BMW profits surge as electric vehicle sales double

BMW (BMW.DE) reported a sharp rise in profits for the first three months of 2021, driven by a rebound in sales as the car market recovers from the coronavirus crisis.

Sales in its electrified vehicles more than doubled in the first quarter, which was also boosted by higher prices and strong demand in China.

Chinese sales nearly doubled in the quarter to 230,120 vehicles, with sales in the overall Asia region exceeding pre-pandemic levels.

Sales were also up in Europe and the US on stronger demand, but those in its home market in Germany dropped 5%.

Net profit at the firm rose to €2.8bn ($3.4bn, £2.4bn) from €574m in the same time period the year before.

First quarter revenues rose 15% to €26.8bn. Per-vehicle profitability, defined as operating result on sales, soared to 9.8% — a jump from 1.3% in the previous year and within BMW’s long-term target range.

"The significant recovery of the markets, which began in mid-2020, continued to gain momentum during the first three months of the year," a company statement said.

Looking ahead, BMW expects to have 2 million fully-electric cars on the road by 2025, it said on Friday.

The German luxury carmaker added its still on course to meet its profit targets for this year despite rising costs of raw material.

It cautioned that COVID will continue to directly and indirectly "influence the course of business for the BMW group throughout the current financial year."

However, vaccination programmes worldwide should have a positive effect on the situation and increasingly reduce the adverse impact of the pandemic on global economic growth, BMW said in a statement.

Shares in the company were up 0.5% in Germany.

"The first quarter shows that our global business model is a successful one, even in times of crisis," said BMW's chairman of the board of management, Oliver Zipse in a statement. "We remain firmly on track for continued sustainable, profitable growth,".

BMW's announcement came despite the impact of the coronavirus crisis and a shortage of semiconductors affecting the global car industry.

The automotive sector has been experiencing a boom in sales with several companies reporting rising revenues despite the hurdles.

On Thursday, Volkswagen (VOW.DE), raised its full year guidance on the back of increased sales and profits in Q1.

Europe’s largest car manufacturer said revenue rose 13% to €62.4bn ($75.2bn, £54bn) in the first three months of the year, while pre-tax profit jumped to €4.5bn from €0.7bn the year prior.

It now expects operating return on sales of between 5.5% and 7% in 2021, compared with the previous range of 5% and 6.5%.

Similarly, Stellantis (STLA) — the new car company formed by the merger of Fiat Chrysler and PSA groups — announced earlier this week its first-quarter revenue rose 14% to €37bn, while consolidated vehicle shipments were up 11% to around 1.57 million units.

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Read More: The chip shortage bringing car factories to a standstill

Breaking with the views of its peers, BMW said it expects the global shortage of semiconductors hindering automotive production to be resolved as firms and governments hone-in on the issue.

But, other leading car companies —who have been competing directly with tech firms and the consumer electronics sector for supply — have issued stark warnings on the chip shortage.

A host of carmakers, including Volkswagen, Jaguar Land Rover, Mini, Nissan (7201.T), Renault (RNO.PA) and Honda (HMC), halted production at their plants due to the crisis.

Others have made similar moves. Last month, US car company Ford (F) announced that it will cut car production due to the global chip shortage and said profits could be hit by $1bn. General Motors (GM) warned that it could face a $2bn profit hit.

Stellantis warned the impact of the chip shortage, prevented a stronger rebound from plant shutdowns due to the COVID-19 pandemic.

The company said the crisis cut planned production by 190,000 units in Q1 amid rolling halts of some assembly lines, according to the company's chief financial officer Richard Palmer. The impact will likely be more pronounced in Q2 and linger into 2022, the company said.

Meanwhile, the chief financial officer of VW Arno Antlitz, said: "The shortage of semiconductors throughout the industry is expected to have a more significant impact in the second quarter than before."

Watch: Global chip shortage wreaks havoc on various industries