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Europe: Deep Dive: The Future Of BMW’s Project I Product Plans

For all outward appearances, BMW’s Project i is going full-speed ahead. The first two products from this endeavor, the i3 city car and the i8 sport coupe, are due in 2013 and 2014, respectively, and the concepts are already stars on the auto show circuit. But the whole enterprise is skating on dangerously thin ice.
The BMW i program is so big one could almost be forgiven for calling it the reinvention of the car. The entry-level i3 is supposed to cost roughly the same as a 335i sedan (about $45,000) but has a carbon-fiber body shell, an aluminum platform, a lithium-ion battery, and a rear-mounted 150-hp electric motor. Then there’s the scale of the operation: BMW expects to find 100,000 buyers per year for the i3 and another 10,000 for the 493-hp i8 plug-in hybrid.
The problem is that many of the external catalysts that BMW had hoped would popularize electric cars have failed to materialize quickly enough. Promised green car incentives have fallen victim to the emphasis on austerity that has taken hold of most western governments, and the battery-charging infrastructure remains in its infancy in all but a few cities. There’s a lot of lobbying going on to iron out external obstacles. Trouble is, BMW is not dealing with only one country and one market here. Rather, it confronts an increasingly fractious Europe, a China that is changing its own rules with little warning, and a U.S. federal government that hasn’t followed the state of California’s eco-leadership.
BMW is still convinced that Project i will eventually pay off, and the complex engineering and tooling work is said to be proceeding on schedule. However, team leader Ulrich Kranz and new research and development chief Herbert Diess are discussing contingency plans as you read these lines. BMW refuses to put a number on a Project i exit strategy, but chairman Norbert Reithofer claims that, although it would cost billions, halting the i3 and i8 would not throw the carmaker into the same kind of turmoil its Rover misadventure caused in the late ’90s.
For now, the proposed i1 intra-city car and the i5 eco-van have been put on ice. It might be possible to delay the launch of the electric i3 and i8 to concentrate on the potentially more saleable plug-in hybrid or even to add a gas-only model, but BMW definitely does not want to make a compromise that might defeat the point of its green car offensive.
Sorry, sports car lovers
Sports cars are another cul-de-sac BMW has maneuvered itself into. The new 6 Series Gran Coupe is handicapped by its highly ambitious price tag, next year’s 2 Series is no more than a renamed 1 Series replacement, the proposed 4 Series stops making sense when it sacrifices the iconic M3 model designation, the overdue M1 supercar must remain cages until the brand-shaping i8 has found its place in life, and the Z4 has been turned into an overweight GT with a compromised folding hardtop. What the BMW community would love instead is an affordable Z2 – think of it as BMW’s answer to the Toyota GT 86/Scion FR-S/Subaru BRZ triplets. This car could pick up what was lost when then Z3 became the Z4, but unfortunately the new compact roadster keeps being rejected by the board, primarily for pricing and positioning reasons. Even though it is now almost too late to sign off on a Z2 based on the purist rear-wheel drive 2 Series components set, the time will probably never be ripe for a front-wheel drive Z2 twinned with the next Mini Cooper S Roadster. As a result, the Z4 soldiers on in a shrinking segment where the Audi TT, Mercedes-Benz SLK, and Porsche Boxster are suffering a similar fate.
What to do? The least likely option is to recreate a Z3 based on the all-wheel drive edition of the future 1 Series platform. Alternatively, BMW could conceive an up-market Z6 and attempt to offset the further reduced volume by charging a higher price – which would, of course, directly affect the volume again. Since the board is skeptical whether a brand-new roadster based on the brand’s forthcoming all-new rear-/all-wheel drive can break through this vicious cycle and generate some profit, skeptics fear that the Z4 will coast toward oblivion after a major reskin, which is due in late 2015.

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