ABG: We're here with Tom Purves this morning and you are the CEO of BMW USA. BMW has got a big announcement today regarding diesel technology coming to the United States. Tom, welcome and would you like to tell us a little bit about what BMW is going to be announcing today.
Tom Purves: Yes, I would be delighted. We, being in the diesel business of course in Europe and other markets for many, many years we have been developing technology which will allow us to sell diesel in all 50 states. Diesel engines that actually would comply with the emission regulations right across the USA rather than just in 48 or 49 states and come the autumn of this year, October this year, we will be actually launching into the market two new vehicles we are showing for the time here.
You can read the rest of our discussion after the jump.
TP: One is an X5 with a turbocharged direct injection, high performance diesel engine with BluePerformance and the other one is a 3-series Sedan with similar engine. To give you some idea of what this means, these are not just conventional diesel engines in that sense. They have very high performance and if you imagine a 3 Series sedan which is an agile car, a car with relatively small dimensions equipped with an engine which gives you the same torque as our six liter V12 in our 7-Series at under 2000 revs. You can imagine what this means in terms of performance and acceleration on to the freeway, whether you are in Los Angeles or you are in New York. Or indeed, if you are on a long run, you are getting at least 10 percent to 15 percent more range from the same tank size. So we are very excited. I mean diesel has done a tremendous job for us in Europe.
In some markets we sell as many as 70 percent of our production in diesel form. Here in the Unites States, it is going to be some substantial period of time before you see any percentage approaching that. But it is going to make a big contribution, not only to environmental friendliness of automobiles in general, because we are not the only people bringing diesel to the United States, but it is also going to be reinforcing BMW's prime position as the "ultimate driving machine" because these diesels are high performance, they are exciting to drive, they are exactly what you expect for a BMW.
ABG: Can we talk a little bit about the technology you are using for the U.S. market diesel including the injection systems and the after-treatment systems?
TP: Yes, we have what is called SCR technology. First of all it is a twin turbocharged engine variable with direct injection and we inject urea into the system which finally cleans the NOx emissions that, of course, everybody has had some concerns about up to now. But rather than spend a lot of time on diesel technology, per se, I think it would be interesting for your audience perhaps to know a little bit more about where this fits into BMW's full approach.
TP: With Efficient Dynamics and environmental sustainability. We have about 25 years of investment in what I would describe as the end game which is a hydrogen powered internal combustion engine. It is entirely feasible to run hydrogen through the internal combustion engine and you get substantial performance with that. Same responsiveness as you do with the gasoline without any of the negative effects. And this we see as being a brilliant approach because it builds on 100 years worth of investment in the internal combustion engine. We do not need to revisit that.
And as we all know eventually we will be able to produce hydrogen purely from solar power and water. So it is sustainable in the long term. We have some of those cars running. They are production cars. We have deliberately put them through the normal production process and they are now running in the market with customers, potential customers getting experience.
We know we are a long way away from being able to bring those into market for the consumers at an affordable price and indeed we are a long way away from an infrastructure that will support that. So what happens between now and then? Well, now we have tremendously efficient valve-tronic gasoline engines. Environmental Defense gave us an award for the single company who had done more to reduce its fuel consumption over the last 15 years.
These valve-tronic engines, which use a very special technology, breathe much more freely than normal internal combustion engines and give us phenomenal fuel consumption. For example, I drove about 500 miles this summer in a 750 V-8, 24.6 miles a gallon, I achieved. Average speed 60, 65 miles an hour. These are phenomenal numbers but we're bringing the diesel because the diesel have also helped hugely with CO 2 emissions and broaden our offer.
Its torque is particularly suitable for American driving conditions. Then we have a hybrid coming in 18 months time which is a joint venture we are engaged in. We are doing it Daimler, Chrysler and with General Motors which will allow us to bring hybrids to our products for a period. And thereafter we will be moving on through ever more efficient diesel and gasoline engines and hybrids up to the hydrogen car.
Along the way, we got some very interesting use of energy. I mean brake energy regeneration. Obviously when you create kinetic energy, when you brake, what would you do with that energy? If you could feed that back and have it charge the batteries, then you have actually got a tiny, dare I say hybrid in its own way. We have got other technical developments which we are using in Europe at the moment.
For example, auto stop/start, where you when you come to stop at traffic lights the engine automatically stops and when you move forward with your foot on the throttle, again it automatically starts. So you do not have any idling emissions. And we've won awards in Europe for our Efficient Dynamics and in fact won the Golden Steering Wheel award in Germany for being advanced in terms of not just having these things as prototypes but delivering it to the consumers.
And I see that technology feeding its way through to the United States as we get better at it and as we get more knowledgeable about how we can apply in this environment.
ABG: As far as the diesels that are coming this year, how much of an improvement in fuel efficiency and reduction in CO 2 do you expect to see in the U.S.-market version compared to, let us say, the 3L twin turbo gasoline engine?
TP: That is a good question and I cannot give you a direct answer because I do not have that on the top of my head. I am sorry I do not have that but I have absolutely no doubt that we can get you that number.
ABG: All right, at this point, is it too early still to say how much of a price premium there will be for the diesels?
TP: Yes, because we will set our prices much later in the year but I mean, it is fair to say that it would be more expensive than the gasoline engines. It depends on the performance and power. It depends on do you relate to a gasoline engine of the same capacity or do you relate it to a smaller gasoline engine. But in general terms you can imagine a price premium.
ABG: Moving forward a little bit to the hybrids that you've got coming or actually before that the start/stop and the brake energy regeneration. Will that be coming to the U.S. market before the hybrid?
TP: At the moment the auto start/stop has been engineered for manual four cylinder cars which, of course, I think are the cars of which we have a propensity of sales in Europe compared with the United States. We don't sell any four cylinders here. But that technology is absolutely adaptable and it is a question of engineering capacity, time and priority.
So we have to comply with U.S. regulations and we have to comply with European regulations and they are different. And they will continue to be different in the future. So we apply our engineering resources the best possible way in order that we can get a balance within our organization. But I think it will be relatively soon when you see some of these things coming into our US cars.
ABG: You said the two-mode hybrid system, the active hybrid you showed on the X6 concept in Frankfurt, that will be coming to the U.S. in about 18 months' time?
ABG: Are you planning to make that with gasoline or diesel engines or both?
TP: In the first instance with gasoline engines.
ABG: At some point, do you anticipate a diesel hybrid?
TP: You can do diesel hybrid or gasoline hybrid. That is absolutely, from my prospective, there is equal opportunity in both directions but I think it is going to be a substantial period of time before you see diesel, in the minds of the U.S. consumer as substantial as it is in the minds of the European consumer and in our planning, we have to take that into account.
But we have here today an X6 which we are launching which is of course a sports activity coupe, very, very attractive car. That is our new twin turbocharged V8 gasoline engine with direct injection which also gives substantial improvements and all of our engines, each one as we introduce it does not just offer more performance, it has to offer more fuel efficiency at the same time.
And coming back to diesel, one of the differences between the European experience and the U.S. experience is of course diesel in Europe is less expensive, the fuel itself either through local taxation which is less than gasoline or through some form of secondary taxation which encourages people to drive diesel because diesel is more CO 2 friendly than gasoline. That isn't the case here in the United States. So the benefits for the consumer here primarily will be in the torque and the range rather than an economic benefit in cost per mile that you run.
ABG: Moving beyond the hybrids towards hydrogen. You've got the Hydrogen 7 Series. A fleet of those are running now. Where do you go beyond that? What is the next step beyond the current H7?
TP: I think for the H7 what we are demonstrating is that it actually works, and we are demonstrating that it can work in bivalent form. That is with a switch where you can go from gasoline to hydrogen which shows that even if you do not have a full infrastructure for hydrogen you can always drive in the car.
Where we will go from here is a refinement of the concept in the context of things like tank production costs, filter production costs, packaging in order to get the thing to be as efficient as possible, because of course you need a larger tank space.
So the steps from here on in are rather than convert an existing product that we have done with the Hydrogen 7 Series is to say, okay we are going to use hydrogen power in the future. What sort of concept of vehicle is that best suited to in order to get the packaging right? As we do in the present 7 Series, we use some of the space on the long wheelbase car and some of the trunk from the longer wheelbase car to house hydrogen. We have to find a solution for housing that more effectively.
ABG: On to the MINI. In Europe, the MINI is offered with a diesel engine. Are there any plans to bring that diesel engine to the U.S. market in the MINI.
TP: No. The MINI gasoline engine is extremely efficient. Those are by the way direct injection. In the context of performance and fuel efficiency, it is right to the top of its class. So we do not see a need to bring a diesel in such a small car to the States because the benefits that you get from it are disproportionately less than you do for a large or heavier vehicle. It is absolutely possible if you could bring it. It depends on the infrastructure, it depends on consumers' propensity to want a diesel and it also depends to some extent, on the atmosphere in the country and its orientation towards diesel. We are aware that the refineries are structured in such a way that there is a certain supply of diesel and as with everything if you have a major trend of different direction it will take time for that infrastructure to catch up.
So we see diesel as being particularly suitable for a sports activity vehicle, particularly suitable in our 3 Series Sedan. It is terrific torque and performance but for the States, the gasoline MINI is ideally small.
ABG: Perhaps in the future over the next few years, as you watch the acceptance of some of the new diesels coming from BMW and other manufacturers and perhaps as diesel supplies expand, than getting to biodiesel. What about biodiesel by the way? Will the diesels coming from BMW this year be biodiesel capable?
TP: That is not something that I can answer because I have not given much thought for that. Is it biodiesel compatible? Technically 10 percent biodiesel compatible but we do not shout about it.
BMW rep: We prefer actually blending rather than switching over to a complete biodiesel infrastructure within the car. We think that volume wise, it makes more sense, also with conventional petrol by the way when you talk about biofuels in general. We think 5 percent to 10 percent blending is much more sensible than doing the E85 or doing the 100 percent biodiesel. We also have difficulties to get really certified biodiesel in our country.
ABG: Right, a B20 standard is in progress right now in the U.S.
BMW rep: We still have not achieved it and we also have sometimes issues in terms of emission and the particulate trap. From our standpoint at least, we would rather go for blending. We think that is a sensible solution and for the environment it is the same. If you go blending 5 percent or 10 percent and a cheaper, broader kind of consumer base and it is the same as if we have a small niche kind of application with 100 percent.
ABG: Perhaps once the B20 standard has been validated in the United States, at that point, would BMW perhaps say that yes B20 is acceptable?
BMW rep: We will certainly look into that stuff because we understand what the progress is in the area and at least we figure out perspectives and then try to apply it to our product. But again, as long as the blending itself is not yet done on a large market scale, we think that is probably the best way to do it right now without any technical issues in our part.
ABG: All right, great. Thank you.
TP: I mean it is very interesting. I think that whole bio issue is as much about understanding what it really costs to produce it and how much land do you really need to produce it. It works very well in Brazil for example, but they have sugarcane and they have land and they have space and they have a different orientation. It simply does not work in other parts of the world.
ABG: I think at least some auto makers are looking at it as getting flex-fuel or biodiesel capable vehicles into the market today because of the turnover time for the fleet. Down the road for five or ten years as we are getting into next generation biofuels like cellulosic ethanol that those vehicles will be capable of running on those fuels at that point because most of them will still be on the road at that time.
TP: Exactly, I think it is a step-by-step process. And actually we are all learning. It is a really exciting time. We are all learning what we are talking about diesel, biodiesel, sophisticated gasoline engines whether you are talking about hydrogen, automatic stops, all of those things offer a great learning process. I have to say I do not think there has been a time for maybe since the beginning when it was so interesting in the context of motor power.
ABG: Things are changing very quickly these days.
TP: I always say at the turn of the 20th century if you had three guys, one had a steam engine, one had electric car and the other one had a car which is powered by a machine with internal explosion, the last one that you would have backed is the one that won out. What do we know now? How do we know now? We have no idea.
ABG: Thank you very much for time, a pleasure to meet you.