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PHOTO CAPTION: BMW i3 cost an estimated $2 billion to develop.

BMW i3 Is Costly, but Unavoidable Investment By German Carmaker

With an estimated $2 billion investment in the i-Series, analysts see the electric car line being a financial drain for the next five years, but will ultimately pay off for BMW.

Published: 28-Oct-2013

German luxury car manufacturer BMW’s new little i3 electric vehicle is likely to lose a substantial amount of money in the short term for the company, but the techniques involved in building the car should give it a lead over its German competitors with the possibility of a big payoff in the long-term.

German manufacturers of high profit gas guzzlers like BMW, Mercedes, and Volkswagen’s Audi and Porsche subsidiaries, are all threatened by tightening fuel efficiency rules and are being forced to invest huge sums in alternative powered vehicles. They are scrambling to bring electric, hybrid and plug-in hybrids to market, even though Europeans are skeptical about their efficacy.

The drive to electric vehicles is likely to have a negative long-term financial impact on marginal manufacturers globally. Only the strongest will survive. BMW plans to be one of them, and it has stolen a march on the opposition with its new i3.

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