As Tesla Inc. struggles with producing its first high-volume car, BMW AG has some advice for its electric-vehicle rival: embrace human labor, be flexible and focus on the details.

“Producing cars in cycles of 60 seconds: That is the deciding factor,” Oliver Zipse, who oversees BMW’s production network that makes Tesla’s entire 2017 output once every two weeks, said in an interview. “To fully automate the assembly process is not our goal, because the human being with its unique properties is unbeatably flexible.”

Source: BMW AG

Tesla, whose Model 3 is set to compete with BMW’s 3-Series and upcoming i4 electric sedan, has repeatedly pushed back production targets and temporarily halted assembly lines to rework them. Amid the struggle, founder Elon Musk has admitted to installing too many robots.

For more on Tesla’s automation challenges click here

One key to the success over the years of BMW, which is holding its annual meeting in Munich Thursday, is a production system that consistently churns out elite cars for the world’s most discerning customers. It’s now retooling the bulk of that network to assemble battery-powered vehicles alongside its conventional models, giving it scale that Tesla can’t match.

Incumbents have long held the view their new competitor would face difficulty scaling up to offer electric vehicles to a broader audience, after success with cars like the $110,700 Model S P90D uncomfortably showcased conventional carmakers’ dearth of attractive electric choices.

To have a look at Bloomberg’s Tesla tracker for the Model 3, click here

“Maybe there’s more leeway in the top-end market segment above 100,000 euros ($118,000), but as soon as you enter market segments with volumes like the 3- or even in the 5-Series, keeping costs under control is paramount,” BMW’s Zipse said. “You can’t allow yourself to have inefficiencies there.”

BMW’s electric rollout of 12 vehicles by 2025 starts next year with a battery-powered Mini, assembled at its factory in Oxford, England, alongside conventional models. That project will serve as a template for upgrading four of its seven major plants by 2021, including sites at its home town of Munich as well as Shenyang in China.

After learning from its own struggles with a stand-alone assembly line for 2013’s electric i3 city car in Leipzig, BMW is getting leaner with its mainstream rollout. “Meticulous and very detailed” work helped cut costs for the Oxford retool to less than 100 million euros ($118 million) from about 1 billion euros, according to Zipse.

Electric Avenue

Battery-powered cars have skyrocketed from humble beginnings

Source: Bloomberg New Energy Finance

Germany’s high-end carmakers are keen to take the competition to Tesla after the trendy California brand threatened to redefine luxury autos with the success of its flagship Model S. With the Model 3’s production hiccups, the door is open for BMW and Mercedes-Benz to take the wind out of Tesla’s sails.

“We are preparing our car architectures and our factories to flexibly integrate this technology,” said Zipse. “For us, creating that flexibility is the most efficient way to profitably offer electric cars.”

To manage the costly electric shift, Germany’s carmakers are going down different paths. Volkswagen AG is going for a dedicated electric platform and plants as it pursues a goal of selling as many as 3 million all-electric cars by 2025.



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