June 10, 2014 at 5:05 pm

BMW offers Hybrid i8 in bid to compete with Tesla

BMW i8 (BMW)

BMW AG is rolling out the plug-in i8, its first sports car in more than three decades, in a bid to keep its cutting-edge image as Tesla Motors Inc. shakes up the luxury auto market.

The world’s largest maker of upscale vehicles starts deliveries this week of the $135,700 hybrid hot rod to show it can do more than make conventionally powered sedans and sport-utility vehicles. BMW’s most expensive model combines an electric motor and a lightweight carbon-fiber frame to get better gas mileage than the Toyota Prius and accelerate faster than a Porsche 911, demonstrating the breadth of its technology with Tesla set to outsell BMW in emission-free cars.

“Germany’s premium automakers feel Tesla’s rise more keenly because they’re expected to be the biggest innovators,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler. “Tesla will be able to win over people who’d normally buy a BMW. Even in Germany, people are lining up to test drive” the U.S. carmaker’s Model S sedan, the brand’s only car.

For BMW, which claims to make the “ultimate driving machine,” Tesla’s emergence threatens to make the German brand’s refined muscle cars appear antiquated, putting at risk a business model that depends on its ability to command premium prices. BMW is particularly vulnerable to Tesla’s inroads because it’s a stand-alone luxury-car maker in contrast to Volkswagen AG’s Audi and Daimler AG’s Mercedes-Benz.

“The i8 is a brand shaper,” Ian Robertson, head of sales and marketing for BMW, said in an interview. “Today sustainability is another important element of premium cars and it may very quickly become a must-have.”

While Tesla sells about one vehicle for every 60 sold by BMW, the Palo Alto, Calif.-based manufacturer led by Elon Musk has become a sought-after brand for trendy consumers because it offers clean motoring and a maverick image.

The $63,570 Model S can drive as far as 265 miles before needing to recharge, and Tesla operates fast-charging stations in North America and Europe that are free for its customers to facilitate long-distance driving.

“It represents the right direction, a paradigm change,” said Michael Willberg, chief executive officer of German headphones maker Ultrasone AG. He got a Tesla Model S in February after driving Mercedes and Audi cars for 20 years and has driven from the Munich area to Berlin, Cologne and Dresden. “Tesla is the car of our times.”

In a bid to counter that, the i8 can drive emission-free for 23 miles and offers flourishes like distinctive wing doors and optional laser headlights. After decades of relying on performance-oriented sedans and SUVs, the i8 marks BMW’s first pure-bred sports car since the M1, which was halted in 1981.

The 362-horsepower i8 accelerates to 62 miles per hour in 4.4 seconds, compared with 4.6 seconds for the Porsche 911 Carrera. Combining a three-cylinder gasoline engine with an electric motor that can propel the car for about 20 miles emission-free, the i8 gets the equivalent of about 135 miles per gallon, compared with 51 mpg for the Prius.

IHS Automotive forecasts that BMW will sell 23,000 i models this year, trailing Tesla’s 31,200 sales of the Model S. Even with demand for the i3 and i8 modest, the company is committed to the marque.

“You don’t develop a brand like BMW i’ if you don’t think about the road ahead,” said Robertson. “We spent a lot of money on this and are definitely thinking long term. There are going to be others in the BMW i lineup.”

Early response to the i8 shows that it is doing what BMW hoped for: that is, turning heads. During recent testing in California, the car had enough star power to gain paparazzi-like attention from passersby on Beverly Hills’ Rodeo Drive, where exotic cars are commonplace.