Global Crisis

Virtually every facet of the i3's manufacturing process is different and BMW is evidently struggling to manage setbacks

According to Jay Cole over at insideevs.com i3 production is currently 50% lower than expected at this point in time. Cole's source is Manager Magazine Online, a German Publication, which states the high rejection rate of the carbon fiber parts made for the car. The article goes on to say that BMW's recent announcement that the company will be investing another 100 million euros to increase the production of carbon fiber is tied to this issue.

Manager also says BMW is only churning out 70 i3's per day which is about half of what they were hoping to be making by now. BMW began i3 production in October so they are four months in and now have over 11,000 i3's on backorder. Plus, US sales are only just beginning so it would appear that even if BMW gets the current problems solved in short order (and that's a big "if"), it will still probably take them nearly a year to catch up with demand since the orders will continue to pile up. It has long been speculated that BMW will have the capacity to make between 30,000 and 40,000 i3's per year once they are running at full production.

It seems we now have some answers to two things which were puzzling US customers recently. A couple months ago BMW announced that US i3's will not have a moonroof available. This comes long after it was announced that the i3's with Giga World and Tera World interiors get the moonroof included with the packages. To make matters worse, most of the i3's here in the US are pre-production European spec cars and they all have sunroofs. So everyone that had the opportunity to test drive an i3 got teased with seeing the moonroof that they were later told they won't be able to have. Then, a few weeks ago BMW announced the first three months of i3 US production would be limited to a "Launch Edition" version. The Launch Edition is fully loaded with every option available on the car and the most expensive Tera World interior. The only thing the customer can choose is the color (and only the metallic colors are available) and if they want the optional 20" sport wheels.

Many people speculated that is was simply a money grab and BMW knew the car would be in high demand so they could get away with making anyone that wanted one of the first i3's in the US buy one that was loaded. Now, with the recent news about production difficulty, I think it's obvious the reasons the moonroof isn't available at launch, and custom ordering isn't available for another three months, is solely because BMW is struggling to refine the manufacturing process and eliminate the problems they are currently having.

I've had the opportunity to talk with many BMW program managers over the past few years. One of the things that has always stood out to me was how on one hand they were really excited about the i3 because of how special and different everything about it is, while on the other hand they would always acknowledge how big a challenge it was going to be. Everything about the i3 is different. BMW has never made a car that required special manufacturing processes for virtually every stage of assembly. Besides the electric powertrain, most of the materials used in the car are even different. While the biggest challenge is likely working with carbon fiber on such a large scale, they are also using more aluminum on a car than they ever have and are using interior materials that they have never worked with before. Then there is the outer thermoplastic body panels which BMW has never used before which has even led to the painting process presenting challenges.

So personally I'm really not surprised by all this. The i3 is a revolutionary new car for BMW, and nobody else is making anything quite like it. Yes, there are some that will look at it and say "It's just another 80 mile electric car, big deal", or "It's nothing more than a Nissan LEAF that costs $50,000". I respect everyone's opinions, and for some people it doesn't represent any more value than a $30,000 Nissan LEAF and that's fine. However when I see the i3 I see the future of the automotive industry and I applaud BMW for taking the enormous risk of building such a radically different car, something that nobody else is attempting to build. Yes, I wish it had more range and I think BMW would have been better served if it could really deliver 100 miles of consistent real world range for most drivers, and it's clear it will not. But that's the biggest knock I can offer and it's far from a deal breaker for me. BMW will get past these initial manufacturing snafu's. The top concern at this point should be quality, which I'm sure it is. The production numbers will increase and by the end of the year I'm sure they will have everything running as smoothly as planned. The question is will the customers wait many months for their i3 to be made? I suppose the people that don't put as much weight on how special it is may not, but those that appreciate how unique the car really is will. After all, there is nothing else out there they can get that is quite like the i3.

On July 22nd, tucked nicely at the end of a press release for the i3, were the words,“It will arrive in US showrooms in the second quarter of 2014.”

That means US i3 customers will have to wait a bit longer than expected. Although BMW has never made an official announcement on when US sales would begin, about four months ago BMW's North American president Ludwig Willisch told the Automotive News that the first batch of i3s arriving in the US would have the range extender option and would arrive in the US late this year, but that significant numbers of them wouldn't be delivered until early 2014.

So somehow late 2013 to early 2014 has been moved to 2nd quarter of 2014. It's only a delay of a few months but it has people wondering what was the cause of the delay. To add to the mystery is the fact that the European launch seems to remain on schedule and is still set for November of this year.

There are a couple possible reasons that I can imagine:

1) BMW is having some last minute manufacturing issues so they will need longer than expected to ramp up to the volume they'll need for the US launch. Everything about the production process for the i3 is different than a conventional car so it wouldn't be surprising to find that they are discovering some manufacturing snafus that will need a little extra time to iron out. This happens with conventional cars so one would imagine BMW will certainly experience issues refining the assembly line for the i3.

2) The range extender isn't ready. BMW expects that as much as 80% of the US i3 orders will have the range extender option. What if it's not ready yet, and will take a few months longer? It's conceivable that they begin sales in Europe without the range extender option available and add it a few months later, right before the car launches in the US. A long shot, but possible. If the range extender is available for order at the European launch then this theory is proven wrong.

3) BMW has experienced a higher than expected interest in reservations in Europe, and won't be able to have an adequate supply for the European launch and still begin US deliveries only two months later. Perhaps they will need a couple of months to get the Leipzig plant up to full capacity and satisfy the initial European demand.

4) There really is no delay. Since BMW really never announced an official release date and the only reference ever made was from the Automotive News story where they interviewed Willisch. If you read the article (link above) you see the part where they talk about when the cars will start arriving in the US they aren't quoting Willisch, so it is possible they just used bad information and Willisch actually didn't tell them the car would launch then. Perhaps Willisch was referring to when i3s with range extenders would arrive in the US to be used for training and marketing purposes and the plan all along was to start selling them a couple of months later.

If I had to put money on it, I'd probably go with dealing with manufacturing issues combined with heavier than planned demand in Europe. Perhaps we'll get some clarity on this at the i3 formal introduction on Monday.

I'll have the press conference streaming live here on this site, so tune in at 8:00am this Monday, July 29th.