Electric Cars

In a significant strategic move, BMW is positioning itself with a dual approach to automotive propulsion, investing billions into the future of electric vehicles while firmly stating its commitment to the enduring presence of internal combustion engines. This stance deviates from the industry trend where many manufacturers initially boasted about the imminent obsolescence of gasoline-powered cars. BMW's leadership recognizes the varied global readiness for EV adoption, opting for a diverse powertrain portfolio to cater to different market demands and ensure continued profitability.

BMW's strategy stems from a nuanced understanding of global market dynamics. While considerable resources have been channeled into developing the innovative Neue Klasse electric platform, which is set to form the foundation for numerous future EV models, the company is not abandoning its gasoline legacy. Jochen Goller, a key member of BMW AG's board overseeing customer, brands, and sales, emphatically stated that internal combustion engines \"will never disappear,\" signaling a long-term commitment.

This steadfast position might appear counter-intuitive, especially given BMW's commendable success with EVs in markets like Europe and the United States. However, the company acknowledges that certain regions, including parts of Eastern Europe, India, and the Middle East, are not yet equipped for a complete shift to electric mobility. In these markets, gasoline engines continue to be a viable and necessary option for sustained sales and market penetration.

To execute this diverse strategy, BMW is not only advancing its Neue Klasse EV platform but also developing a distinct platform solely for combustion-powered entry-level vehicles. Furthermore, a third, highly adaptable platform is on the horizon, designed to support a range of larger SUVs and sedans. This versatile architecture will enable BMW to offer the same vehicle models with various powertrain options—fully electric, plug-in hybrid, and traditional combustion—tailored to specific market needs.

Looking ahead, BMW has set an ambitious target for electric vehicles to account for half of its annual sales by 2030. This goal suggests that while EVs will play a pivotal role, combustion engines, in various forms, will persist in BMW's lineup well into the next decade. This extends beyond the European Union's proposed 2035 ban on new car sales with emissions, where potential exceptions for plug-in hybrids and extended-range EVs could offer manufacturers additional flexibility. Such concessions would also provide crucial time for the expansion of charging infrastructure, though the environmental implications of this extended transition remain a key consideration.

The Middle East and North Africa regions are currently experiencing an unprecedented surge in electricity consumption, primarily fueled by the essential requirements of cooling systems for homes and businesses during extreme heat, alongside the increasing need for potable water through desalination. A recent analysis by the International Energy Agency (IEA) sheds light on the dramatic scale of this energy boom. Electricity usage in these areas has seen a threefold increase since the turn of the millennium, with projections indicating an additional 50% rise by 2035. This anticipated growth in demand is equivalent to the combined current electricity consumption of Germany and Spain, underscoring the immense challenge and opportunity facing the region's energy sector.

Cooling and water purification technologies alone are expected to contribute approximately 40% of the growth in electricity demand over the next decade. Beyond these critical needs, factors such as rapid urbanization, industrial expansion, the electrification of transportation, and the proliferation of data centers are also placing considerable strain on existing power grids. The IEA's comprehensive report, titled \u201cThe Future of Electricity in the Middle East and North Africa,\u201d highlights these diverse drivers behind the escalating energy requirements.

Historically, power generation in the region has been overwhelmingly dominated by fossil fuels, with natural gas and oil accounting for over 90% of the electricity supply. However, this energy mix is undergoing a significant transformation. A growing number of nations, including Saudi Arabia and Iraq, are actively seeking to reduce their reliance on oil for power generation, aiming to free up these valuable resources for export. The IEA forecasts that natural gas will likely meet half of the projected demand increase through 2035, while oil's contribution is expected to sharply decline from 20% today to a mere 5%.

The shift towards cleaner energy sources is also gaining momentum. Solar energy capacity is poised for a tenfold expansion by 2035, adding 200 gigawatts (GW) to the grid. This substantial growth would elevate renewables' share of the electricity mix to approximately 25%, a significant leap from its 6% share in 2024. Concurrently, nuclear power generation is also projected to triple over the same period, further diversifying the region's energy portfolio.

Fatih Birol, the IEA executive director, emphasized the gravity of the situation, stating, \u201cDemand for electricity is surging across the Middle East and North Africa, driven by the rapidly rising need for air conditioning and water desalination in a heat- and water-stressed region with growing populations and economies.\u201d He further added, \u201cTo meet this demand, power capacity over the next 10 years is set to expand by over 300 GW, the equivalent of three times Saudi Arabia\u2019s current total generation capacity.\u201d Meeting this escalating demand will require substantial financial investment. In 2024, the power sector saw investments totaling $44 billion, a figure projected to increase by another 50% by 2035. Nearly 40% of this expenditure is earmarked for upgrading grid infrastructure, which currently experiences losses double the global average.

The IEA underscores the critical importance of grid enhancements and strengthened regional interconnections for ensuring electricity security. Moreover, balancing the intermittent nature of renewable energy sources will necessitate greater investments in energy storage solutions, demand-side flexibility mechanisms, and a sufficient number of gas-fired power plants to compensate for periods when solar and wind energy are not readily available. Improving energy efficiency also presents a viable pathway to alleviate some of the pressure on the grid. For instance, air conditioning units in the region are currently less than half as efficient as those utilized in Japan. Upgrading these cooling systems alone could reduce peak demand growth by an amount equivalent to Iraq's entire current power capacity.

The consequences of a slower transition to a diversified power mix are considerable. The report warns that carbon dioxide emissions would continue their upward trajectory, and the demand for oil and gas in electricity generation could climb by more than a quarter by 2035. Such a scenario would result in an $80 billion reduction in export revenues and a $20 billion increase in import bills, highlighting the economic and environmental imperatives for decisive action.