GM Plant to Supply Hybrid Trans for BMW
By David E. Zoia WardsAuto.com, Jan 23, 2008 9:12 AM

DETROIT – General Motors Corp. will supply BMW AG with 2-mode hybrid transmissions from its Baltimore plant for use in an upcoming version of the German auto maker’s new X6 cross/utility vehicle.

BMW’s top sales executive, Stefan Krause, confirmed the sourcing in an interview here with Ward’s.

Output of the new X6, which was unveiled in full production dress at the North American International Auto Show and will go on sale this spring, is ramping up at the Spartanburg, SC, plant. The hybrid version, which BMW will launch in 2009, is expected to consume 20% less fuel than the standard model.

The 2-mode hybrid technology was co-developed by GM, BMW and the former DaimlerChrysler AG. It already is used in GM fullsize SUVs and will be going into GM fullsize pickups and Chrysler LLC’s Dodge Durango and Chrysler Aspen SUVs this year. Daimler will produce a hybrid version of its Vance, AL-built M-Class SUV, also in 2009.

BMW has not said how many of the X6 hybrids it plans to sell, but Krause predicts volumes will be low, in part because the auto maker expects to have to cover a big chunk of the added costs of the vehicle.

BMW X6

“We don’t expect (demand) to be very heavy, because of the cost,” he says. “Right now, I don’t think manufacturers offering hybrid cars are making money on them.”

He says a full hybrid system probably has a true consumer cost of about $10,000, but research shows buyers in BMW’s market sector are willing to pay only about $1,200-$1,300 for the technology.

“Once you go beyond the $2,000 barrier, it’s a tough sell,” Krause says. “So the reason we do not believe it will necessarily be a long-lasting technology is the question of how pricing is going to be and what’s the consumer’s willingness to pay for expensive technology.”

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Like others, Krause says BMW will have to eat some of that gap between the X6 Hybrid’s cost and the customer’s willingness to pay.

“We will have to be competitively priced,” he says. “Certainly costs will come down and the market will mature. The question is how long will you have to subsidize and support that?”

dzoia@wardsauto.com