Green Cars

BMW’s and Canada’s electric-vehicle future

The transition to electrified vehicles is under way and BMW is ahead of the curve

BMW's Electric Future

Every automaker is now rushing to produce electric vehicles. Some local governments around the world have set deadlines for them to either sell a minimum percentage of EVs or prohibit the sale of new gasoline-powered vehicles entirely.

If these regulations are successful, other governments will follow their example and automakers will have to be ready.

In Canada, only the province of Quebec is preparing to introduce legislation that forces the sale of electric cars. The federal government, however, has established an advisory group that expects to announce national recommendations on the subject next summer.

Quebec’s Bill 104, already passed and appealed and now just waiting for agreement on its final wording, says automakers a minimum of 3.5% of their vehicle sales must be EVs in the model year 2018. If they do not meet this target, they’ll have to pay a penalty that could amount to millions of dollars.

Mazda, for example, sold more than 25,000 cars in Quebec last year. To meet the 2018 quota, 875 of those vehicles (3.5%) must be EVs, but the brand will not have an electric vehicle in its lineup until at least 2019 – it’s been focusing on improving its internal combustion engines. The proposed penalty is $5,000 for every unsold electric car, which means it would have to pay more than $4 million to the provincial government.

The Quebec government, under the current proposed scheme, gives different percentages of electrification to different types of EVs. A full BEV qualifies as one credit, while a PHEV qualifies as a percentage of that.

This is just the beginning. The proposed Quebec quota rises each year to 6% in 2019, 12% in 2021 and 22% in 2025. These targets are similar to the quotas announced five years ago for California, which are being followed by 10 other American states.

Carrots as well as sticks

Electric, and electrified (e.g. – plug-in hybrid), vehicles are currently only sold in any quantity in Canada in Quebec, Ontario and British Columbia, where the provincial governments offer generous rebates to bring their prices down closer to those of equivalent conventionally-powered vehicles.

The amounts vary with each model of Battery Electric Vehicle (BEV) and Plug-in Hybrid Electric Vehicle (PHEV), but they can amount to a maximum of $14,000 in Ontario, $8,000 in Quebec and $5,000 in B.C. Subsidies are also offered for installing 240-volt charging stations that provide twice the power of a regular household outlet. No other provinces offer financial assistance, and they have no plans to do so.

This policy is not based on short-sightedness or ignorance: those other provinces just don’t have the supply of ‘clean’ electricity that is available elsewhere. Quebec’s provincial grid is almost entirely powered by hydroelectricity from the damming of its northern rivers, while much of Ontario’s supply is generated by nuclear stations (which are clean in terms of CO2 emissions but have problems of their own with respect to radioactive waste).

B.C. also creates much of its power from damming rivers, but other parts of Canada are far more dependent on electricity made by burning coal and oil. There’s little point in cutting back the emissions from each car if the extra electricity they need is spewing its own emissions into the air.

Already, Canadian automakers are boosting their EV fleets in Quebec to reduce their potential penalties. But there are limits to the number of vehicles exported to any country, due to the capacity of the assembly plants to produce them,

That limited availability of some EVs means Quebec will get them first. Toyota’s new plug-in Prius Prime hybrid, for example, is only sold in Quebec.

BMW’s electrification plans

BMW is confident it can meet Quebec’s ambitious targets, at least in the first one or two years. Last year, 2.3% of its total Canadian sales were EVs; world-wide, BMW says it expects to sell 15% of its fleet as electrified vehicles in 2025, and perhaps as much as 25%. That’s probably 500,000 vehicles, which is a five-fold increase from its target this year. By 2025, every BMW model line will have a BEV or PHEV variant.

"Out of all the OEMs [original equipment manufacturers], we're perhaps in one of the best positions – this is something we've been looking at internally for a year or two," says Matthew Wilson, BMW's national manager of product planning. "We are forever anticipating changes, not only in Quebec but federally. These are things we have to factor into our long-range planning. Regulations are not softening, by any means."

BMW sells seven electrically-powered cars in Canada today, although six of them are PHEVs and only the sub-compact i3 is totally powered by electricity. Even then, four out of every five i3s sold in Canada are ordered with the $4,500 “range-extender” option, which adds a small gasoline-powered engine to take over if the electric battery should be totally drained by driving more than about 150 kilometres.

Rebates offset price premiums

The i3 qualifies for an Ontario rebate of $13,000, which brings its $52,000 price (with the range extender) down to a more manageable level. Other electric BMWs all have maximum electric-only ranges of no more than just 25 km, so they’re subsidized much less, but sometimes that rebate will bring their price below the cost of the equivalent gas-powered car.

The BMW 530e, for example, has a base price of $66,900 and it qualifies for a rebate of $4,000 off that price in Quebec and $2,500 in British Columbia. In Ontario, though, buyers will get $8,460 back, and that prices the car at almost $6,000 less than the equivalent all-gas 530i, with no reduction in performance.

The plug-in versions of the 7 Series and the X5 are also cheaper in Ontario than the all-gas versions, with a savings in fuel, too. The 330e comes in around the same price – in Ontario – and the least expensive of all is the just-released Mini Cooper SE Countryman, which retails for $43,490 (compared to $32,290 for the non-electrified version) and qualifies for rebates of $7,730 in Ontario, $4,000 in Quebec and $2,500 in B.C. It’s a strong competitor against the i3 for city driving, though its electric-only range is just 19 km.

All EV drivers also get green licence plates, allowing them to use High-Occupancy Vehicle (HOV) lanes with only one person inside. That can be a very valuable benefit in Toronto, Montreal and Vancouver.

Other benefits as well

It’s not always just about price, though. The plug-in i8 performance sports car, which costs $149,000, comes in just below Ontario’s $150,000 limit for financial incentives and only gets a rebate of $3,000; it’s too costly to qualify for anything in Quebec or B.C. But no matter – you can still drive in the HOV lanes and other drivers will still stare at you, especially when you raise and lower the gull-wing doors.

There’s a new roadster version of the i8 that will be introduced at this month’s Frankfurt auto show. Next year, BMW will debut the all-electric Mini BEV and the plug-in hybrid X3, followed in 2020 by an X3 BEV and, soon after, the much-anticipated iNext autonomous car.

BMW says it sells 29% of the world’s premium electrific cars (which would not include Nissan Leafs or Chevrolet Bolts). This is double that of its next-closest competitor, Mercedes-Benz, and bested only by the 30% of Tesla’s international sales.

In Canada, BMW says it already has more than half the market share of premium-segment electric vehicles, and all its 48 dealerships are qualified to service PHEVs. Sixteen of its dealerships can service BEVs, including all its Quebec stores.

“We find ourselves on the threshold of a new era,” said Harald Kruger, the CEO of BMW Group, in a statement earlier this year. “Our focus is on sustainable powertrains and the digitalization of our products and processes. Our vision is clear: to take the leading role in all these future technologies.”

BMW’s sales and development of electric vehicles seems in line with the goals of Quebec’s environmentalists and law-makers, which puts it ahead of many other Canadian automakers. Only time will tell if it stays the course around the world.

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