Bayerische Motoren Werke AG
XETRA:BMW
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
65.96
114.75
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Bayerische Motoren Werke AG
You don't have any saved screeners yet
Ladies and gentlemen, the BMW Group is a company that takes the long view that is profitable even in a volatile environment and that always charts its own course. In 2022, we grew in three different ways with the complex challenges we faced with e-mobility and with our earnings. On the one hand, our focus is on operational excellence in the here and now. We know we can handle complexity. We can pivot quickly if the situation requires and that makes the company more resilient than ever. And on the other hand, we consistently maintain our course for the future realizing our goals with determination.
A good example of this is our BEV ramp up since 2013. We steer it to closely track growing demand. And since the start of the BMW i3, we have put more than 0.5 million, all electric BMW and MINI vehicles on the roads worldwide. And in fact, we sold more than 215,000, all electric vehicles just last year. And that is more than double the number from 2021 despite the difficult supply situation. We deliver on our promises. That has been a differentiating factor for BMW for over 100 years. With our strong BEV growth, we are leaving established competitors far behind, not to mention many of the BEV only manufacturers from the United States and Asia who are new to the market. This is true both in absolute terms and also in terms of our growth dynamic and we continue to up the pace. Demand remains strong. That’s why all electric vehicles are expected to account for 15% of our global sales this year already. This will mean another big leap and the highest absolute increase we have targeted to-date. We have clearly defined the next milestones for our BEV ramp-up, a fifth of overall sales in 2024, a quarter in 2025 and a third in 2026.
With this momentum, more than half the vehicles we sell worldwide will be all-electric before 2030. It goes without saying that the percentage in Europe will be – already be well over 50% by then. And if individual markets or regions demand 100% e-mobility at a certain point in time, we will be ready and able to deliver. BMW, MINI, Rolls-Royce and BMW Motorrad already offer fully electric cars and two-wheelers in practically all the segments we serve. We already have a dozen fully electric cars in our lineup this year, covering a range of different customer requirements.
Last year, I was only able to show you the profile of the BMW i7 and the BMW iX1. And today, those production models are standing right here beside me. Both vehicles are fresh on the market and impressing the media and customers alike. With all our BEVs, we are attracting an especially high number of new customers across different segments and that is another reason while we are expanding our BEV range in a deliberate manner and we are not done yet.
In 2023, we will take the next big step to fulfill the diverse technological needs of our customers around the globe. Later this year, we will be realizing the latest version of the world’s most successful business sedan on the market, the new BMW 5 Series, including, of course, the fully electric i5. This will also be followed in 2024 by two plug-in hybrid variants. The official launch is still a few months away, but behind me, you can at least see the camouflaged i5. Production will get underway in the summer. From October onwards, the i5 will initially be released in Korea, Europe and the United States.
BMW M fans get to experience the perfect harmony of e-mobility and dynamic performance in a very unique way. BMW M GmbH reported a record year to mark its 50th anniversary in 2022. And the best selling model was the fully electric BMW i4 M50. I think that speaks for itself. It is another reason why we are also bringing the new BMW i5 onto the market as an M Performance model. And today, I can also announce the new BMW 5 Series touring, which is particularly popular here in Europe. Our touring fans will be excited to hear that an all-electric version of the touring will also be available for the first time from spring 2024. That is our unique selling point in this segment.
I can also officially confirm the new BMW X2 and of course the all-electric iX2. This is already BMW’s second BEV offering in the high-volume compact class. And like the iX1, we are building the iX2 in Germany at our Regensburg plant. It will be launched towards the end of this year. E-mobility is a priority for us and we measure ourselves against this. That is why starting this year, the BEV share of total sales will be a key performance indicator for our management of the company. Our BEVs also make a vital contribution to achieve further tangible reductions in the CO2 emissions of our Europe new vehicle fleet. At 105 grams of CO2 per kilometer in the WLTP cycle, we even outperformed the EU 27 plus 2 fleet target by 22.5 grams per kilometer by the end of ‘22.
As you can see, the BMW Group can also be relied on to meet political directives. And we are pressing ahead with our BEV ramp up. At the same time, we remain true to our broad technological approach. Why? Because we don’t want to miss out any market potential and this is the only way to effectively contribute to climate protection in all markets. It is also the only way we could continue to take different customer needs in the regions and markets into account.
In addition to BEVs, we are also seeing particularly strong growth in the profitable high-end premium and luxury segments. More specifically, we anticipate growth here in the mid double-digit percentage range in 2023. Thanks to attractive models like the new BMW 7 Series, the BMW X7 and the BMW XM and of course, the Rolls-Royce model family. This will be joined in the spring by updates to the BMW X5 and the BMW X6. From 2025 onwards, the Neue Klasse will bring added momentum to sales of our all-electric vehicles. We intend to release at least 6 models onto the market within 24 months of the start of production.
But before we look ahead to the future, here is Nicolas Peter to talk about our key figures for the financial year 2022.
Good morning, ladies and gentlemen. As you know, the BMW Group consistently delivers on its strategic priorities, excellence in execution and compelling returns for all stakeholders. 2022 was no exception. Our group EBIT margin stood at 16.5%. Our Automotive operating earnings increased 7.8% year-on-year. The EBIT margin for the segment of 8.6% was at the upper end of our target range of 7% to 9%. Excluding the consolidation effects of the BBA full consolidation, the auto EBIT margin stood at 11.2%. Free cash flow in the Automotive segment reached €11 billion, well over our projection of at least €10 billion.
We reached our overall sales target, thanks to double-digit growth in Q4 as well as our best delivery target with sales more than doubled from 2021. We also met all our non-financial targets. This includes a further reduction of our CO2 fleet emissions to 105 grams, representing an outperformance of 22.5 grams. We achieved all of this in the face of many challenges that caused a high level of volatility in our business environment. Continued semiconductor shortages and supply chain bottlenecks impacted us throughout the year and led to production disruptions. This included bottlenecks in vehicle and parts logistics partly due to pandemic-related lockdowns in China. The combination of these factors dampened vehicle sales in the first half year, in particular, as we were simply unable to meet demand.
Under these difficult conditions, the BMW Group proved its resilience and earnings power yet again. In all areas of the company, our employees have worked tirelessly to help us navigate through these challenges. Thanks to our globally balanced footprint, we are able to react flexibly to developments in our markets. In a volatile environment, we recorded strong sales figures in the second half year and concluded the full year with a robust business performance. At the same time, we had an exceptional development throughout the increase of our stake in our Chinese joint venture BBA to 75% and the full consolidation in the BMW Group’s financial statements. We are capitalizing on the strengths of both companies to increase agility and thus enhance the ability of BBA to exploit opportunities in a volatile and dynamic business environment.
Let’s now take a look at the business development in detail. Revenues at group level amounted to €142.6 billion for the year. Cost of sales also increased significantly due to the inclusion of BBA’s cost of sales and rising material and logistic costs, a higher share of electric vehicles as well as increased risk provisions for our financial services business also factored into the increase. Group earnings before tax reached €23.5 billion. The significant increase compared to 2021 reflects the revaluation effect of previously held BBA shares amounting to €7.7 billion. Additional tailwinds came from strong pricing and ongoing positive developments in the pre-owned vehicle markets. As mentioned, the group EBIT margin came in at 16.5%.
Let’s now take a closer look at the individual segments, starting with the Automotive segment. With a strong second half year, we achieved our annual sales target with a slight reduction of 4.8% compared to 2021. In total, we delivered nearly 2.4 million vehicles to customers worldwide. Due to the factors mentioned before that affected production we adjusted our volume target after the first 6 months. In 2022, we sold nearly 216,000 all-electric BMW and MINI vehicles more than doubling our total from the previous year. The segment’s operating earnings totaled almost €11 billion. At 8.6%, the EBIT margin is at the upper end of our target range of 7% to 9% for 2022 and within our long-term strategic target range of 8% to 10%. Excluding consolidation effects of the BBA full consolidation, the auto EBIT margin stood at 11.2%.
Despite the reduced sales volume, the year-on-year increase in segment earnings was mainly driven by improved pricing. Positive effects also came from the full consolidation of BBA while our after-sales business also saw significant growth. The continuing positive development in pre-owned car markets and positive currency effects also contributed to the increase. Throughout the year, rising cost raw materials and logistics impacted the segment’s EBIT, resulting in a headwind of more than €2.5 billion. This primarily reflects the limited availability of semiconductors and supply chain disruptions as well as higher raw material and energy prices.
Higher expenses for warranty provisions due to the exhaust gas recirculation cooler and inflation adjustments also dampened earnings. Consolidation effects from the initial consolidation of BBA totaled around €3.1 billion. These included depreciation and amortization from the purchase price allocation and elimination of interim profits in connection with intragroup deliveries. The significant increase in the financial result to €8.3 billion mainly came from the fair market valuation of previously held equity interest in BBA, which resulted in a one-time effect of around €7.7 billion. Free cash flow in the Automotive segment reached €11 billion and includes around €5 billion of net cash acquired from BBA at the date of initial consolidation. For 2023, our ambition is to achieve a free cash flow of around €7 billion.
Ladies and gentlemen, the BMW Group is known for its innovative strength. We remain focused on our transformation as we electrify and digitalize our business. Overall, we invested around €7.8 billion in 2022 in new vehicle projects as well as in the digital backbone and digital features of our vehicles and battery technology. This resulted in an overall CapEx ratio of 5.5%. For 2023, we expect the CapEx ratio to be around 6%. This higher level of capital investment ensures the future viability of our business.
We are preparing our global production network for further electrification with investments in China, Spartanburg and Mexico and the launch of our Neue Klasse with the upcoming plant in Hungary. Our approach of thinking globally and acting locally gives us the flexibility to react to individual market developments. Research and development expenditure remains at a high level with a priority on the further electrification of our portfolio and expansion of digital features. In addition to expenses for new models, a major focus in 2022 was software architecture and preparations for the upcoming Neue Klasse.
R&D costs according to IFRS totaled €6.6 billion, moderately higher than 2021. The R&D ratio according to the German Commercial Code stood at 5.0% for the full year. As expected, the ratio is lower than the previous year despite the ongoing high level of R&D expenditure due to the increase of revenues from the full consolidation of BBA. Moving forward, we are adjusting our long-term target range for the R&D ratio to between 4% and 5% from 2023, reflecting the impact of BBA consolidation in our revenues.
Let’s turn now to the Financial Services segment. Pre-tax earnings amounted to €3.2 billion, a significant decrease on the previous year, which was influenced by an exceptionally positive risk situation. In 2022, geopolitical uncertainty and weaker macroeconomic outlook led to higher provisions for credit risks, mainly starting in the third quarter. Nevertheless, the actual credit loss ratio currently remains at a historically low level. However, in the second half year of 2022, we saw a slightly increasing trend.
Positive effects on earnings continued from high revenues from the resale of our end of lease vehicles. However, the total volume of new business from financing and leasing contracts with retail customers for the year was down. The decrease primarily reflects rising interest rates, related price increases and a very competitive landscape in the financial services sector, coupled with the overall limited availability of new vehicles.
On the other hand, average financing volume per vehicle increased due to higher vehicle prices and an improved product mix. The return on equity of 17.9% was within our adjusted target range of 17% to 20%. In 2022, the motorcycle segment delivered its strongest sales performance in its history with over 200,000 units sold. The R 1250 GS and R 1250 GS Adventure Boxer models were particularly popular with customers with just under 60,000 units delivered. 2022 also saw the launch of the CE 04 with 5,000 units sold already, the e-scooter has demonstrated clearly the popularity of electric urban mobility. As it enters its centennial year, the brand continues to see growth in markets worldwide with double-digit growth in the U.S. and Latin America in 2022. The EBIT margin for the segment came in at 8.1%. Pre-tax earnings amounted to €269 million, significantly above the previous year.
Finally, let’s look at earnings in the other entity segment and intersegment eliminations. At around €1.1 billion, the combined result was higher than the previous year. Positive valuation effects from interest rate derivatives driven by significantly higher interest rates as well as lower intersegment eliminations from the reduced leasing business contributed to the increase.
Ladies and gentlemen, despite the difficult business environment, the BMW Group posted strong earnings for 2022. This allows us to invest in the future transformation of the company. We remain focused on ensuring that our shareholders participate in the company’s success. To that end, the Board of Management and the Supervisory Board will propose a dividend of €8.50 per share of common stock and €8.52 per share of preferred stock to the Annual General Meeting. This represents a payout ratio of 30.6%, which is within our long-term strategic target range of 30% to 40%. Additionally, we successfully launched the first program of the share buyback, which was approved at the Annual General Meeting in May 2022. We expect to complete the first program by the middle of the year. This underscores our financial strength and robust liquidity from operations.
Ladies and gentlemen, let’s turn our attention now to 2023. Our strong consistent financial performance provides us the flexibility to invest in the future of our business. We are always steering the company towards profitability and leveraging efficiencies in all segments and across all brands. Overall, we expect demand in premium markets to remain stable in 2023. Currently, we see stability in the U.S., slight softening in Europe, and expect to see some recovery in China from the second quarter, although it is too early to judge the full impact. Despite some leveling off of order intakes from the exceptional levels in European markets at the end of 2022, our order books remain well filled due to our attractive product lineup, especially for our BEVs. The launch of the new X1 and all new iX1 in Q4 provided fresh momentum for customer orders, particularly in Europe. This means we have maintained in 2023 the strong pricing levels achieved in 2022.
We also see positive momentum coming from the top end of our portfolio where we anticipate growth in the mid-double-digit percentage range and high-margin products in 2023. We will have a full year of the new 7 Series and i7, the upgraded X7 as well as the XM. With the X5 long wheel base localized in China, we also have additional X family capacity in Spartanburg. As you can see, we are leveraging our leading SUV competence and expanding our top segment. And even if macroeconomic conditions lead to reduced customer demand, our high level of flexibility in production and sales allows us to maintain a profit-oriented balance between supply and demand while capitalizing on new products.
Our guidance for this year reflects the current status of our planning. The supply situation remains challenging as we expect the situation on raw material markets to remain difficult in 2023. However, the availability of components and semiconductors should improve slightly. While the energy supply should stabilize, disruptions and further significant cost burdens in supply chains are still expected. Logistic costs will therefore continue to weigh on earnings.
Regarding pre-owned car markets, we are anticipating the situation to begin to normalize in 2023 due to the increased availability of new cars. Despite the current high inflation and interest rates and the challenges I have mentioned, we are confident about the financial year 2023. Target investments and close cooperation with a strong supplier network will help us achieve our goals for the year. For the group pre-tax profit, we expect a significant year-on-year decrease. This is due to the basis effect from the revaluation of previously held BBA shares in 2022. The BMW Group’s headcount will increase slightly. Due to the better availability of new vehicles and strong order book levels, we are forecasting a slight increase in deliveries in the Automotive segment driven by growth of our BEVs and high-end models.
Reflecting the increased focus on all-electric vehicles the BMW Group will now only report on the share of all-electric vehicles in total deliveries excluding PFS starting in 2023. For the share of all-electric vehicles, we expect a significant increase compared to 2022. We expect the EBIT margin in the Automotive segment to be within our long-term strategic target range of 8% to 10%. In the Motorcycle segment, deliveries are forecast to increase slightly with an EBIT margin in our target range of 8% to 10%. In the Financial Services segment, we should see a return on equity within the range of 14% to 17%.
Ladies and gentlemen, in such a complex and volatile environment, the BMW Group demonstrates resilience in delivering on strategic priorities, excellence in execution and competitive returns to all stakeholders. We walk the talk and reliably deliver on the commitments that we make. This has always been a strength of ours. We have proven it many times over the past several years in the face of external challenges and taking the lessons with us.
In 2023, we will continue to leverage the flexibility of our business model to secure our profitability. Our strong financial position provides us a basis not only to manage the challenges ahead, but to drive the transformation of the BMW Group forward. We are investing in our future towards electrification and digitalization. We remain well positioned to continue to lead the industry and look positively to the road ahead.
With that, I will hand back to Oliver who will dive deeper into our strategic outlook. Thank you.
On the road to the Neue Klasse, we revealed our digital vision vehicle at the CES in Las Vegas. And this was a real sensation. [indiscernible], you have caused quite a stir since your debut in Vegas. Now you are standing here with me at BMW Welt. Are you ready?
[Video Presentation]
At the BMW Group, we deliver on our promises. That is our pledge. The same applies to digital innovations. We are making mobility a totally new experience for our customers. Our revolutionary head-up display blurs the lines between reality and the virtual world. Augmented reality even enhances the real world. No one has ever imagined and implemented it like this in a car before. We call it BMW Panoramic Vision and it is certainly not science fiction. In 2025, just 2 years away, a standard production version of this technology will be used in the Neue Klasse.
[Video Presentation]
At the CES, we demonstrated how we can integrate software and hardware into a perfect customer experience. Behind the digitalized vehicle, like our Vision Vehicle Dee, there stands a digital company. What others are only just announcing has long been a reality for us. We already have the world’s biggest update compatible fleet of 4 million vehicles on the roads. We have rolled out the third generation of our operating system 8, and we are realizing – we’re raising the bar again with the operating system 8.5 and the operating system 9.
We know exactly what we develop in-house and where we need to integrate partners. For example, in Qualcomm, Arriver we have a strong strategic partner for the next generation of driver assistance systems. We already used vehicle and fleet data from over 20 million vehicles connected to the BMW cloud for intelligent customer functions, predictions and improved efficiency. For the required IT infrastructure we use, among other things, our strategic cooperation with Amazon Web Services. Our position is clear, we live by digital serenity for data and intellectual property, independence and data protection.
And one thing is clear. It is our employees who are developing these innovations. We are creating the knowledge of tools needed to identify and implement digital potential in every area of responsibility.
[Video Presentation]
The theater screen and the new BMW 7 Series is a good example of how we are also realizing digital innovations in collaboration with our suppliers. This highly exclusive private cinematic experience on wheels came out of our cooperation with Amazon and three other companies. But collaborating with our suppliers, it’s not just about technical innovations. Our supply chains need to meet increasingly complex and demanding requirements for CO2 emissions, environmental and social standards and on the road to a circular economy.
The aim is for the BMW Group’s entire value chain to be climate neutral no later than 2050. This will require many, many individual steps. Let me give you three examples to illustrate how our holistic approach starting next year. We will be sourcing significantly CO2 reduced aluminum in Canada, exclusively for vehicle production at our U.S. plant in Spartanburg. We also have concluded agreements for delivery of CO2 reduced steel in Europe, the United States and China. Our goal is to supply more than third of our global production network with CO2 reduced steel from 2026 onwards. This move alone will avoid 900,000 tons of CO2 in our supply chain and support the transformation of the steel industry.
We continue to pursue our major goal of a circular economy. And to achieve this, we have our significantly increasing the percentage of secondary material in our vehicles and especially for the Neue Klasse. We showed how the circular economy can be implemented in our industry with our BMW i Vision Circular 2 years ago. The key to all this is close cooperation with our partners in the supplier network.
The future is decided by innovations. This will be especially true for our customers’ digital experience in the Neue Klasse. That’s exactly what a BMW i Vision Dee stands for. We bring the most powerful innovations and technologies into the company in close cooperation with our supplier network. We are looking far into the future using our expertise to identify digital innovations and enable our suppliers to make them ready for serious production. The digital key represents co development at its best. We have set a unique industry standard together with Apple. The driver uses the smartphone as a car key, contactless and without even taking it out of his pocket. Today, this works across iOS and Android, in Apple, Google and Samsung devices with more to follow, increasing innovation scouting and actively empowering our partners to innovate. This is how we are tapping into the opportunities of the future.
In production, we are bringing innovation to life. It is part of our DNA to seamlessly integrate the latest technologies. This year, we already produced 11 fully-electric models in our global production network, like this sporty [indiscernible] and [indiscernible] i4 here in plant Munich, or our technological masterpiece, the BMW i7. With the Neue Klasse, we will take the next massively forward. Starting with [indiscernible], we will integrate its new vehicle architecture and the new generation of high-voltage batteries into our global production network. As you can see, the BMW iFACTORY is taking shape, highly flexible at full speed and always leveraging the opportunities of digitalization. But take a look yourself. In the virtual world, our Vision Dee is already rolling off the line. Welcome to the future of BMW Group production.
BMW iFACTORY, that is the future for our global production network. We are expanding this concept in great strides in all major regions of the world. We completed two key projects in China last year in April, the expansion at our Dadong location began operations. This is where we are localizing the BMW X5 as a long wheelbase version for the Chinese market. And in late June, we also put another plant into service at our Tiexi site. The plant is fully geared towards e-mobility and was planned entirely in a virtual environment.
In Europe, at around the same time, we laid the foundation stone for our new plant in Debrecen, Hungary. It should become a pioneer in sustainable and climate-friendly production. This plant was also planned completely digitally. Production of the Neue Klasse will get underway there in 2025. From then on, others will follow in rapid succession, our main plant in Munich in 2026, in 2027, our Mexican plant in San Luis Potosi, with other locations to follow.
We are also enabling our largest plant worldwide plant Spartanburg in South Carolina and the United States for production of all-electric vehicles. We’re investing over $1.7 billion in this site. And by 2030, we will have six pure electric models coming off the production line in the U.S. We will be manufacturing the high-voltage batteries needed for this at a completely new plant in nearby Woodruff.
Woodruff is just one example of our production of high voltage batteries around the world. At the moment, we are manufacturing high voltage batteries for our current electric models in Germany and in China at our Shenyang location. Debrecen in Hungary, San Luis Potosi in Mexico and Woodruff will complete this network for the sixth generation of battery technology in the future. This local-for-local approach enables us to secure our BEV ramp-up in individual regions of the world and significantly increase our resilience to unforeseen events. Our world is diverse and individual at the same time, we believe that the mobility of the future also needs more than one leg to stand on in addition to battery electric drive trains.
We see hydrogen electric vehicles as a meaningful complement to e-mobility, even if with something of a time lag. Hydrogen has a lot of potential globally and across all industry, we are already on the way to becoming a hydrogen society. At BMW, we could even envision a production vehicle in the second half of this decade. Hydrogen could also be a possible drive technology for the Neue Klasse going forward.
Technologically, we are ready. We proved this a few weeks ago when we presented our BMW iX5 hydrogen in Antwerp. A range of around 500 kilometers in the WLTP cycle and refueling in 3 to 4 minutes speak for themselves. We are now sending a pilot fleet out into selected markets to gain customer experience. But let’s leave the slightly more distant hydrogen technology and come back to what our customers can look forward to today and in the near future.
MINI will be really taking off in the next few years. By the early 2030s, the brand will be electric only. This is what the pioneering new Mini family is all about. A total of three new electric models will be coming onto the market next year. Standing next to me is the new Mini Cooper Electric. And I’m confident the fan community is also going to love the MINI Countryman and the Mini Aceman. Rolls-Royce will be all-electric from the start of the next decade. The Spectre is being released at exactly the right time. We have never had so many preorders for an all new Rolls-Royce model. BMW Motorrad already relies solely on e-drives in urban settings. Following on from the CE 04, the CE 02 is mainly designed to appeal young people living in the city. The concept is standing right here beside me. Today’s perfect customer experience also entails personalized communication with customers in the worlds they live in.
[Video Presentation]
Focused on the customer with highly attractive products for all brands and a new sales model. This is how we are heading into the future together with our retailers. We have broad support from our sales partners. This collaborative approach is what sets us apart from others. Direct sales with agents acting as sales representatives will be a key element of our realigned sales structure. We have already successfully tested this as part of a pilot project in South Africa. We launched this model in China for MINI on the first of March this year already. And it will be followed next year by the European sales region for MINI, and we plan to transition the BMW brand in Europe from 2026 onwards.
Ladies and gentlemen, at the BMW Group, we move body, heart and mind. This aspiration also encapsulates our impact on society as a value-based value-creating company. And above all, we deliver on our promises, you will always be able to rely on the BMW Group for this in the future. In 2023, our strategic approach will once again keep us on track for success. We will meet current requirements with our fresh technological broad product lineup and with our operational excellence. At the same time, we will remain focused on our course for the future. With the Neue Klasse, we are embarking on a new era of mobility and at the same time, taking the company into the next dimension.
Thank you, Oliver. Thank you, Nicolas. Ladies and gentlemen, now it’s your turn. After a short break, we will start with our first Q&A session for journalists, which be held in German. A simultaneous English translation will be offered through the streaming side. All members of the Board of Management will join us. The second Q&A for investors and analysts in English will begin at about 11:15. For this session, Oliver and Nicolas will join us. A simultaneous Chinese translation will be offered for both sessions in the streaming side. We are looking forward to your questions. We will now get the studio ready and see you again at 9:45. Feel free to video call, so that we can see you here in the room. We would appreciate if you already started dialing in. See you again shortly.
Ladies and gentlemen, dear colleagues, welcome back. Let me now introduce the members of the Board of Management to you. And I’m starting at the far right from my point of view, Milan Nedeljkovic, management Board member in charge of production. Next in, Ilka Horstmeier, who is in charge of people and real estate, and she’s also our Labor Relations Director. Next to her, Nicolas Peter, our CFO. To my very left, our Chairman of the Board of Management, Oliver Zipse. Next to Mr. Zipse, Frank Weber development. And then next to him, Pieter Nota, management Board member in charge of customer brands and sales. And of course, Joachim Post in charge of purchasing and supplier network.
Your call will be streamed to us directly in the room, and we would therefore encourage you to use a video call so that we can see you here. And this year, again, we will have participants from all over the world joining us. And we kindly ask for your understanding if there are any minor technical delays. Please bear in mind, this Q&A session takes place in German. We offer simultaneous interpretation into English, which means you can also ask your questions in English. The members of the Management Board, however, will then answer in German, and you will receive the simultaneous translation.
And we are starting with the first question, and I’d like to ask for the first question to be streamed to us now.
The first question is by Christina Amann from Thomson Reuters.
Good morning to everybody. I’ve got a question, which is mainly for Mr. Peter, which is about the profit margin. You’re talking about some impacts on to costs due to inflation, supply chain disruptions. At the same time, you also mentioned stable selling prices and a margin of 8% to 10%. How does this go together? What do you mean by stable selling prices? And how will this develop in your point of view? And can you please also give us some numbers in terms of the impact on the purchasing and how this has developed?
Well, thank you, Ms. Amann, Mr. Peter, please.
Well, Ms. Amann. Now first of all, to put this into context, our results for 2022 are very strong, which we can build upon with an EBIT margin of 8.6% within a highly volatile environment characterized by the war in Ukraine, disruption in the supply chains, logistics issues, inflation and interest rate increases. So I think against this backdrop, we’ve done very well. And this is something we can build upon. Now where do we have headwinds? And where do we have tailwinds? Let me start with the headwinds. In the current budget for the year 2023, we have already assumed increases in cost of material, which is already included 8% to 10%. And we will be talking about a number of roughly €2.4 billion. So that’s quite a lot that’s already included. And furthermore, we also expect headwinds when it comes to raw materials and raw material prices. However, to a certain extent, this is going to be offset by a positive FX development, which means we will only see a negative impact in the lower to medium triple-digit range.
On the other hand, we do expect tailwind coming from the strong product portfolio that we have and especially in the higher segments, we’ve got full year availability in almost all markets, except for China, where we are ramping up the 7 Series gradually. But apart from that full availability, then we’ve got a facelift X7, then we’ve got the XM, which is going to come somewhat later in the year, which will also help us achieve very good contribution margins. And with localization of the X5 in China, we also will have more production capacities available in Spartanburg, which is also is going to help us increase our profit contribution. And therefore, on the whole, the guidance, we will see an increase by 1 percentage point from 7% to 9% in the past to 8% to 10% next year.
Now there is one thing you’ve got to take into account. You remember that last year, we had a positive effect from revaluation of the 50% BBA shares that we had held in the range of somewhat more than €7 billion. Now we’ve got the countering effect, namely depreciation on the purchase price, that’s about 1%. So actually, you can add that 1 percentage point on top to the 8% to 10% because once again, that impact is already been included in the budget.
Thank you very much, Ms. Amann. Then next question, please.
The next question is by Daniel Zwick from Die Welt.
Good morning from Berlin. Mr. Zipse. I’ve got two questions on the general operating environment. Now in Berlin, we are having massive discussions about the ban on internal combustion engines. The German government is blocking the ban in Brussels because the liberals want to have an exemption for e-fuels. Oliver Blume of Porsche and Volkswagen, they welcome this move. Now what’s your view on this? What would be the impact on to BMW if there were exemptions from the ban on internal combustion engines? And another major discussion ongoing is about the Inflation Reduction Act in the U.S. Now you said €1.7 billion is going to be invested in Spartanburg. Now do you plan to invest even more in the U.S. in order to benefit from the IRA as well? Probably you will already benefit from the IRA with €1.7 billion. Now in today’s situation, would you still have decided to build that plant in Europe in Debrecen or has the overall environment in Europe deteriorated so much that you would not take the same decision again?
Well, thank you very much, Mr. Zwick, and I hand over to Mr. Zipse right away. Now Debrecen is a topic which could also be answered by our head of production. But let’s start with Mr. Zipse first.
Good morning, Mr. Zwick. Now you have known us as somebody who is very much in favor of a technology-agnostic approach. That means that all technologies can contribute to substantial improvements in the climate, thanks to their further development. Of course, that applies to BEVs, which is the strongest market segment with the strongest growth. But this also applies to continuous improvement of our combustion technologies. No matter whether the internal combustion engines in Europe will be banned or not, it’s still a long way to go to get there. And there is no other region in the world planning to ban this kind of a powertrain. Now talking about e-fuels, which is your key question. The main effect with e-fuels is on the existing fleet, the legacy fleet. So it’s not about new models to be launched. And here, we have a massive discussion, of course, in Europe, but we haven’t really talked about the stock fleet yet. And the only contribution to improve the emissions of the existing fleet, we have only one option, namely e-fuel. So I fully agree with the colleagues who favor this solution, especially because our engines are already well prepared for e-fuels.
Now IRA. Now Mr. Zwick, the United States have realized that there is a nexus between industry production, value generation, localization and innovativeness. And that is something where Germany has always been very strong. And I think we would now be well advised not to easily jeopardize that competitive edge that we still have but to take a similar approach, no matter how exactly you implement it. I mean, the EU is also sponsoring a lot of new technologies here, we should not complain.
Just think about all of the [indiscernible], but we have to realize that maintaining industrial competitiveness and innovativeness for future climate-friendly technologies, now that really goes very closely together. And that’s the lesson that we have to draw from the IRA. And the $1.7 billion that we invest, now that’s due to the fact that we want to electrify our largest plant in Spartanburg, which means that within a very short time, a total of six electric vehicles can be localized there. But now – although we’re now receiving subsidies we would have taken that decision without the subsidies.
Thank you very much. And now the Debrecen question goes for Milan, please.
Well, the question of whether building the Debrecen plant in Europe is the right decision or not. Well, following the principle of production follows the market. And we keep growing continuously in Europe as well, and therefore, Debrecen is an important building block of our capacity setup. And within Europe, we deliberately chose Debrecen because in Debrecen, we’ve got a very good infrastructure. The city is a city, which also has got a very high – highly renowned university and that means we also have good labor market in the region. And currently, we are continuously ramping up the plant. We are in the process of commissioning the various building phases and therefore, that’s an important site for us.
Thank you very much, Mr. Milan. Thank you very much, Mr. Zwick. Next question, please.
The next question is by Wilfried Eckl-Dorna of Bloomberg News. Mr. Eckl-Dorna, please.
Good morning to Munich. Actually, I’ve got only a very brief question. Mr. Zipse, now we have already heard that there might also be plans to invest in UK – in the UK plants. How much are you going to invest there? And how much of subsidies are going to receive from the UK government in this regard? And the second question that I have, are you also going to produce electric MINIs in Oxford in the UK? And if so, when?
Thank you very much, Mr. Eckl-Dorna. Mr. Zipse, please.
Mr. Eckl-Dorna, the United Kingdom is very important to us because we have localized two very strong brands there. And this is also their origin that is MINI and Rolls-Royce. Now you know that last year, Rolls-Royce once again set a new record in terms of profits and also sales. And this also speaks in favor of the environment that we have there. And I can only talk about the economic environment for us, which is still very favorable. And this is, for us, is a matter of honor to stick to our UK plants.
Now regarding Oxford, I can reassure you the electric MINIs is already built there today. The electric MINI vehicle that you can order is built in the UK. And we’re also preparing the future generations of MINIs to be built there. And we’re in good talks with the government to receive support from the UK there. And I’m speaking on behalf of the entire industry, I think we still have to support industry and industrialization in the UK as well in order to ensure the future for industry.
Thank you very much. And the second part of the question, once again, goes to Milan Nedeljkovic about the MINIs out of Oxford, the electric ones.
Well, thank you very much. Oxford, for us, is an important member of our international production network. And currently, we are building three important derivatives there, also, the all-electric MINI apart from Oxford. We also have the Countryman being ramped up in Leipzig. And there, we will have an ICE country-driven and also an all-electric Countryman being built in Leipzig. Furthermore, we also have got a joint venture enterprise in China. And there, there are two all-electric models coming from that plant. And this shows that we have an international production network covering the entire world. And we successively enhance our respective plans. And for Oxford, we already have got the next generation where we’re in preparations for the launch in the SOP next year.
Thank you very much. The next question, please.
Our next question is by Patricia Nilsson, Financial Times.
Hello and good morning. Thank you very much for taking the quests today. You said today you do not expect to raise selling prices further. This is despite some bottlenecks still persisting and some costs still being expected to rise. Could you give a bit more detail as to why you are making this decision? I mean have BMW cars reached a max level of what customers are willing to pay? And the follow-up question is BMW has like most of its rivals been successful in passing on a higher cost to consumers. Can you give a little bit more detail as to how much the average price of the BMW car has gone up in the past year and the past 3 years? Thank you very much.
Alright. Thank you very much for your question. I would like to ask Pieter Nota to answer this question. Pieter?
Alright. Thank you very much for this very important question. In the last years, we have in fact seen a really good price realization, which of course has contributed greatly to the solid profitability of the company. This is also based on very high demand for our product portfolio. We have an extremely strong and a young product portfolio. We have full order books in Europe, but also outside of Europe. And this of course, translates into good price realization. Of course, we keep a close eye on the market around the globe. And we will of course, also make sure the pricing decisions will be met accordingly in the future. However, I cannot say anything about this at this moment. We are a premium manufacturer. We offer premium brands, and that is why of course, we continue to strive for a continuous and stable price development, which is also important for our customers, a piece of reliability. And of course, also, it’s important for the resale value of our product. So all-in-all, we trust in the attractiveness of our product portfolio and our price positioning really reflects reliability. In how far our prices have developed specifically, I cannot tell you off the top of my head today. However, the price realization has significantly improved in 2022. Thank you.
Thank you very much, Pieter. Next question, please.
Our next question is by Marco Engemann, dpa-AFX. Please switch on your microphone.
Good morning from Frankfurt. And so sorry for not being able to offer any video. Unfortunately, the digitalization efforts aren’t just a challenge for car manufacturers. Now, I have a question on Gen 6 of your electric drivetrain systems. I am still remembering Mr. Kroger, who for Gen 5, was speaking of cost savings of 20% for Gen 6, can you also give us a KPI like that? Is there going to be a cost reduction for electric cars that you are expecting? And Mr. Zipse, on the e-fuels, if I understand correctly, the discussion with the stock that’s out there on the streets, of course, that’s logical that makes sense. If I understand the discussion, however, it’s about new approvals after 2035. Why does the German car industry lobby for a timeframe of plus 13 years to make sure that internal combustion engine cars will still be able to be approved that can then be operated with e-fuels? Why is that? And maybe to add on, of course, Spartanburg, Woodruff, you have mentioned the €1.7 billion in investments. Can you already say, how much you will get from the IRA for that? Thank you.
Alright. Thank you very much. So, let’s start with Gen 6. This is of course, a question regarding cost savings. Let’s start with Mr. Peter, e-fuels, Mr. Zipse and Spartanburg, I would again hand back to Milan Nedeljkovic. Nicolas, over to you.
Mr. Engemann, thank you very much. By the way, in Munich, we are really well underway when it comes to digitalization, but this just as a side note. Now, cost reductions on Gen 6 for the batteries. This should be about 50% compared to the Gen 5. That’s what we are aiming for. And we are doing quite well. That’s not all, however. Of course, on top of that, with Gen 6, we are planning to make sure that the charging times can be significantly reduced. I believe that is a crucial element in the mix. And of course, the introduction, as already has been communicated, will take place with the introduction of the Neue Klasse end of 2025. Thank you.
Frank, maybe you can also talk about a few more general aspects of Gen 6.
Well, I think Peter was already saying the Neue Klasse is the probably most important step, technologically speaking, to get into the next time. Gen 6 doesn’t only mean new battery cells with significantly higher energy density and of course, with that also coming higher reach, while significantly reducing costs. No. In the Neue Klasse, of course, this also affects the board network that is integrated. And then with that of course, we are creating a fully new level of – well, this new 6th generation and with the Neue Klasse as to the end of 2025. Thank you.
Now Mr. Zipse, on the e-fuels?
Right, the e-fuels question, maybe we need to expand the scope here. If we approve e-fuels, of course that has to applied to new and old cars. You can’t really differentiate at the gas station what’s a new and an old car. That’s almost a side effect. But let me talk about why we have this discussion in the first place. Today, there are five different drive technologies for cars around the globe but, with of course, two different types of combustion engines, gas and diesel, plug-in hybrid, purely battery electric vehicles and of course, hydrogen is already being offered by certain manufacturers. Now if you say today, that soon and 12 years is not that far in the future, in 12 years, you want to eliminate a lot of stuff. You – let’s say, you switch off four technologies. And then if you need to hold all these other cars in rotation, you need to of course, completely reshuffle the infrastructure. And for example, the charging infrastructure is of course growing much, much more slowly than the number of battery electric vehicles because of course, that’s a huge investment. And of course, you also create new dependencies regarding raw materials, especially regarding raw materials, which I believe can also be dangerous in a way. And of course, we are currently learning how important it is to not become too dependent on certain things. And I think the takeaway is diversity means resilience in this regard. And I believe for industries that are as large as the automotive industry, we should have resilient approaches, which all-in-all, regarding climate protection, are highly effective. And please allow me one last remark. We are of course really following this technology openness. We have been for quite some years. And this year, we are definitely over-performing regarding the EU CO2 regulations. We are outperforming it by almost 18%, and we are doing that with a great mix of plug-in hybrids, BEVs and continuously improving internal combustion engines. And I believe this approach is going to be successful today and going forward.
Alright. Thank you very much. And then we had another question on Spartanburg, the U.S. plant there and how much we could gain from the IRA? Milan?
Right. Mr. Engemann, you mentioned the €1.7 billion in the context of Woodruff. That €1.7 billion, of course, referred to the Spartanburg site and the reworking of our plant there. Woodruff itself is a production site, which is right around the corner from Spartanburg, we are producing it or creating it at the moment and the energy storage products are going to be produced there going forward. And on site, we are getting of course, some subsidies for the actual property. Besides that, through the IRA, there is of course also subsidies for a certain production volume. And according to the capacities produced on-site, we will get the respective subsidies, which are generally applicable for everybody in the United States. And with that, of course I can’t give you a specific amount for Woodruff as of today.
Thank you very much. Next question, please.
Our next question is by William Boston from The Wall Street Journal, Germany. Please un-mute yourself.
Good morning. There is no Wall Street Journal, Germany, but I am in Germany.
I believe it’s Wall Street Journal International.
Yes. There is only one. There’s only the one Wall Street Journal.
No, that’s okay. Yes, I think we got it.
Okay. So, I just wanted to go back to the IRA. For us, as an American economic magazine, of course that’s a crucial topic. So, you spoke of Spartanburg, but what are your thoughts in regards to how you will be able to profit from the IRA going forward? Now for example, Tesla is getting their battery cells from the United States in order to profit further from the IRA because of the battery production in the United States. And now they are basically just assembling it with the car here in Brandenburg. So, are you considering things like that? Are you considering carrying out certain shifts, because I mean at the end of the day, who doesn’t want free money, right? There are opportunities to be seized. How do you want to seize them? And the second question has to do with pricing. In China, of course a price war is being waged at the moment and BMW, at the beginning of the year, apparently joined the fight. How is that supposed to continue? And how high is the risk that this price war, this downward spiral we see in China, is going to wash over to Europe and the United States? Thank you.
Thank you, Bill. Great question. Very smart questions and amazing German, Hats-off to you. And with that, I would like to hand over the first part of the question, the IRA, over to our Head of Purchasing, Mr. Post and then of course on pricing, Pieter Nota.
Right. Mr. Boston, you mentioned the additional options, or what other options there were to profit from the IRA. Generally, we have of course, the local for local approach also in the supply chain and production. And of course, within the supplier network, there are various options for components like, for example, battery cells to profit from the IRA together with our suppliers and also look at the entire end tier supply chain, so upstream to set it up accordingly. We are of course, having intensive discussions with our suppliers, and we have set up a clear strategy, have already signed agreements in order to profit from the IRA in our supply chain and really set up a local network to diversify and be more independent.
Thank you very much, Joachim. Pieter?
Thank you. We of course, in the long run, follow a demand-based sales management. And with that, in 2022 and in the years ahead of ‘22, we realized our prices very well. That’s of course number one. Basically, we always deliver one vehicle less than what the market demands. The market demands are very high because, again, we have a very high – a very big and modern product portfolio that is received very well by the customers. Our order books are full. We are in a good position. But on your question to China, in order to better allocate that question, I think we need to understand the market structures in China perfectly. I think at the moment there are huge offerings for local electrified vehicles in – at play. And at the moment, this fully electric market, to a large degree, is at a much lower pricing positions. So, about 95% of the volume there is sold at a price point of under €50,000. However, we establish vehicles, particularly in the premium segment that is above those price point. And we are doing so very successfully, for example, looking at the i7. We are significantly above the price point of €50,000. And of course, we also have really good price enforcement. Now as mentioned, we are of course, keeping a keen eye on the price development around the globe and are continuously following this demand-oriented product management approach. And even going forward, I can’t really give you any specific statements on our pricing and positioning in the future, but it will continuously be based on the strength of our product portfolio and of our brands. Thank you.
Thank you very much, William. All the best and moving on to some written questions. Now, let me start with one question for Ilka Horstmeier. Let me read it out to you. On this year’s equal pay day, BMW has received an award. It seems that the pay gap between men and women has been closed by BMW. How did you achieve that?
Well, I am very happy about this question. And for us, the award is a source of satisfaction and motivation, at the same time, because it shows that we have done a lot of things right in our compensation policy in the last couple of years. Now, this award means that in our overall compensation structure, we hardly have got any differences between men and women anymore for two reasons at BMW. On the one hand, because compensation is based upon performance and equal opportunities, and we adapted continuously. And on the other hand, we also systematically support women since 2019. The share of women in leadership positions has been increased from 17.2% to 20.2% within BMW Group. And our objective until 2025 is to reach 22%. That’s why I am quite optimistic that we will continue to be successful along this track. And as I have said, we are very happy about this award because it is also an award, which is sponsored by the Federal Minister of Labor.
Thank you very much. And the second written question goes to Frank Weber. Let me read it out once again. One of your key competitors recently announced that by 2025, they want to have an own operating system and that it will be able to run updates over the air entirely. Now, what can BMW offer in this regard?
Well, thanks for this question, which of course is essential in our industry. Digitalization has been our key development priorities for the last 20 years. We have got almost 9,000 software development engineers at BMW Group. And actually, each BMW development engineer also focuses on digital because digital is integrated in every physical function at BMW to produce an overall experience. And I think if you look at Vision D, you can really see how innovative we are, which – features which we launched in standard production. We presented BMW Panoramic Vision, for example. The entire windscreen does becomes a huge fantastic display. And the operating system serving this is a system that we have developed internally at BMW. And those things, which give BMW a distinctive feature versus our customers, that’s something which we have been producing internally for years and decades. And those things which you can purchase off the shelf and which do not offer any distinctive advantage, now this is where we go for such off-the-shelf product. And I think our performance shows that this mixture of strong performance internally and strong partnerships leads to good success.
Next question, live again.
The next question is by Andreas Höß from Münchner Merkur. Mr. Höß, please.
Now here we go. Good morning. I have got three questions. Number one, it’s about the interest rate increase. Now, that means that leasing rates and financing models for cars are becoming more expensive as well. Now, have you already noticed this in your order intake, or is this also a business risk for you for the upcoming year and maybe even beyond, because it seems that interest rates have not reached a peak yet. Then next question on the agency model, which is to start you are going to launch at MINI next year and then 2026 also at BMW. Now, one aspect of this is that you cannot go up to your dealership anymore and negotiate your final purchasing price. Now, does this mean that at the end of the day, customers will have to pay more for a car, or will you somehow reduce the list prices? And then a third question for Ms. Horstmeier. Now, BMW has announced a fantastic dividend, and is also very proud of sharing the success with the employees. Now, do you have any numbers regarding the employee bonus already?
Well, thank you very much, Mr. Höß. Well, interest rate increase, leasing rates impact on to order intake, well, I think that’s the question to be taken by Mr. Peter then FSM, Pieter Nota and then, as I said, finally, dividend and success participation of the employees, Ms. Horstmeier. Nicolas, please?
Well, of course, that’s an important topic because 4 out of 10 vehicles are funded and financed via our financial services offerings. And in my report, you have certainly seen that in 2022, we deliberately reduced the rate of penetration slightly because not every step taken by business banks, which took a much more aggressive approach. Now, we did not want to parallel each of these steps. Now, if you look at the leasing rates, then basically, there are three major markets we are talking about. That’s the United States, it’s the UK and Germany. And as Pieter Nota, just already explained, especially in Europe, which means Germany and UK, we still have a very strong order book. However, in our quarterly conference last year, we had already stated this. And of course, the increased leasing rates do have a certain impact and we have already announced that we see a slight slowdown of order intake in Europe. But we still have a very strong order book, which we have to serve, first of all and in the United States. I mean that’s a highly transparent market. If you look at the latest auto data, then you will see that the market still a very solid one with a very low level of incentives also historically speaking, which is why we are quite confident about that market.
Thanks Nicolas. Second part, FSM, price negotiations impact onto prices, Pieter Nota, please?
Well, thank you very much. Now, we have got a long-term strategy regarding the best customer experience in the industry that we want to offer our customers. So, the future sales model fits perfectly into this long-term sales and marketing strategy with the ambition of offering the best customer experience. And that’s exactly also the target of our future sales model. This is about direct sales with enterprises and agents as sales representatives. And in this context, we will offer transparent and consistent prices more than what we can currently do with the current model. And we have observed, and that’s also we see in customer data, we have observed that the majority of customers do not appreciate the possibility of price negotiations that much anyway. However, this transparent and consistent pricing structure is something that they appreciate very much. And we are a premium provider. And in the sales process, in the new one, we will place an even stronger focus on good advice being offered to customers. Now, how this is going to impact prices also because this is going to be a key topic for the future. Now that is something I cannot share with you at this point. But I am going to show you – I can reassure, it’s going to be a good fit because we are aiming for a long-term and stable pricing strategy, which is also transparent for our customers. And as I said, it has already been well received in the market, and we have seen a good demand there.
Thank you very much, Pieter Nota. Then last part of your question was about the employee bonus, Ilka Horstmeier, please.
Mr. Höß, you know that for us, employees are an important key to success, especially if we want to achieve such outstanding results as recently. Now, thanks to our consistent compensation, of course. Our employees will benefit, which is not only fair in terms of gender pay, but it’s also consistent all the way from the Board down to every single employee. But of course, they can also always benefit from our success in good times and in the bad times. And at the employee meeting last week, we announced that our employees – and here, I take a skilled worker, they have received a bonus of €9,000. On top of that, there is also a dividend component, which contributes to pension provisions, which is based upon the dividend. And thirdly, most of our employees also are shareholders of BMW Group, which means they will also benefit from the dividend payout.
Thank you very much. Now, we have got about 10 minutes left. So, I will now ask for the next question.
The next question is by Leonard Vanco from Automobile [ph]. Mr. Vanco, the floor is yours.
Thank you very much, and hello, everybody. Now, I would like to know which parameters need to be met for this hydrogen pilot series, iX hydrogen to become standard production? Now, you said you want to decide on this the end of the decade. What exactly would need to happen for you to offer this new series also with hydrogen powertrain?
Well, Frank Weber, please.
Well, that’s a question we also asked ourselves when it comes to electromobility about 10 years ago. And again, it’s a question that is dependent on the infrastructure because one thing that is obvious, a vehicle running on hydrogen actually is a battery electric vehicle where the big battery storage is replaced by hydrogen tank. And therefore, the question for example, of how the Green Deal is implemented in Europe and how green is hydrogen is produced, that’s the basis for the implementation and the use of hydrogen in cars together with the fuel cell. And then comes to critical question, how quickly will a hydrogen infrastructure be available? And in this case, it’s not so much going to be driven by the passenger car industry, but rather by heavy-duty transportation needs, which means that on the highways. And that means for a further expansion and for the decision to go for series production, we need to have a minimum refueling infrastructure for hydrogen being available. And once that is in place, then hydrogen can be a highly attractive alternative for zero emissions.
Thank you very much for this. Mr. Vanco, we once again have a written question. Let me read it out to you by Regina Ehm-Klier of Passauer Neue Presse. Now, she asked the following, now I have got a plan about – a question about the plans for the new high-voltage storage production. The plant Wirtschaftsagentur in Bavaria was not mentioned in this context. Is there any reason for this? Is the plan somewhat being jeopardized or at risk? Milan, please?
Now we are in the midst of the ramp-up of electromobility. And correspondingly, we are enhancing our capacities at all sites. And with the current electrification in Dingolfing, Leipzig and Regensburg, we do have already installed respective technologies. And we see further electrification coming up in the future in Bavaria and then would be the nice new site in Straßkirchen and also, as mentioned before, in Woodruff, near Spartanburg. Now, when it comes to Straßkirchen this is a new manufacturing site exactly for energy modules. And then from that site, we are going to serve our Bavarian vehicle plants. And the plan is still fully in place. It stands, and we are currently in the process of finalizing the purchase of the real estate there. So, that means the answer is no, the plant is not at risk.
Now next question, please.
Our last question is by Victoria [indiscernible] by Thomson Reuters. Please un-mute yourself.
Hello and thank you. I have a few questions, if that’s okay. First, a question on the collapse of the Silicon Valley Bank. It probably doesn’t affect you directly, but maybe it influences your strategy in some way like, for example, additional diversification regarding the banks you are working with or maybe additional checks for the banks that you have invested in indirectly via ventures? Then another question to Mr. Nedeljkovic, are there additional details on the fossil fuel-free plant in Debrecen? Do you know how that’s going to work? And also, is there going to be a new 3 Series combustion engine? And if so, when? Thank you.
Thank you very much. We are going to start with Nicolas Peter.
Thank you very much for your question. You already basically, gave the answer yourself. The Silicon Valley Bank collapse has no direct impact on BMW. And it also has no impact on the strategic choices or the strategies of our bank selection, if you will, because we have a syndicated loan facility of around about €8 billion which, of course is a crucial building block in our refinancing strategy, our liquidity strategy. We are working globally in this regard. We are working together with European, American and Asian banks and even Canadian banks, for example. They are all very strong partners also looking at their balance sheet and that’s going to stay that way.
Thank you very much. And on digitalization, the Debrecen plant, Milan?
Now regarding sustainability in the Debrecen plant or generally, we are of course following a clear sustainability strategy where we want to make all of our plants more sustainable and want to make sure that we establish a proper footprint across the board. We have only been getting nine green electricities in 2019 across all sites and of course, are trying to realize additional potentials. For Debrecen, we are taking an innovative step by making sure that the entire process, energy and also heat energy is being derived from heat exchangers and with that, we are going to be able to do away with fossil fuels. With geothermal energy production, we can actually work on this plant. And with that of course, truly have a CO2-free production at this particular plant that again doesn’t need fossil fuels.
Sorry, can I ask a follow-up? You asked that you are in a position to work this plant with electricity and geothermal energy. Is that true?
Well, we are currently assessing with the local authorities to look into geothermal energy production options, and it is one of our plans to follow this. At the moment, we are planning the respective boreholes and drillings, and we are going to of course, look further into the different options.
Right. The last part of this question, I believe was a potential new 3 Series ICE, Frank Weber?
Now of course, it’s a more general question. I think you are asking what are we doing with combustion engines because, of course the 3 Series is a core product but we are a global provider. And we are fully convinced of the fact that the coexistence of the best ICE offerings and the best battery-operated offerings is something for the next 10 years that is going to make BMW really strong. And with that, we can only say this decision is a decision we have made, and we are only going to make decisions as and when we need to adjust it. But I think what’s important now is that we are really investing into the Class A, in high-volume segments. And of course, that is certainly going to include a vehicle volumes of the 3 Series, but that doesn’t mean whatsoever to completely let up on the ICE side, but really being very present in both segments, that’s something that makes BMW so strong.
Thank you very much, Frank Weber. Ladies and gentlemen, dear colleagues, as always, you should stop while you are ahead, while it’s nicest. It is now a little bit after 10:30, which means we have to end this press conference. Thank you very much for your interest. Thank you very much for all questions, nothing but the best. Speak to you soon.