German automaker Bayerische Motoren Werke AG (XTER:BMW, Financial) has plans to increasingly ramp up production of electric vehicles over the next two years. By the end of 2023, the luxury carmaker hopes to increase electric vehicle production by 250,000 units.
According to an interview with the German publication Augsburger Allgemeine, BMW CEO Oliver Zipse aims to have around every fifth car that BMW sells to be electric. This would be a large jump from approximately 8% of current sales coming from electric vehicles.
To support the increase in electric sales, Zipse highlighted the need for supporting infrastructure:
"Just one example: in Germany, around seven to ten million electrified vehicles are expected to be on the roads by 2030. Because every car has to be charged, you would need a total of about eight to eleven million charging points – one million of which are public. For this size, 15,000 private and about 1,300 public charging points would have to be put into operation every week from today. Unfortunately, we are a long way from that."
Despite concerns of a bottleneck from infrastructure, BMW already plans to have 25 electrified models on the road by 2023. Half of these models will be all-electric, with plans to create electric options of their popular 5 series and 7 series. To support these models, BMW has already rebuilt several of its plants and is certain all four of the German car plants will produce pure electric cars as early as 2022.
According to Zipse, BMW is well prepared for the transition to electric vehicles over the next decade and aims to help Germany defend its leadership position in premium car sales. According to its third-quarter report, BMW has a positive outlook moving into 2021 as vehicle sales recover and grow.
As of Dec. 29, BMW stock traded at 73.49 euros per share ($90.02) with a market cap of 47.41 billion euros. According to the GF Value Line, the stock is trading at a fair value.
GuruFocus gives the company a financial strength rating of 7 out of 10, a profitability rank of 7 out of 10 and a valuation rank of 8 out of 10. There are currently four severe warning signs issued for assets growing faster than revenue, declining operating and gross margin percentages and an Altman Z-Score of 0.75 placing the company in the distress column. Currently the return on invested capital is lower than the weighted average cost of capital, indicating the company will destroy value as it grows.
David Herro (Trades, Portfolio) is one of the top shareholders with 1.51% of shares outstanding. He is followed by Charles de Vaulx (Trades, Portfolio), the IVA International Fund (Trades, Portfolio) and the Third Avenue Value Fund (Trades, Portfolio).
Disclosure: Author owns no stocks mentioned.
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