BMW is putting a heavy emphasis on carbon fiber. This design decision is based in the company’s larger strategy of endeavoring to grow its electric-car market. It is trying to stay ahead of the competition, says Sanford C. Bernstein analyst Max Warburton (Chris Reiter “BMW Has Seen the Future, and It’s Carbon” Bloomberg Businessweek, 11/25/13–12/1/13, pp. 21–22):
“BMW’s decision to go all-out and do carbon-bodied electric cars is brave… . It’s a reminder that they’re [thinking] more long-term than the competition.” (p. 21)
Carbon fiber is stronger than steel, but it is also about 20 times costlier than steel. Therefore, BMW decided to manufacture its own carbon fiber at a new plant in rural Washington (a joint venture with Germany’s SGL Carbon) instead of the more conventional approach of strategically outsourcing the component. Again, in line with its long-term vision, the company wants to own key manufacturing processes and thereby better control the costs:
“The choice of site was influenced by its proximity to the Columbia River. The hydroelectricity that powers the plant’s furnaces and other machinery costs about 3 cents per kilowatt hour, less than one-fifth what the company would have to pay in Germany.” (p. 22)
I commend BMW for its strong progressive approach. Carbon fiber has amazing properties such as strength and low weight. It is already designed into superjumbo jets, military applications, and Formula 1 racecars. As demands for improved fuel efficiency and lighter-weight vehicles increase, years from now, BMW should be able to say this was a smart decision.
Of course, we never know for sure what the future holds. However, this seems to be one calculated strategy decision based on available knowledge that will likely produce a high payback.
[Today’s post— Blog.reliableinsights.com.]