BMW Sees "Huge Challenge" for Industry Through Emission Regulations
07/12/2012| 01:09pm US/Eastern
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(Adds details, quotes throughout)
By Christoph Rauwald
BMW AG (>> Bayerische Motoren Werke AG) Chief Executive Norbert Reithofer said Thursday the German luxury-car maker wants to reduce the average CO2 emissions of its fleet significantly by 2020, but he stressed that tightening emission regulations are posing "a huge challenge" for the car industry.
"By 2020 we want to halve the CO2 emissions of BMW Group's fleet compared to the mid-90s," Mr. Reithofer said Thursday at the Handelsblatt industry conference, according in a prepared speech.
He said the Munich-based firm invested more than 1.2 billion euros ($1.47 billion) in technology to improve fuel efficiency and reduced emissions to 145 grams per kilometer in 2011 from more than 200 grams of average fleet emission in Europe in 1995.
Premium car makers like BMW face close scrutiny to cut emissions of their cars amid tightening emission regulations worldwide. Large luxury vehicles with powerful engines produce more emissions on average than smaller cars. BMW, however, gained a competitive edge over its direct rivals in the premium segment such as Daimler AG's (>> Daimler AG) Mercedes-Benz brand as it started to invest in fuel efficiency measures earlier.
On Wednesday, the European Commission, which has executive powers in the European Union, proposed limiting carbon dioxide emissions to an average of 95 grams per kilometer starting in 2020, down from a target of 130 grams already set for 2015. Last year, passenger cars emitted an average of 135.7 grams of CO2 per kilometer, according to the commission.
The fresh proposal stirred more unease in an industry already suffering from a slump in demand and production overcapacity. Auto makers in Europe are selling about 20% fewer cars than they were in 2007, leaving many with mounting losses and far more plants, workers and production equipment than they can keep busy.
Luxury-car makers like BMW have felt little impact so far from the woes embroiling the mass-market segment in Europe, due mainly to a more affluent customer base and booming demand for premium vehicles in markets such as China. But the enormous costs for advanced technology to cut emissions further are causing major headaches across the entire industry.
Mr. Reithofer said cars with combustion engines will continue to dominate roads in the foreseeable future, but that plug-in hybrids and electric cars will be needed to meet the future emission limits set by regulators.
So far, plug-in hybrids and electric cars account only for a small portion of overall car sales, mainly because of the high costs related to the battery technology, which make it difficult for vehicle manufacturers to offer these cars at a competitive price.
BMW will start producing its first electric car-the BMW i3--at the end of 2013.
"The BMW i3 will be our first fully-electric car for urban areas," Reithofer said. The car's body will be made mainly of carbon fiber to reduce weight.
Reithofer said the auto industry is experiencing the most transformational change in its history so far and said BMW is determined to play a leading role in shaping future mobility.
(Alessandro Torello in Brussels contributed to this article)
Write to Christoph Rauwald at christoph.rauwald@dowjones.com
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