, and we expect that we
will be able to keep the situation stable.

That brings me to our third main market: In China, the coronavirus
pandemic is flaring up again. As a result, the metropolis of Shanghai
is back in lockdown. Production facilities and ports have been closed
to contain infections. Our plants in Dadong and Tiexi were also
affected by temporary closures, but production there has resumed in
the meantime.

One issue the industry has been dealing with worldwide for the past
year is the shortage of semiconductors. We don’t expect to see an
improvement until at least the second half of this year – and we will
still be dealing with an underlying shortage throughout 2023.

To limit the effects of the shortage, we are exploiting the
flexibility of our production network to the full, as we have in the
past. This enables us to reallocate production volumes at short notice.

We are responding to the supply situation with maximum efficiency.
This is a strength of the BMW Group that has set us apart in a
positive way in the past.

We have also created flexibility in our main sales markets. Our three
market regions are increasingly independent when it comes to sales,
production and the supplier network.

The current differences in their situations show how important this
approach is. It creates resilience. Because when the market situation
is difficult in one region of the world, the other markets carry us through.

This means that, despite the different challenges of our times, we
are always able to work towards the success of the company as a whole.

The results for the first quarter of 2022 are proof of this. Strong
demand for our products enabled us to strengthen our competitive
position in the first quarter of 2022 and grow our global market share
year-on-year – despite the difficult circumstances.

Bottlenecks in the supply of components and measures to stop the
spread of the coronavirus in China are the reasons why we were not
fully able to meet the high demand for BMW, MINI and Rolls-Royce vehicles.

While sales through February were slightly higher than in the same
period of the previous year, the development in March was mainly
characterized by supply bottlenecks for wiring harnesses from Ukraine.

As a result of this, we saw a moderate decrease in deliveries between
January and March 2022, compared to the all-time high of the previous year.

Our sales of electrified vehicles increased significantly – climbing
28% to more than 89,000. During the same period, sales of
fully-electric vehicles more than doubled to over 35,000 units.

The iX3* and MINI SE* were the most in-demand fully-electric models:
Sales were significantly higher than in the prior-year quarter.

The BMW iX and the BMW i4, which we presented last year, will be
introduced in many more markets worldwide over the coming months. The
new i7* will also be in showrooms from November. All of this will
accelerate sales growth even further.

This puts us on track to more than double our sales of fully-electric
vehicles compared to last year. We aim to break through the sound
barrier of a total of two million all-electric vehicles sold overall
by 2025. By 2030, at least half our global deliveries should come from
BEVs. And we are doing everything we can to meet this goal earlier.

2025 will play a crucial part in this – because that is when we will
be launching our NEUE KLASSE. With its focus on electric, digital and
circular, it represents a quantum leap in technology.

The NEUE KLASSE will also come with our new Gen6 drive train
generation for the first time – with more output, new cell chemistry
and new cell formats. The NEUE KLASSE will give sales of
fully-electric vehicles a major boost.

We are consistently pushing forward with expansion of e-mobility, in
line with growing demand. That is how we are responding to our
customers’ desire for emission-free mobility.

At the same time, we are making sure we can achieve the strategic
climate-protection goals we have committed to – because it is
especially important in challenging times not to lose sight of our
long-term objectives.

Our road to climate neutrality by 2050 follows a scientifically
validated and transparent path through the entire value chain. In this
way, we will be able to reduce our products’ total carbon footprint
throughout their lifecycle by 40 percent by 2030.

We deliver on our promises. For example, in 2021, we once again
overfulfilled our CO2 emissions targets for the European Union. All
drive technologies contributed to this.

In addition to reducing CO2, the topics of raw material efficiency
and circularity will play an increasingly important role. We showed
with the BMW i Vision Circular last year, what luxurious, yet
sustainable, mobility in the urban environment might look like.

The use of secondary materials will be a basic requirement on the
road to creating closed material loops.

That is why the BMW Group’s approach is called “Secondary First”. We
are consistently following this path. Our goal is to create the most
sustainable supply chain in the entire automotive industry.

The light-alloy cast wheels for the new MINI Countryman are a very
concrete result of this thinking. They are made of 70 percent
secondary material.

This enables us to avoid up to 80 percent of the CO2 emissions from
production in this way.

In addition to relying on secondary materials, we are also
concentrating on utilising raw materials in such a way that they can
be fed back into the material loop after being used. The NEUE KLASSE
will set new benchmarks for this: 50 percent of the raw materials used
to build it will be recyclable.

But circularity does not just represent the future from an
environmental perspective. We are currently seeing quite clearly how
this approach also plays an increasingly important role from an
economic and geopolitical standpoint.

Due to current events and the possibility of supply bottlenecks as a
result, prices in the commodity markets are skyrocketing right now.
Purchase prices for many industrial and precious metals have reached
all-time highs. Some of these are essential to technological change in
the automotive industry – and, especially, the transition to e-mobility.

We are currently discussing – quite rightly – how to reduce our
dependence on fossil energy. But, at the same time, we have to be
careful not to create new dependencies in other areas.

For example, a battery alone contains several hundred kilos of raw
materials – most of which do not come from Europe.

Circularity is an approach that will greatly reduce dependence on
primary raw materials in the long term. Until then, only technological
diversification and the availability of alternatives will create resilience.

That is why we are also advocating in this context for an
open-technology approach, with sustainable further development of all
drive technologies, including support for hydrogen technology.

Ladies and Gentlemen,

Having to deal with the combined burden of major, overlapping
challenges – that is the new normal.

The BMW Group has always responded to challenges with an effective
operating performance by the entire company and a high level of
flexibility. In this way, we have always guaranteed the commercial
success of the company – even in challenging situations. In fact, we
have emerged stronger than ever from many of these challenging times.

You can rest assured that we will continue to manage the BMW Group in
this spirit in the future.

Thank you.

*Consumption/emissions data:

BMW i7: Power consumption in kWh/100 km combined:
19.6-18.4 WLTP

BMW iX1: Power consumption in kWh/100 km combined:
18.4-17.3 WLTP (forecast value based on vehicle’s prior development status).

BMW iX3: Power consumption in kWh/100 km combined:
18.9-18.5 WLTP.

MINI Cooper SE: Power consumption in kWh/100 km
combined: 17.6-15.2 WLTP.

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