MIL-OSI Translation: Speech by Oliver Zipse, Chairman of the Board of Management of BMW AG, Conference Call Quarterly Statement as of March 31, 2022

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MIL OSI translation. Region: Germany/Germany –

Source: BMW GroupLadies and gentlemen,

strong products and desirable brands, that is the basis for the business success of the BMW Group. Thanks to the customer-centric orientation of our portfolio, we have seen very robust demand in recent years despite difficult circumstances. This trend has intensified again this year.

Never in the history of our company have we had more pre-orders than today. And the markets are signaling continued high demand. Our order books are full for months, especially for our all-electric vehicles. This applies above all to our innovation leaders, the BMW i4 and the BMW iX.

A few weeks ago we presented another milestone in the expansion of our all-electric portfolio: the BMW i7*. I personally presented the vehicle to our dealers in America and to journalists in the United States. The response: excellent worldwide. The 7 Series is tech magic at its best and the only luxury sedan that offers a real variety of drive types: BEV, plug-in hybrid or modern combustion engines. Our customers can choose what best suits their needs – without compromise.

This year we already have 8 fully electric models on the road. And numerous other innovations are already on the starting line. Including the pre-series vehicles, we are producing 15 all-electric models this year. With them, we have a purely electric range in around 90% of our segments. In the coming months and years things will continue at high speed. The iX1* will start at the end of this year. We are thus also offering one of our highest-volume models in the premium compact class as a purely electric vehicle. Next year we will be electrifying another core product of the BMW brand: the 5 Series.

The numerous new launches and the high demand for our products show: We inspire people, we develop innovations with market success and we create desire.

This is the basis for the growth that we have planned for the coming years. Not just in the purely electric vehicle segment, but across our entire portfolio.

We will continue to rely on our approach of being open to technology in the future. It is now the right concept for our customers worldwide. In doing so, we take into account the different developments in the regions of the world. We offer the latest and most climate-friendly drive technology for different needs and increase our contribution to a positive climate impact.

With this technological breadth, we are meeting both the requirements of our customers and the expectations of our stakeholders in the current transformation phase, because we are further optimizing all technologies.

We are transforming the BMW Group effectively and quickly – with all consistency. Our focus is on e-mobility, digitization and holistic sustainability.

What sets us apart: We are performing while transforming. This is also shown by our strong first quarter.

The figures for the first three months are positively influenced by the full consolidation of the Chinese joint venture BMW Brilliance Automotive.

This was a strategically important step for us.

We are thus strengthening the long-term cooperation with our partner in China. We are expanding the production capacities at the existing locations in Shenyang. In this way we continue to increase our ‘local for local’ share. And we are consistently expanding the localization of further models – including New Energy Vehicles.

The all-electric long version of the BMW 3 Series is an example of this. It was developed exclusively for the Chinese market. A long version of the X5 is also specially tailored to the needs of Chinese customers. Both the electric 3 Series and the X5 long are manufactured locally in China. This ensures that we can serve the high demand for these two models even better.

As a global company, the BMW Group operates in a field of tension between the different conditions in the major regions of the world. The current picture could hardly be more different.

A few weeks ago I was visiting the USA. We have presented our products to over 1000 dealers from all over America for the next two years. They loved it and are investing billions in the future with us. There is a positive spirit of optimism.

This is also reflected in the sales figures for the first three months of the year. Compared to the first quarter of 2021, we were able to continue growing on the American continent. This applies in particular to the USA. The plus there amounts to 3.7%. The BMW Group thus once again occupies a leading position in this important market.

We can react flexibly to the increasing demand in the region with our largest plant in Spartanburg and the plants in San Luis Potosí, Mexico, Manaus and Araquari, in Brazil.

In Europe, the effects of the Ukraine crisis are dominating. The energy supply for the entire continent is being jeopardized by the war and the resulting tensions with Russia. The inflation rate is at a high level. Food, energy and fuel costs are rising. As a result, the economic forecasts are continuously lowered.

The war in Ukraine is also having a significant impact on the automotive supply industry there. As a result, production was interrupted at our European plants. We used our ability to react quickly, our high level of flexibility and our agile way of working to compensate for the war-related failures of components together with our partners as quickly as possible. We continue to rely on deliveries from the Ukraine. In this way, we continue to offer the employees of our local partners a perspective even under these circumstances.

The delivery situation has meanwhile eased and we assume that we can continue to keep it stable.

This brings us to the third of our major markets: The corona pandemic is flaring up again in China. As a result, the metropolis of Shanghai is in lockdown. Production sites and ports are closed to contain the spread of infection. Our plants in Dadong and Tiexi were also affected by temporary closures. In the meantime, however, they have resumed production.

One issue that has occupied industry worldwide for the past year is the shortage of semiconductors. We won’t see any improvement here until the second half of the year at the earliest. However, we will still have to deal with a fundamental shortage in 2023.

In order to limit the consequences of the defect, we make maximum use of the flexibility of our production network, as we have done in the past. It allows us to rearrange production volumes at short notice. This is how we react to the respective supply situation with maximum efficiency. A strength of the BMW Group, which has already differentiated us positively in the past. We have also created flexibility in our most important sales markets. Our three market regions are increasingly independent in terms of sales, production and the supplier network.

The current different situations show how important this approach is. He creates resilience. Because when the market situation in individual regions of the world is difficult, other markets support us.

In this way, despite the different challenges of our time, we can always act in the interests of the success of the entire company.

The results for the first quarter of 2022 are proof of this. Despite adverse circumstances, we have further strengthened our competitive position thanks to strong demand for our products in the first quarter of 2022. We have further expanded our global market share compared to the previous year.

The bottlenecks in the supply of components and the measures taken to prevent the further spread of the corona virus in China were the reasons why we were unable to fully meet the high demand for BMW, MINI and Rolls-Royce automobiles.

While in February we were still slightly above the sales of the same period of the previous year, the development in March was largely characterized by the delivery bottlenecks for the cable harnesses from the Ukraine. As a result, the number of deliveries in the period from January to March 2022 was moderately below the absolute record value of the previous year.

With an increase of 28%, sales of electrified vehicles have increased significantly. Deliveries amount to more than 89,000 automobiles. In the same period, we even more than doubled sales of all-electric vehicles to over 35,000 units.

The iX3* and the MINI SE* were the most popular all-electric models. Sales increased significantly compared to the comparable quarter.

Our innovators iX and i4, which we introduced last year, will be launched in numerous other markets worldwide in the coming months. The new i7* will also be available from dealers from November. All of this will accelerate sales dynamics once again.

This puts us on track to more than double sales of all-electric vehicles this year compared to 2021 as a whole. By 2025 we want to break the sound barrier of a total of 2 million fully electric vehicles sold. By 2030, at least half of our global deliveries should consist of BEVs. And we are doing everything we can to achieve this goal sooner.

2025 will play a crucial role in this. Then our NEW CLASS starts. With a focus on electric, digital and circular, it marks a huge leap in technology. Our new Gen 6 drive generation is also being used for the first time in the NEW CLASS. They are characterized by more power, new cell chemistry and new cell formats. The NEUE KLASSE will give sales of all-electric vehicles a significant boost.

We are consistently driving the expansion of e-mobility in line with increasing demand. This is how we serve our customers’ wishes for emission-free mobility.

At the same time, we ensure that we achieve our strategic climate protection goals to which we have committed ourselves. Because especially in challenging times, we must not lose sight of our long-term goals.

Our path to climate neutrality by 2050 follows a scientifically validated and transparent path that encompasses the entire value chain. By 2030, we will reduce the carbon footprint of our products by 40% over the entire life cycle.

And we keep what we promise. For example, in 2021 we once again exceeded the CO2 emission targets in the European Union. All drive forms have contributed to this. In addition to the CO2 savings, the topic of raw material efficiency and thus the topic of circularity is playing an increasingly important role. Last year, with the BMW i Vision Circular, we showed what luxurious and at the same time sustainable mobility can look like in an urban environment.

The use of secondary materials is a basic prerequisite on the way to circular reusable material cycles. That is why the “Secondary First” approach applies at the BMW Group. We are consistently pursuing this path. Our goal: to build the most sustainable supply chain in the entire automotive industry.

A very concrete result of this thinking are the light-alloy cast wheels of the new MINI Countryman. They consist of 70 percent secondary material. We can save up to 80 percent CO2 during production.

In addition to the use of secondary materials, we focus on using raw materials in such a way that they can be returned to the material cycle after use. The NEUE KLASSE will set benchmarks here. Half of it should consist of recyclable raw materials.

However, circularity is not the future from an ecological point of view alone. We are currently seeing clearly that this approach is also playing an increasingly important role economically and geopolitically.

Due to the current events and the resulting possible supply bottlenecks, there is currently a price rally on the raw materials markets. Purchase prices for many industrial and precious metals are at record levels.

Some of them are essential for the technological change in the automotive industry – especially for the change to e-mobility.

We are currently discussing how we can reduce our dependency on fossil fuels, and rightly so. At the same time, we have to be careful not to become dependent on others elsewhere. For example, there are several hundred kilograms of raw materials in just one battery. Most of them are not obtained in Europe.

In the long term, circularity is the approach that greatly reduces dependence on ever new raw materials. Until then, only technological diversification and the existence of alternatives will create resilience.

Against this background, we therefore advocate a technology-neutral approach and the sustainable further development of all forms of propulsion, including the promotion of hydrogen technology.

Ladies and gentlemen,

a multiple burden due to the overlapping of great challenges – that is the new normal.

The BMW Group has always met challenges with an effective operational performance of the entire group and a high degree of flexibility. In this way, we have always ensured the business success of the company, even in challenging situations. We have even emerged stronger from many challenging times.

Rest assured: We will continue to manage the BMW Group in this spirit in the future.

Thanks very much.

*Consumption/emissions data:BMW i7: power consumption in kWh/100 km combined: 19.6-18.4 WLTP.BMW iX1: power consumption in kWh/100 km combined: 18.4-17.3 WLTP (forecast value based on the previous development status of the vehicle).BMW iX3: power consumption in kWh/100 km combined: 18.9-18.5 WLTP.MINI Cooper SE: power consumption in kWh/100 km combined: 17.6-15.2 WLTP.

MIL OSI

EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

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