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Bayerische Motoren Werke AG (BMW)’s New Electric Car Just Became a Major Problem

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On Monday, Bayerische Motoren Werke AG (ETR:BMW) announced that the U.S. base price for its all-electric i3 will be $41,350, not including any federal or state incentives. For General Motors Company (NYSE:GM)‘ Chevy Volt, and possibly Tesla Motors Inc (NASDAQ:TSLA)‘s Model S, Bayerische Motoren Werke AG (ETR:BMW)’s move spells major trouble. Here’s why.


The Bayerische Motoren Werke AG (ETR:BMW) i-Concepts i3. Source: Wikimedia Commons/Motohide Miwa.

Bad news, General Motors Company (NYSE:GM)
With a starting MSRP of $39,145 in 2012, the Volt was the best-selling EV, and it’s not hard to see why. Really more of an electric hybrid than a straight EV, the Volt combines a 9.3-gallon fuel tank with a lithium-ion battery. This combination allows the Volt can go an estimated 38 miles on pure battery before switching to regular fuel, which extends the range to an estimated 380 miles. Because of this combination, the Volt cuts down on range anxiety, which is still a huge deterrent to getting consumers into EVs.

Now, compare the above to Bayerische Motoren Werke AG (ETR:BMW)’s all-electric i3: According to BMW, the i3 has a pure-electric range of 80-100 miles, thanks to its lithium-ion battery, and has an optional range extender that lengthens that initial range by 80 miles. Plus, thanks to BMW’s eDrive technology, a driver can extend the initial range up to 124 miles by putting the vehicle in one of the “EcoPro” modes.

Right away you can see the problem. Not only does Bayerische Motoren Werke AG (ETR:BMW)’s i3 go farther on pure battery power, but with the purchase of the optional range extender, range anxiety goes way down. More pointedly, the base MSRP for the BMW is only $2,000 more than the Volt. I don’t know about you, but if I had to decide between spending $39,000 for a Volt, or $2,000 more for a BMW, I’m going with the BMW, hands down.

Tesla Motors Inc (NASDAQ:TSLA), this is bad for you, too
Right now, Tesla Motors Inc (NASDAQ:TSLA) is the crème-de-la-crème of EVs. But it’s competing against all-electric EVs like Nissan Motor Co., Ltd. (ADR) (OTCBB:NSANY)‘ Leaf, and Ford Motor Company (NYSE:F)‘s Focus Electric. To put it simply, Tesla’s Model S can drive circles around these cars. Yes, it’s more expensive, but the technology, range, and precision of the Model S makes anything else seem almost silly in comparison. BMW, however, is a luxury brand with renowned German engineering, and its new i3, and the future i8 model, presents a new challenge for Tesla.

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