BMW talks €30bn future-tech fund, new blockchain experiment, plus COVID impact
German car giant BMW will invest €30 billion in “future-oriented” technologies during the next five years. The group has confirmed it will expand a blockchain pilot for purchasing front lights to suppliers of other car parts.
The announcements, made at the end of last month, in the days prior to the coronavirus lockdown and halt to manufacturing in Europe, sought to reinforce the perception of BMW as a pioneer in industrial transformation.
Oliver Zipse, chairman at BMW, said: “We intend to invest… to underscore our position as an innovation leader… The ability to integrate diverse technologies to form a complete system is vitally important. Those companies capable of developing and combining hardware and software in equal measure will shape the future of the automobile. In this respect, we are quite clearly in the fast lane.”
BMW said it has already put clear daylight between itself and its rivals, as a consequence of its early decisions to embrace industrial and digital change. These include, notably, setting stretching CO2 targets, covering both efficiencies around production and energy usage, and the electrification of its fleet.
“We took decisive steps… at the right time and are now intent on leveraging our competitive advantage to set ourselves apart from the industry trend,” said Zipse. The company said it has trained 46,000 staff in electric mobility, and 5,300 in data analytics. The company is “one of the largest IT employers” in its home country, it insisted.
With regards to new industrial-grade private cellular connectivity, Deutsche Telekom has already installed a dual-slice private LTE ‘campus network’, hived off its public LTE network, at a BMW plant in Leipzig. Ericsson has supplied the networking gear for the project. In general, BMW has said it will apply for 5G spectrum licences in the 3.7-3.8 GHz industrial band in local factories at home on an ad hoc basis through the remainder of 2020, as use cases and experiments arise.
BMW is looking at industrial 5G in Germany, and across its global production sites as well. The company’s joint venture in China, BMW Brilliance Automotive (BBA), claims to be the first automobile manufacturer to enable full 5G wireless coverage at all its plants.
The company said it will fund the R&D investment by improving production efficiencies and costs as part of its so-called ‘Performance > NEXT’ initiative, which is slated to generate efficiency savings of €12 billion by the end of 2022 and reduce development times for new vehicle models by a third.
The company stated: “Up to 50 per cent of drivetrain variants will be eliminated from 2021 in the transition to creating enhanced, intelligent vehicle architectures – in favour of additional electrified drivetrains. It is in this area that the full impact of these measures will come into effect, particularly in the years after 2022.”
The new blockchain programme, called PartChain, is geared towards the traceability of parts and raw materials in international supply chains. Andreas Wendt, responsible for purchasing and supplier networks, said: “PartChain enables tamper-proof and consistently verifiable collection and transaction of data in our supply chain.”
The automotive industry’s international supply chains are complex, with numerous players at different delivery stages. Considerable manual effort is often needed to track a component’s origin or supply route. Most partners have managed their own data separately; their IT systems have not always been able to communicate.
PartChain, running on AWS and Microsoft Azure, has seen supply-chain data from multiple parties entered onto an immutable distributed ledger system. The 2019 pilot focused solely on part tracking, and involved two out of 31 BMW plants (Spartanburg in the US and Dingolfing in Germany), as well as three lighting supplier locations.
BMW wants to use the platform to trace critical raw materials “from mine to smelter”, as well. Wendt commented: “This move is designed to take the digitalisation of purchasing to the next level. Our vision is to create an open platform that will allow data within supply chains to be exchanged and shared safely and anonymised across the industry.”
BMW co-founded the Mobility Open Blockchain Initiative (MOBI) in 2018, a cross-industry initiative comprising 120 leading automotive, mobility and technology companies. “We want to share PartChain with the initiative and invite interested companies to join the initiative,” said Wendt.
BMW expects the coronavirus pandemic to have a negative impact in all markets during 2020, with deliveries to be significantly down on 2019. “Solidarity and responsible action are called for. In our society, it is the duty of the strong to protect the weak,” said Zipse, in late March.
The company said, following lockdown in Germany, it is working with suppliers to procure respiratory masks and other medical equipment at short notice. It is also reviewing the possibility of producing medical masks itself, it said.
Companies in discrete manufacturing in various sectors – such as car makers like Volkswagen in Germany, Groupe PSA in France, Ford in the US; the likes of Airbus and Boeing in aircraft manufacturing; ABB, Bosch, General Electric, Siemens, Schneider Electric, among major industrialists – have switched production to respiratory masks and personal protective equipment (PPE) in recent weeks.
Zipse at BMW commented: “We take our responsibility seriously, both when it comes to ensuring the protection and health of our employees and to achieving the best possible balance in terms of profitability. One thing is certain: coronavirus is here now, but there will also be a time after coronavirus. The approach we are taking clearly reflects the BMW Group’s ability to react quickly and flexibly.”
By the end of 2021, BMW reckons it will have at least one million vehicles with all-electric or plug-in hybrid drivetrains on the roads. These will include six models: the long-standing i3 (in its sixth year), the Mini Cooper SE (which went into production in the UK at the end of 2019), the iX3 (going into production in China in 2020), the iNEXT (later in 2020, in Germany), the i4 (2020, Germany), and a variant of BMW’s flagship 7 Series.
By 2023, the BMW will have 25 electrified models on the roads, with more than half of them all-electric, it said.