Slow transition to electric fells BMW CEO after one term

Elisabeth Behrmann
Bloomberg News

When BMW AG picked Harald Krueger to run the company more than four years ago, he was the perfect candidate. Young, with a personable manner and decades of experience across the company, Krueger appeared ready to guide the venerable luxury carmaker into a future of electric, self-driving and shared automobiles.

But on Friday — two weeks before his contract came up for renewal — Krueger quit. Instead of leading the company through the biggest upheaval in a generation, he was felled by the transition as he failed to provide a roadmap to the future. In his farewell note, he cited the “enormous exertion” demanded of BMW employees as the company grapples with the unprecedented demands of the shift.

In recent years, the industry “has been shaped by enormous changes, which have brought about more transformation than in the previous 30 years,” Krueger said in the note.

Krueger, 53, inherited a company at the top of its game. Under the previous CEO — now chairman — Norbert Reithofer, BMW had outsold Mercedes-Benz and Audi for a decade. The company was a pioneer in electric vehicles with the i3 city car introduced in 2013. It was the first major automaker to use lightweight carbon fiber in mass-market models. And its traditional business of sumptuous-but-sporty sedans and SUVs was as robust as ever.

But soon after Krueger took over, sales of the i3 hit a wall, calling into question the electric push. The plan to use carbon fiber turned out to be too costly. The strong-willed Reithofer never really exited the stage. The diesel crisis that shook rival Volkswagen AG sullied the reputation of the German car industry, and the recent U.S.-China trade spat has hit profits.

“The path BMW set out for Krueger wasn’t easy,” said Frank Biller, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart. “BMW has traditionally picked executives with less emotional flair and more of a technical, engineering background. Car electrification is a very emotional topic.”

As Krueger puzzled over how to reinvent BMW for the electric age, it was almost a year before he presented his strategic vision, which was a bust. He delayed BMW’s next major electric car, effectively squandering its leadership in the field. Key engineers quit to set up an electric-vehicle startup. And to help pay for the shift, Krueger doubled down on gas-guzzling, super-charged luxury cars such as the 8-Series sports car and full-size X7 SUV.

At Krueger’s first major public appearance, at the Frankfurt car show in 2015, the CEO collapsed on stage minutes into a presentation. He blamed the episode on dehydration and too many hours flying, but it was an apt metaphor for his leadership.

The company has since watched Daimler AG reclaim the luxury crown. Tesla Inc. has become the face of the electric-car revolution. And everyone from Ford Motor Co. to Ferrari NV is rushing to develop electric models, with scores of new offerings set to hit the market in the next five years.