BMW Malaysia & PHEV: Fortune favours the bold?

Volvo’s ‘Twin Engine’ plug-in hybrids: the XC90 is represented here in Malaysia, the S90 to join the fray soon.

When Volvo Cars announced two weeks ago that every new model from 2019 onwards will come with some form of electrification, the MSM (mainstream media, ahem…) somehow got ahead of themselves and proceeded to churn out overly optimistic headlines that read like “Geely’s Volvo to go all electric with new models from 2019” (Reuters) and “Volvo goes electric across the board” (BBC).

Yes, Volvo should be applauded for setting a date to start phasing out models powered solely by the internal combustion engine (ICE), but it doesn’t mean that after 2019 (which is less than two years from now), Volvo cars that are powered by ICE would disappear from showrooms.

In fact, all-new ICE models (including existing ones like the V90 T6) launched before 1st January 2019 would still be offered until the end of their model lives, and that can typically range from five years at minimum to seven years or even beyond that (remember the last generation XC90 sold for a good 12 years), or when consumers have had enough of them.

Volvo also made it clear that post-2019 new models would come in the form of mild hybrids (think Prius), plug-in hybrids (e.g. current XC90 T8) and fully electric-powered ones. It should not be read that every new Volvo model from 2019 onwards will be fully electric, though Volvo is planning to introduce five fully electric-powered models between 2019 and 2021, though that on its own isn’t necessarily ground breaking.

That the future of automobile propulsion lies in electrics (hopefully generated by renewable sources) isn’t in doubt, however the transition is tricky for conventional carmakers as they juggle between sustaining a global business that’s still largely driven by internal combustion and apportioning sufficient resources and development to ensure competitiveness when electrics become the norm. As a carmaker with the luxury of rewriting the script from ground up after Geely’s takeover, Volvo chose a path that’s poised for the future with electric-ready platforms and powertrains. It is looking like a smart choice.

BMW in Malaysia: Crazy or gutsy?

Wait, isn’t this an op-ed about BMW? If what Volvo plans to do is considered noteworthy, then the efforts by BMW in Malaysia in the past few years (the lobbying and planning would’ve taken that long) should be lauded many times over. The sceptics may say that this is yet another move from the CKD hybrid incentive playbook, but consider this:

  • After BMW Malaysia introduced the X5 PHEV in June last year, all other ICE variants were discontinued
  • After BMW Malaysia introduced the 330e PHEV in August last year, the 330i petrol variant was discontinued. A second variant for the 330e was added to the line-up this year and the ever-popular 320i was then made redundant – note that this is the bread-and-butter variant which used to make up for more than half of all F30 3-Series sold in Malaysia! If you’re shopping for a 3-Series today, you can only choose between a 1.5-litre, three-cylinder powered 318i and the 330e.
  • After the introduction of the 740Le PHEV three months ago, production for other 7-Series ICE variants were discontinued
The arrival of the BMW 330e has made the 320i and 328i/330i redundant; makes up more than 60% of all 3-Series sold.

It’s a gutsy call to discontinue core ICE models but BMW Malaysia’s commitment to its PHEV strategy is unequivocal – and that is to make plug-ins work for its customers in Malaysia, or nothing. So, let’s see whether the business case is bearing fruit:

  • BMW Malaysia has now sold over 3,200 units of its iPerformance plug-in hybrids over the last 12 months (from June 2016 to June 2017) from just three locally-assembled models and a sprinkling of the hyper exclusive i8
  • The aforementioned iPerformance models now make up for 44% all BMW cars sold in Malaysia, well above what BMW averages globally (3%) and far ahead of 13% achieved in tree-hugging, eco-friendly Nordic countries. In short, a 44% PHEV model mix is nothing short of astounding
More than 600 BMW plug-in owners have signed up to use ChargEV’s growing network of charging stations (now at 200).

And so we come to the bottom line: is BMW selling more or fewer cars in Malaysia with the PHEV strategy in place? Year-on-year figures show a healthy increase of 22% from 3,964 units in 2016 to 4,816 units in 2017 (January to June). Suffice it to say, there’s no need to wait for 2019, electrification is already happening, right here, right now.