BMW struggling in electric cars
Tesla's electric vehicle price cuts are fueling a global price war to defend market share, which is flaring up from strength to strength. Just last week, Ford announced it would make billions in losses on electric vehicles this year. Now, shares of BMW AG are falling after warning of soaring costs for developing electric vehicles and struggling supply chains.
BMW now expects auto cash flow to exceed 6 billion euros ($6.6 billion) this year, up from about 7 billion euros previously.
Comparative loss of BMW stock
In addition, the free cash flow of the automotive segment is now expected to be above €6 billion for the full year 2023, taking into account the increased investments in the transformation towards electromobility and the increase in inventories to guarantee the necessary supply of vehicles to the markets.
The German luxury carmaker now expects "higher supplier spending due to inflation and the supply chain to continue to be a headwind in the second half of the year."
A combination of soaring EV manufacturing spending and supply chain headwinds sent shares of BMW Frankfurt down as much as 6.7%, the largest intraday decline since May 12.
Bloomberg added more details on the supply chain issues:
“ After protracted semiconductor supply problems, several automakers are now grappling with new logistical constraints. Volkswagen AG cut its delivery forecast last week after a lack of carriers left finished vehicles stranded in factories. Porsche AG has had to limit sales of its electric Taycan after having difficulty sourcing some components.
Jefferies analyst Philippe Houchois wrote in a note to clients that BMW's statement this morning is " confused and negative ."
Though there were cautious comments about a potential second-half headwind, the automaker raised its full-year earnings forecast on improved availability of its premium vehicles. German manufacturers are increasingly focusing on a high-end segment, an operation which over time, however, can be dangerous.
The troubles at BMW's EV division come days after Ford announced it would lose $4.5 billion from its EV segment this year, a loss $1.5 billion higher than the company had forecast.
BMW and Ford's problems in the EV sector come after Tesla spent most of the year undercutting the prices of its vehicles to squash the competition. This strategy is working and many manufacturers that produce electric cars have had to revise their sales forecasts downwards.
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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/bmw-in-difficolta-nelle-auto-elettriche/ on Tue, 01 Aug 2023 16:17:58 +0000.