Strategic Management and Sustainability #51

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SUSTAINABLE STRATEGIES OF BMW

Figure 1. BMW logo. Stick PNG

The objective of this newsletter article is to understand what kind of sustainable strategies BMW is developing and understand how they are affecting its production of cars, which is the main activity of this company. So, we want to study if the production of electric cars of BMW is aligned with its sustainable strategies and with the objective of achieving a better future for the environment. To do that we will make an introduction of the brand and see what the sustainable strategies implemented by BMW in the last few years and we´ll analyze if nowadays they are having an impact on the environment. And after that being the cars sector his main activity, we`ll evaluate the advantages and disadvantages of electric cars.

This newsletter has an estimated time of reading of 5 minutes and is composed by 1086  words.

Newsletter written by group 3: Maks Homicki, Mario Álvarez, Pablo Ayala, and Tomás Fernandes.

Introduction of the company

BMW, in full Bayerische Motoren Werke, is a German international manufacturer of luxury vehicles headquartered in Munich. It was originally founded in 1916 as a manufacturer of aircraft engines. Its first motorcycle in 1923 marked a new beginning for the company, which had been selling engines rather than complete vehicles until that moment. In 1951, after World War II, they launched their first post-war automobile, setting themselves again as high-quality retailers. 

Nowadays, BMW counts on more than 118 thousand employees, from which around 106 thousand are dedicated to the automobilistic sector. They have delivered more than 2,5 million cars and nearly 200 thousand motorcycles by the end of 2021, earning total revenues of more than 110 billion euros. This can be achieved by its multinational production, set in various countries such as Germany, Brazil, China, India, Mexico, the Netherlands, South Africa, United Kingdom and the United States.

What are the sustainable strategies implemented by BMW?

BMW plans to reduce CO2 emissions from their factories globally by over 80% and reduce every car pollution of ⅓ during its lifespan by the year 2030. These plans are based on taking advantage of the circular economy as the standard to deal with their resources, confirming that 80% of what passengers see in the interior of the car is made out of recycled materials or these, which have been created using renewable energy sources. A very important part of the long-term strategy of BMW, is that the company is planning to increase the share of electric vehicles in total sales to over 50%, by increasing the range of electric vehicles offered. Additionally, BMW is a member of the Paris Climate Agreement which obligates it to become climate neutral by year 2050, however BMW didn’t put any specific strategies into the work, as they focus on reducing emissions to levels targeted at the year 2030.

Figure 2. Sustainability Goals of BMW. Source: BMW Movement

Are these strategies having an impact on the world? Should BMW and other car brands continue to apply them?

BMW is one of the car brands most committed to sustainability. 

The first example that this is one of the most committed and advanced brands is that they have been in the electric car market for some time. The recently released iX1 is the model with which the brand began to operate in this market, today thanks to their persistence continue to make a car that meets consumer expectations and meets the conditions of being a car that does not pollute with CO2, which is one of the objectives of the company.

In their mind is a challenge that should be pursued by all those involved in this type of activity. His ambitious sustainability goals are an example to follow and it is constantly moving towards transforming the company to reach the goal of climate neutrality by 2050. The recycling of raw materials in the sense of a circular economy is envisaged to achieve the best possible resource efficiency.

The company will reduce its CO2 emissions by 40% per vehicle by 2030 along the entire value chain compared to 2019. This is a success, because many things need to be changed and many factors need to be taken into account in order to change something that is complicated by the fact that the market situation is not at its best and that there is not such an operating experience. 

Lastly, it is important to mention that BMW's corporate strategy has a large part of sustainability as a protagonist. And the company is on the right track, because any company that conditions the health of the planet will be highly criticized and gradually marginalized. Being the automotive sector one of the sectors responsible for the great air pollution, it is advisable for all companies to follow the current sustainable trends because sooner or later companies will have to adapt to survive, and sustainability must be present more and more. It could be said that BMW is an example for many other brands trying to find their place in the market. 

Advantages and Disadvantages of the Electric BMW cars

The Electric cars of BMW are the center of its main sustainable strategies. The production of these cars has advantages. BMW is famous for its fast cars. Generally, these fast cars pollute a lot, so by producing these cars BMW maintains the way it wants to be seen, that is, continues to produce according to its mission and vision and at the same time produce cars with lithium (a resource that can be recycled repeatedly) batteries which reduce emissions. Another big advantage of this is that with these BMW cars were introduced sustainable manufacturing techniques that use 50% less energy and 70% less water. The last big advantage of the BMW construction is that it introduces a revolutionary material design, that is, part of the interior materials in these cars are made of renewable and/or recyclable materials.

Figure 3. Benefits of Electric cars. Source: BMW Group Press Club

Despite these advantages, this type of car has disadvantages. The first and clear disadvantage of the BMW electric cars is that they are more expensive than a normal car. This is due to two factors, firstly the expensive lithium batteries that this type of car requires and because of the lack of competition in the production of electric cars, although this market has been growing. Because of that many consumers who desired to buy one of these cars are not able to buy one because of the high purchasing power required to buy one of them. Moreover, another down point of these cars is the low autonomy and the fact that these cars require a lot of time to be fully charged. This moves away some of the potential buyers because given these characteristics and the low number of charging stations, would be difficult for the potential buyers to make a long trip with their car.

Figure 3. Electric cars of BMW. Source: Car Magazine

Conclusion

Although there is a huge effort from the company to invest in cars made by renewable energies and composed of recyclable materials, it is not easy to develop this project without investing in high costs. It is clearly not a question that must be answered exclusively by BMW, but it has to be reinsured by everyone else. The lack of charging stations, electric cars demand and consumption and high lithium prices make sustainable strategies hard to accomplish. Will their attempts to be more environmentally aware be meaningful for our climate change issue? Or just an exception in a world who doesn't seem to be taking enough steps into a more world-caring path?

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