BMW says it has no plans at the moment to manufacture electric vehicles (EVs) in SA, but adds: "Never say never."
Oliver Zipse, chair of BMW SA, told Business Times this week the government had "disincentives" in place for EVs, and the local market for such vehicles would also need to be stronger before the company considered EV production locally.
The department of trade & industry launched its Electric Vehicle Industry Roadmap in 2013 but to date very little progress has been made.
X marks the spot
Zipse says the decision to manufacture the X3 sport utility vehicle at BMW's plant in Rosslyn, Gauteng, has proven to have been the right one.
He describes it as "mission accomplished", adding: "We would do it again."
He says the switch from producing the 3 Series sedan to the SUV has been good for export credits as the X3 is a more expensive model.
Asked about the possibility of manufacturing the electric version of the X3, the iX3, he says: "If the day comes that 50% of all X3s are electrified then we would reconsider."
Made in China
The company has announced that the iX3 will be produced at a plant in China. Zipse says this choice was influenced by production capacity considerations.
Production of the iX3 in SA would require significant new investment. Zipse says no decisions have been made on future investment in SA, with the Rosslyn facility already close to its capacity of 77,000 vehicles a year. Most of these cars are exported to Europe.
Discussions are already under way regarding the next generation of the X3 at the plant, but there are challenges.
The new South African Automotive Masterplan seeks 60% localisation of components, a target that Zipse calls "difficult".
He says it is not achievable with the current X3 model now in production but it will be looked at for the next generation.
BMW itself is facing a number of major challenges. Board member Nicolas Peter said at the annual results announcement in Munich this week that trade tensions, Brexit, exchange rates, commodity prices, emissions rules and regulations were all big issues to be addressed.
Some of these have already affected the company, which announced that group revenue decreased 0.8% for 2018, sparking a drop in the share price.
Mini, part of the BMW group, is also a key part of any discussions relating to Brexit, with the brand being manufactured in the UK, where there is also an engine plant.
"The preparations necessary for the UK's withdrawal from the EU will be an additional burden in 2019. Nevertheless, we continue to expect that there will be an orderly Brexit," said Peter.
"Depending on how conditions develop, our guidance may be subject to additional risks; in particular, the risk of a no-deal Brexit and ongoing developments in international trade policy," he said.
"If conditions deteriorate further, effects on our guidance cannot be ruled out."
Peter also referred to uncertainty about tariffs in the US; its trade war with China could have an impact on the automotive company's business.
Time to change gear
The challenges come at a time when BMW and other carmakers are undergoing major transformation.
BMW announced it is seeking billions of dollars in cost cuts to maximise profitability, including a freeze on its workforce and even job reductions through early retirement options in some regions.
The chair of BMW, Harald Krüger, says the company is moving to become more of a technology company.
"We aim to be a leading tech company for premium mobility," he says.
Its strategy includes the introduction of widespread electrification - plug-in hybrid derivatives of every model were exhibited at the recent Geneva International Motor Show.
Nicolai Martin, vice-president of the BMW division developing electric powertrains, says the company will introduce 13 hybrids between now and 2025 featuring an electric-only range of 75km.
New batteries developed
The introduction of new batteries now under development could see that increase to more than 100km from 2021.
A dozen purely electric vehicles will also be introduced by 2025, featuring ranges up to a claimed 600km, depending on battery options. This will include the highly anticipated electric Mini.
The company is also increasing its research & development expenditure to meet the challenges of the future.
How involved SA will be in that future remains to be seen...