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BMW’s electric cars are its biggest moneymakers

BMW said its top-end electric vehicles like the 7-Series sedans, X7 and Rolls Royce Spectre will drive profit this year, even as faltering global demand weighs on broader EV sales.

The German luxury carmaker expects its priciest models to be key contributors to an 8% to 10% margin for its automotive segment, in line with its long-term target. BMW sees overall sales increasing slightly.

“We see slight volume growth in the main regions North America, China and Europe this year,” Chief Executive Officer Oliver Zipse said Thursday in an interview with Bloomberg Television.

“We are quite optimistic, especially about fully electric vehicles in the upper premium segment.”

BMW is facing fierce competition in China, its biggest market, where a sluggish economy and price war led by Tesla is weighing on the industry.

That price pressure, together with higher production costs, squeezed BMW’s fourth quarter profits, which fell short of analysts’ expectations.

BMW shares declined as much as 1.4% in early trading. The stock has gained about 8% in the past year, while Mercedes-Benz has risen about 5.5%.

BMW is outpacing its premium-segment rivals in the transition to EVs, which now make up roughly 15% of its total deliveries.

The company aims to boost that share further this year with half a million EV sales, drawing on 15 fully electric models across its brands.

Meanwhile, competitor Mercedes expects its EV and plug-in hybrid sales to remain stuck at last year’s levels, and Audi indicated it’s paring back the rollout of new electric models to avoid over-burdening its factories.

BMW forecasts demand for used cars to normalize this year and returns from reselling leased cars to decrease, weighing on group returns.

At the same time, high investments in its “Neue Klasse” generation of EVs — with sales set to begin in late 2025 — will also cut into earnings, Chief Financial Officer Walter Mertl said.

With the new platform, BMW aims to slash battery costs in half from current levels and increase vehicle range by 30%. The vehicles will also allow bi-directional charging, which enables consumers to use the vehicle as a battery back-up for their home.

The company unveiled a prototype of the new vehicle, featuring a customizable display across the bottom of the windscreen and a larger central control screen controlled by touch and voice. The car also has an integrated processor system that BMW says is unique in the industry.

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