BMW Makes A Bold Move To Combat Chip Shortage

Jun. 24, 2021 2:42 PM ET by Martin Bigg Industry News / 4 Comments

BMW has been forced to take drastic action during the chip shortage crisis.

BMW's electrification plans are gaining significant traction. Earlier this month, BMW unveiled the American version of i4, which will rival the Tesla Model S, as well as the iX flagship electric SUV. The Bavarian automaker has also been caught testing electric versions of the 3 Series and has begun testing a hydrogen-powered X5. Speaking with German newspaper Handelsblatt, BMW's board member in charge of production, Milan Nedeljkovic, confirmed that BMW wants to produce as many as three million cars per year by 2030.

However, with the ongoing superconductor chip shortage crisis still showing no signs of ending, there is a danger that production costs in the auto industry could increase significantly.

Production delays will also result in huge financial losses - there are fears the semiconductor chip shortage could cost the automotive industry $110 billion in revenue losses this year.

To combat this, BMW plans to cut production costs by as much as 25 percent in the next few years. "We will lower the production costs per vehicle by 25% by 2025 - compared with the level in 2019," said Nedeljkovic, adding that BMW will achieve this by implementing "leaner logistics" and a "better utilization of existing plants".

He added that reducing production costs will also make BMW more competitive with Volkswagen, Daimler, and Tesla.

Despite the rising costs of raw materials, BMW is still on track to meet profit targets in 2021, although the chip shortage could affect the automaker's second quarter results.

BMW also wants to reduce the development time of new models to help cut production costs, which could lead to shorter model life cycles. "Five years is becoming a really long time for development, not just technologically but also when you look at how society was five years ago," BMW R&D boss Frank Weber said in an interview with Autocar. "Look at how digital dominates today versus 10 years ago. You can expect that this will be even faster in the next 10 years."

Source Credits: Autocar Handelsblatt

BMW Makes A Bold Move To Combat Chip Shortage

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