BMW Quietly Pivoting to EVs, Presenting Big Upside for Investors

Samantha Miller

Munich, Germany – BMW, the storied German luxury automaker best known for sleek sedans and high-performance sports cars, has quietly become a major player in the electric vehicle (EV) market. This under-the-radar transition presents a compelling investment opportunity, according to analysts.

BMW delivered nearly 94,000 fully battery electric vehicles (BEVs) in the third quarter, surpassing the combined BEV sales of rivals like GM, Ford and Rivian. Impressively, EVs accounted for 15% of BMW’s total sales, up significantly from 9% a year ago.

This puts BMW ahead of other legacy automakers in terms of EV sales mix, even outpacing Volkswagen despite VW selling more total EVs.

While BMW doesn’t boast a flashy, futuristic EV brand like other automakers, it has methodically electrified its existing luxury lineup. The company offers electric versions of core models like the i4, i5 and i7 sedans, as well as the new iX SUV.

According to reviews, these EVs deliver the same excellent driving dynamics and luxury amenities BMW is known for, with the added benefits of an electric powertrain like instant torque and quiet operation.

This ability to transition seamlessly to EVs with its established brand and familiar designs puts BMW in an advantaged position relative to peers. While the global market for gas-powered cars is expected to shrink significantly by 2030, BMW’s healthy EV business should insulate it from existential threats facing automakers still dependent on gas engines.

But BMW’s promising EV progress has largely flown under Wall Street’s radar, keeping its stock price depressed. This disconnect presents an intriguing value opportunity according to Jefferies analyst Philippe Houchois, who sees 41% upside potential in the shares.

Houchois believes investors are overlooking several key strengths that support a higher valuation:

Capital Efficiency – BMW is investing judiciously in its EV pivot, committing about 6% of sales through 2025 compared to higher rates by competitors like GM. Thisdisciplined spending will keep BMW generating ample free cash flow.

Fortress Balance Sheet – Excluding its financing arm, BMW holds over $20 billion more cash than debt, equal to nearly a third of its market cap. This rock-solid financial position provides stability amidst a turbulent auto industry transition.

Chinese Joint Venture – BMW recently acquired a controlling stake in its Chinese JV, fully consolidating this business. This smart move gives BMW complete control over its operations in the massive Chinese EV growth market.

New vehicle prices and margins are coming down from pandemic highs, leading the market to project declining earnings for BMW in 2023-24. But with its efficient spending, strong balance sheet and access to China, Houchois believes BMW can outperform estimates.

Trading at just 4 times his 2024 EPS estimate ex-cash, Houchois sees BMW’s current valuation as overly pessimistic. His $116 price target implies a 14% gain from current levels.

And if margins hold up better than expected, he says shares could reach $143, representing 41% upside for investors willing to look past the near-term noise.

While BMW lacks the buzz of newer, sexier EV brands, the company’s methodical and successful EV pivot underneath the hood presents a compelling risk/reward at current prices. As the market recognizes BMW’s progress, its stock should shift into a higher gear.

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Samantha Miller is a business and finance journalist with over 10 years of experience covering the latest news and trends shaping the corporate landscape. She began her career at The Wall Street Journal, where she reported on major companies and industry developments. Now, Samantha serve as a senior business writer for, profiling influential executives and providing in-depth analysis on business and financial topics.
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