Finicky American demand changes path for BMW's crossover EV

BMW has iced plans to bring its first electric crossover to the U.S. for now. The BMW iX3 was scheduled to arrive in the first half of 2021.

"At this time we do not have plans to bring the iX3 to the U.S. market," a spokesman confirmed to Automotive News, declining to elaborate on the reasons for the decision.

BMW, like its German rival Mercedes-Benz, is grappling with the realization that the world's second-largest auto market remains half-hearted in its embrace of electric vehicles. Despite their proclamations of interest in battery-powered vehicles, few automakers other than Tesla have made much traction in the U.S. market with EVs.

Complicating their calculations, regulatory pressures in Europe and China are creating urgent need for EVs in those markets. Automakers face hefty fines in Europe next year if they fail to cut their fleet CO2 emissions to an average 95 grams per kilometer.

As a result, the German automakers are recalibrating their EV ambitions in the U.S. — diverting production supply to markets that are more receptive to the new technology, and biding their time for America's interest to kindle.

In December, Mercedes-Benz told dealers it would delay the U.S. launch of its EQC electric crossover by at least a year, pushing it to 2021. Mercedes pinned the decision on strong demand for the EQC in Europe.

"We had to make a little bit of a tough choice," Daimler CEO Ola Källenius told reporters in January at CES in Las Vegas. "Demand [from Europe] by far outstrips supply, even though we are ramping up and adding additional battery lines to the production."

In late January, BMW informed dealers at a meeting in Boca Raton, Fla., of its decision to not introduce the iX3 in the United States next year.

The crossover is an electric version of the brand's best-selling vehicle, the X3. BMW sold 70,110 X3s in the U.S. last year, up 14 percent from 2018. With the iX3, the X3 will become BMW's first model available with a conventional combustion engine, a plug-in hybrid or a pure electric system.

But the planned EV was shaping up to be an underperformer in the U.S. An EPA estimate of the iX3's driving range has not been disclosed. Unless the vehicle has a range of at least 300 miles, "it's not worth bringing to the table," said one retailer who asked not to be identified.

That is not a given with the new product.

Manufactured in China, the iX3 is powered by a 74-kWh lithium ion battery. That is smaller than the beefier batteries in luxury electric crossovers currently on U.S. roads. The Jaguar i-Pace crossover, for instance, has an EPA range of 234 miles per charge, and it uses a larger 90-kWh battery. The Audi e-tron carries a 95-kWh battery that manages to eke out only 204 miles. Both of those models are selling slowly in the U.S.

The BMW iX3 isn't going to cut it in the U.S. market, said Sam Abuelsamid, principal analyst at Navigant Research.

"To be competitive, you really want to have closer to at least 240 to 250 miles of EPA range," Abuelsamid said. "Anything less than that and I think you're going to be struggling in the marketplace."

Another U.S. challenge for the iX3 is that BMW planned to launch it only with rear-wheel drive, limiting its appeal to American crossover buyers seeking the flexibility of all-while drive.

The BMW iX3 is tailored for the China market, where extended range is not a customer priority, said Sam Fiorani, vice president at AutoForecast Solutions.

"Why push a vehicle with limited appeal into North America only to come up short next to a Tesla Model Y or Ford Mustang Mach-E?" Fiorani said. He believes BMW will have a more competitive chance for a U.S. iX3 when the automaker develops the next-generation X3 platform.

"With better batteries and all-wheel drive, the next generation would make a proper entry into this very competitive segment," Fiorani said.

The BMW iX3, made by joint venture BMW Brilliance Automotive in Shenyang, China, features the fifth generation of BMW's eDrive technology, with the drive unit combining the electric motor, system electronics and transmission into a central housing, reducing its weight and footprint.

The iX3 is part of BMW's ambitious target to have 25 electrified models on the road by 2023. And despite its reversal on the iX3, the Bavarian automaker is sticking to a plan to bring two EVs to the U.S. in the next couple of years.

First is the iNext crossover, which goes into production in the middle of 2021. That will be followed by the i4 sedan, which begins production toward the end of 2021. The i4 and iNext have a range of more than 370 miles, compared with the iX3's 273-mile range, based on the European emissions test cycle.

"With the two longer-range models coming, we don't need the limited range, rear-wheel drive iX3 right now," another dealer said.