BMW to Sell i3 and i8 Electric Cars Online...in Germany
Here's the $50,000 question: Without heading to a dealership, would you, with the click of a mouse, sign away your hard-earned money for an all-new plug-in car? While hypothetical—and likely to remain that way in the U.S.—Germany's BMW is experimenting with online sales for its upcoming 2014 BMW i3 and i8 electric and plug-in cars. As the first two models of BMW's i sub-brand, the i3 and i8, have liberties other models from the automaker don't get to take. They'll have a roaming sales force, a limited brick-and-mortar showroom network, and customers will be able to order them online like a pair of Air Jordans. They're a niche product, the i3 expected to cost about $50,000 and the i8 sports car to start around $130,000. And they'll be expensive to produce. That's partly why BMW is deciding to go with its online strategy, a cheaper way of selling its products with less overhead cost. But BMW is also doing it because it has to. The BMW i3 and i8 aren't cheap to produce. Analyst company Frost & Sullivan says the two likely cost around $3 billion to develop. And consulting company Sarwant says electric cars sold well below expectations last year, 43,000 units worldwide versus its 75,000-car initial projection. Finding takers of the expensive and range-limited EVs is proving more difficult than originally thought. In 2014, the BMW i3 is expected to sell around 30,000 units worldwide during its first full model year, or a little better than the Nissan Leaf. But BMW will also offer a range-extending hybrid version of the i3 at an additional cost, possibly widening its appeal. BMW has gone into its i sub-brand project with the intention of making money despite the expensive costs of creating all-new platforms and lightweight carbon fiber shells for its cars instead of considerably cheaper steel or aluminum. By selling its products in limited numbers at dealers, BMW is expected to hold down costs some five to seven percent when compared to the traditional dealer sales model. But that's not to say it won't have dealers. In London, BMW has already established a showroom for the i cars ahead of their launch. It also helps that BMW is one of the official sponsors of the 2012 Olympics, and displaying both a BMW i3 and an i8 in the middle of one of the busiest cities in the world when literally the entire world's media is watching isn't exactly a bad strategy. And that's probably how BMW's U.S. sales model is going to work, too, with the cars sold at the dealerships. In the U.S., automakers with pre-existing dealership networks are not allowed to sell cars directly in most states. Most recently, Chrysler had to end its ownership of a Los Angeles-based dealer. Tesla Motors is one of the few that controls its entire sales channel. So when it comes here, BMW's i brand will likely be as innovative as promised. But its distribution will be just as old-fashioned as always. Source: Bloomberg
Future cars are going to get greener.