Bayerische Motoren Werke Aktiengesellschaft (BMW) Earnings Call Transcript & Summary

Ladies and gentlemen, a warm welcome to the IAA Mobility. It's a pleasure that so many of you have joined us virtually. First and foremost, an obligatory corona appeal for you, our guests, here in Munich. Please observe all necessary hygiene measures. Each of us can do our part to keep us healthy. We are very pleased that the IAA Mobility is taking place here in Munich right by the headquarters of the BMW Group. Join us and discover what moves us. Reimagine today. Thank you. [Presentation]

Ladies and gentlemen's, the BMW i Vision Circular is designed from the outset to meet the principles of a circular economy. The overall impression is one of clarity and focus with a sleek modern exterior and a surprisingly warm and luxurious interior. The profile is a clear one box design with strong shoulders and a wide stance, compact and energetic at the same time. In the creation of this design vision, we had to rethink every aspect of design, engineering and disassembly. Then we look to reduce wherever we could. The front-end design is a strong symbol for this approach. We have significantly reduced complexity, no chrome, no kidney frame, no decorative elements. Even the BMW logo is etched into the surface. The headlights and the kidney grill merged into a single unmistakable double icon, that means that our brand identity is now expressed through light and digital elements in the exterior. The body itself is made of recycled aluminum. It is not painted. The surface is anodized in bronze. The recycled steel in the rear is treated with different temperatures to create this unique look. So this vision is packed with new ideas that combines sustainability with a new and inspiring aesthetic, not only in the exterior, also in the interior. We have created the BMW i Vision Circular on a minimal footprint yet at the same time, offering a spacious and luxurious interior. All services are made of recycled materials with a modern touch, high value and an aesthetic that tells a story. A highlight in the interior is the floating dashboard, an example of achieving more with less. And with its lighting effects, it shows the intelligence of this vision and is a piece of art in and of itself. But at the same time, it consists of very few materials. And to reduce even further, all necessary information is shown on the windscreen. Every aspect of this vision has been designed for easy disassembly and separation of materials. In order to achieve this, most parts are mounted with 1 single but beautiful fastener. Developing fully circular products is challenging and will require quite a lot of research. With the BMW i Vision Circular and the Circular Lab, we have now started this exciting journey. And the ideas and approaches we develop here will find their way into our production vehicles in the next few years. Alongside electrification, circular design is now becoming another cornerstone of the BMW brand. Thank you very much.

Ladies and gentlemen, the BMW i Vision Circular provides a glimpse of our circular future. It shows our mindset, our long-term objective and how bold our thinking really is. Just take our secondary first approach. We plan to use a lot more secondary materials in our efforts to protect the environment. It means we will need fewer primary resources, which will also allow us to be more economically independent. Our motto is reduce now. We're doing our part making a difference today, tomorrow and far beyond that with a real impact in the places where emissions occur in ways that are scientifically verifiable. And at the same time, we're also picking up the pace. We are committed to the goal of complete climate neutrality by 2050 throughout the entire value chain. We are the first German automotive manufacturer to join the business ambition for the 1.5 degrees campaign. In short, net-zero carbon emissions from 2050 onwards. A key factor in this will be our ramp-up of electromobility. The rollout of the Neue Klasse from 2025 on, will be the next major steps towards this. And it is already taking shape today. The Neue Klasse is the clear focus of our investments for the future. Our new vehicle architecture is uncompromisingly electric with an entirely new IT and software architecture, BEV-only. Our goal is to have 10 million fully electric vehicles on the roads within the next 10 years. By 2030, every second vehicle that rolls off our assembly lines worldwide will be fully electric. And from that point on, MINI will also be electric only. By 2030, we will reduce our CO2 emissions from our global vehicle fleet during the use phase by half. And it means we will also meet the EU targets for 2030. And over the full life cycle, this adds up to 40% less CO2 per vehicle. Ladies and gentlemen, those are just a few of the aspects lining our road to sustainable mobility. But at the BMW Group, it is also about the people who drive change and shape it with their ideas. [Presentation]

The colleagues you saw in this film represent all of us at the BMW Group. Sustainability and e-mobility are the focal points of all our actions. The BMW i4, in particular, shows that e-mobility has made its way deep into the heart of the BMW brand. And together with the BMW iX, it epitomizes the perfection of electric driving pleasure made by BMW, fully electric for locally emission-free mobility with a range of up to 600 kilometers, ideal for getting around town as well as between towns with short charging times and perfectly designed for the digital future. The BMW i4 and the BMW iX illustrate our capacity for innovation, our technological expertise and our right timing. Across our global production network, we continue to reduce CO2 emissions despite building more vehicles every year. And this is important because only an absolute reduction in CO2 emissions will slow climate change. We have used only green power for our global production since 2020. The immediate and measurable effect of this is that CO2 emissions have already decreased by 1 quarter. And from 2021 on, all our production sites worldwide will be net carbon neutral. At this time, we are still using corresponding certificates for this, but our motto is reduction before offsets. We, therefore, plan to reduce our production carbon footprint by another 80% by 2030. Ladies and gentlemen, carbon climate change and managing resources is a responsibility for all of us. And we are doing our part to limit global warming to 1.5 degrees and paving the way for circular closed-loop models. Premium needs responsibility, and that is what BMW stands for. We have a clear vision of what the future will look like, which technologies we will use to achieve it and how we will finance it. To get into more detail on the last point, I would now like to hand over to Nicolas. I'm looking forward to answering your questions later. Thank you very much.

Ladies and gentlemen, great to see at least some of you in person again. As Oliver has just explained, sustainability is a vital success factor for us. All our investments and model decisions consider carbon footprint as a key aspect. At the same time, you know our policy. We don't develop products without a strong business case. Our capacity for innovation is unbridled. Well over half our total capital expenditure and development spending in the next 7 years goes into future technologies. This specifically includes additional all-electric derivatives, strategic modular kits for electromobility and autonomous driving as well as topics relating to digitalization. We invest in a targeted and focused manner following a clear strategic road map, independent of short-term market fluctuations and trends. BMW models continue to be in high demand. In the first half of the year, we gained market share worldwide. We are leading the segment in all major sales regions. Our business development has been especially strong in China. Ladies and gentlemen, over the course of the year, we have successfully managed to further improve contribution margins. In 2021, we will continue our trend from 2020 with better pricing in all major sales regions. This will be reflected in our bottom line as well despite an overall lower-than-expected volume due to the semiconductor shortage. From today's perspective, we are forecasting an EBIT margin in the Automotive segment at the upper end of our guidance corridor of 7% to 9% for the full year. Improved margins throughout global markets are also strengthening our cash position, supported by lower inventories. We therefore remain very confident about our free cash flow target of more than EUR 5.8 billion for the full year. The current development shows just how attractive and desirable our products really are. In terms of technology, we are clearly ahead of the competition, especially with a new operating system aid and the new iDrive. Media reports on the i4 and the iX continue to confirm this. Several thousand prospective customers have already placed binding preorders for the iX. We are already filling the pipeline for 2022. And at the same time, we have made the customer experience even simpler and more enjoyable, for example, with model recommendations and pre configurations. There are 3 preconfigured interior roles for the BMW iX and 3 types of variants. No market-specific drivetrain applications are needed for battery electric vehicles, which again lowers the number of variants. This significant reduction of complexity is greatly appreciated by customers, and it will lead to a better equipped basic vehicle. We are thus reducing costs in both vehicle development and production. Ladies and gentlemen, from development to production, to sales, we are continuously leveraging efficiencies using all opportunities, current technologies has to offer. Process mining helps to analyze and optimize our internal processes. We are using artificial intelligence to improve our pricing structure. Granular analysis and automated evaluation of sales data has greatly advanced our efforts towards systematic data-driven performance steering. These measures enable us to achieve maximum results with a slightly smaller workforce. After reducing our head count in 2020, we aim to pursue this past further in 2021, while continuing to hire qualified personnel to manage the transformation of our business. Profits of every specific model variant in every market are monitored on an ongoing basis and not just for our future portfolio. We have already achieved significant results for our current production models in this way. Ladies and gentlemen, developing the future with a clear focus on profitability and optimizing our ongoing business. That is our recipe for success. Now I look forward to answering your questions. Thank you.

Well, thank you very much for this inspiring show and the speeches. It is my pleasure now to kick off the Q&A that we have here for the next 30 minutes with Oliver Zipse and Nicolas Peter. After this, in the room here, we'll have time for some get together where you can also continue the dialogue also with other experts, senior experts here from BMW. So for those on the line, I'm really sorry, but for technical reasons, we can only take questions in the room. So let's get straight into it. If you have a question, please, if I could ask you to state your name and the company. Please, Arndt.

Thank you, Birgit, and thanks for the presentation. Arndt Ellinghorst from Bernstein. Oliver, when you look out for the next 5 to 10 years, what do you think will be the key technology to differentiate the premium business model? We hear a lot about obviously, e-mobility, Volkswagen is talking a lot about different mobility services. What do you think will be the key driver and how will BMW excel?

Well, first of all, I believe the mobility industry overall will grow. And the question is, do you participate in that growth or do you stagnate? As you see in our first 6 months result, we are growing and gaining market share. And that is a result not only to the very good performance during the chip crisis that also has to play with our product strategy to be able to play in different fields. But now as we said today, electromobility is in percentage from developing the fastest. It has the largest impact on CO2 reduction by far. And if I look into the next 10 years, and that is your question, electromobility, of course, will be a dominant force in driving profitability, in driving market share increases and also in customer satisfaction. At the same time, we will see different development path and velocities in the world. I think Europe, especially the northern and western part of Europe, will accelerate very quickly, specifically in the premium segment. And we will be right in it. We will be right in the growth which is actually only starting today. The worldwide market share of EVs is about 7% to 8% these days. And now the real game starts, and BMW is right there. We will have 12 best models until the end of '23. So this is a full scale up. I think the first models we have is the iX3, the MINI will be complemented now by the i4 and the iX, which will kind of leverage specific market segment, which are not covered by the competition. The lower this car is typically in the heart of BMW, a superior product, not an SUV right where BMW drivers would traditionally see that. The iX is something completely different. It's something new. And for both cars, we receive, as Nicolas said, really grand market feedback. So -- and that is only the start. We will have the i7, which is -- I can only talk about what we see when we drive the car, which will be absolutely superior. And we will continue in that path that until 2025, we will grow our market share to 25%. And then until 2030, overall on a global scale to 50% in Europe and specific areas that might also be a little more. The key to that is that this is an approach which can be faster and can be slower, and they will not influence our profitability. That's the key what we are doing here. And with the show today, I think we feel we are right in the center of the right strategy to answer the questions you have.

Good. Tim, maybe next question?

Tim Rokossa, Deutsche Bank. I have 2 questions, actually. The one follows up a little bit on what Arndt just asked. What will differentiate yourself as a premium manufacturer going forward? Is it still going to be the entire driving experience? Is it primarily design, software, the eDrive train? And then as a second question, would have been my first question, otherwise, you were, in the past, a big sponsor for technology openness. We discussed about this a couple of times. You always call it flexibility. We've heard a lot about BEVs today. Can we take from that, that BEVs are now also the future for you, 100% or do you still believe in a technology open approach?

Right. I think the differentiator of BMW is still the ultimate driving machine. But the ultimate driving machine is changing rapidly into something which has a holistic view of driving. It can be driving yourself. It can be assisted driving. And if you look at the iX, and some of you might have driven it or you will very soon be able to drive it, that is what I'm talking about. Independent of the driving mode, that is a BMW promise to this car. There will be a high technology push into assisted driving independent of what kind of levels we are talking about. We will be right there when there is a business model in there. And as you see it with the iX and also the upcoming 7 series, it will be right there. So that brand promise we always had and ever will be always fulfilled and I think with the coming car over fulfilled. So that is what BMW stands about, and that is a premium promise. And you asked me about the technology openness. Our firm conviction is, and I'm talking about the next 10 years, as a global manufacturer, you will be successful and profitable if you can grow. And as you see our firm, our first 6 months, we are growing. And that includes a massive ramp-up of electromobility, and we do that very profitable. So that is the key, I think. Electromobility will be at the heart of our strategy, but it will not -- and I'm talking about in 2030, will not extinguish any of the other drivetrains until then. I cannot tell you more about 2035, that's 2040. But let's look at the next decade, the biggest change we have inside the EV structure. And that is our message today. We are here 2021 was always our corner point year where our full lineup of electromobility will start, and that is the start with the 2 products we showed today. And I think that is from our point of view as a global manufacturer, the only way, the only way to grow. That's our message for today.

And Tim, maybe let me add to your first question. I hope that most of you or all of you can make it to our driving event in a couple of days where you will be able to experience the iX and the i4 and that will definitely confirm and underline what Oliver just said, this experience.

Okay. Patrick, I see you have the question.

Patrick Hummel, UBS. Also 2 questions, please. My first one is just on your view on the overall market going into next year. We are experiencing a phase in the industry that is supply constrained. You, I think, take a pretty optimistic view on the demand out there. So I'm just interested in terms of the conversations you're having with your suppliers, with the chip suppliers, how is 2022 going to look like? Is it going to be a double-digit percent growth year for the industry? Is premium going to outperform further? How do you think about growth in 2022, not BMW specific necessarily, but just your assessment for the industry? And the second question relates to the i4 and iX. Simply put, how many of those do you want to sell? Do you want to sell as many as possible? Do you want to sell as many as needed for CO2 compliance? I'm just asking in terms of the pricing, they come a little bit at the high end of the respective ICE vehicles. They come at a significant premium to taking the i4 to Tesla Model 3. So I'm just wondering how are you determining the target volumes for these vehicles?

To your first question, the growth of next year depends on the final figures for this year. And as we said, we had a strong first half year. And the second half will be a little bit more difficult. And I said this morning as well, we will lose, compared to our market plans, about 100,000 units this year, which is not a catastrophe, which will still, overall, have a good growth from last year. And that is the base for next year. If we look at the markets, we have a very strong market demand already this year. We could sell a lot more cars already this year. We -- I think the chip situation will last another 6 to 12 months. That's my prognosis. And then by mid '22, we should be over it because we are experiencing the next investment cycle of this industry. And all of you know, 2 years ago, we did not see the global individual mobility market run all the way up to 100 million units from market demand. Currently, this is not match due to the mentioned things. But I think the global automotive industry is in a growing market and -- for many reasons, and we want to participate in that. And again, the first 8 months of this year show we are not only growing, we gain market share from 1.5 years ago, 2.9%; I'm not talking about premium market share, I'm talking about overall, to now 3.5%. And we intend to continue on that route. And that is not, and that leads me to the next question. We do not achieve that by lowering our prices. The prices are high, the prices are stable, and we never had a better pricing discipline than we have right now. Our cost of it really was never lower. So there is not for us at least. And I can only speak for us. There's not a contradiction to we have a convincing product strategy and keeping price stability and at the same time, gain market share, which is, at the end of the day, more volume.

Patrick, those 2 models definitely deserve a price premium against our competitors, if you look at the performance and the quality of those cars.

Yes. And let me make a point here. Yes, we said there is potential in this decade for BMW to reach 3 million units. This is not a volume strategy. This is a market and brand strategy, which reflects a very strong brand push and product push we are experiencing. And that has a lot to do to be able to convincingly serve 140 markets worldwide. And as you know, the market are very different as well. So that is a result of a long-term strategy and it's not -- and I would like to really emphasize that we are not driving a volume strategy and neglecting price discipline. That's not what we're into.

Okay. Horst, do you have a question?

Yes. It's Horst Schneider from Bank of America. I've got also 2 questions, please. I mean, hooking up to this growth question, to what extent do you think still the model cycle matters? Because, I mean, you had great model launches last 2, 3 years. I know you're still going to launch more models. Of course, I'm sure you're going to say no, we don't have a weakness in the model cycle. But just comparing that to some competitors, I mean, just for natural reasons, I didn't have that many launches in the past years, and now they have more. You still think that the model cycle matters for volume growth or we are at the moment in the phase where also we have got a lot of disruption, new technology coming up where it doesn't matter anymore that much? And the second question, more for Nicolas. I mean you put up a very cautious guidance for '21. I know there was some, I don't know, some upset about that, that you're maybe too cautious. Could you maybe make a statement? What has changed as compared to the moment when you announced H1? Has anything got better or worse and what specifically?

I'll start with the first one. Well, it's a natural law in this industry that you cannot replace every model every year. So you're always depend on model cycles. And I think that's nothing new. The good thing is, whenever you introduce a new model, you are at the edge of the newest technology. And sometimes, it is better to come a little bit later to employ the newest technology, and that is happening with the iX and the i4.

Horst, Munich is, as you know, is the home of the Oktoberfest. Usually, the Oktoberfest takes place at the end of September. And while I love roller coaster at the Oktoberfest, I don't like roller coaster in the development of our guidance. And of course, after the extremely strong first half of the year, you might have said, why are they not more optimistic for one very, very simple reason. We work extremely hard to manage the semiconductor situation in the best -- definitely in the best possible way. Our teams have managed so far in particular, in the first 5, 6 months of the year, we've been hardly not impacted, we've been noting. But now we feel that we see some impact. We have some impact. And this is why we are more cautious. Am I pessimistic for the rest of the year, definitely not, but there's too much volatility in the supply processes. So for the time being, we are very confident and very -- we feel that it's extremely right to follow exactly the strategy we have communicated in early August. Otherwise, not much has changed. We stick to our guidance in terms of volume, solid growth between 5% and 10% FX and impact and raw material impact similar to what we've said plus/minus EUR 0.5 billion. So on this front in this area, very stable development. And we have seen, in particular in July and August, the EV market developing in our portfolio quite nicely.

Okay. I've seen one question back there. Gentlemen?

Kai Mueller from Barclays. My first question is really a little bit about your growth plans also in China. We've seen, of course, a lot of debate in that market is becoming more and more important for you when you consolidate your business. How do you think this premium next decade, especially in light of maybe some of the comments made by the government officials talking about equalizing the economy. Are there certain factors you are worried about potentially on that?

China is a very specific case. First of all, our brand reputation in that market is outstanding. And the brand reputation is a reflection of our experiences in the last 18 months -- 18 years we had in that market. Of course, a strong premium growth, but also a very robust relationship to all institutions in that country. That is why we are able to increase our share in our joint venture up in Shenyang from 50% to 75% in due time. So the basis, the industrial basis and the market basis and the consumer reflection is very, very strong in China. On top of that, the mobilization rate in China is still very low. We tend to forget this is a very, very big country, which is still growing. And what we saw this year is that premium is growing faster than the base segment. The base segment was in fact shrinking. And that is not only a premium thing. This is a technology thing. Premium has more technology in it. And therefore, we think there is a strong future in China, not only for strong brands but also being a technology leader there. And whether it's the EV strategy, whether it's our digital strategy, we are right in the center of the current market development and we have a strong local footprint, but we also have a very strong import market there. And fueling the whole thing also have now founded last year, a second joint venture for the MINI brand, we feel very comfortable that we can continue in the past, which we have begun many, many years ago.

Yes, please, here to the left.

My second question...

Tom Narayan, RBC. So we've seen in the past few months how a supply shock like semis can bring an industry like the autos to its knees. And I -- the begs the question of to what degree is that the canary in the coal mine with battery capacity? We've heard peers like VW and Tesla talk about the importance of owning their own captive battery capacity and how they are the only ones to have this. How would you respond to -- I mean how concerned should we be about battery capacity and shortages there being like every automaker is chasing a small group of agent suppliers for this capacity? And how important is owning your own captive battery capacity?

Right. First of all, I don't see ourselves on the knees to the chip crisis. There are some influences, but our businesses to this day still growing. So there is an effect, yes, but it's -- we're not in our knees by far not. And it does not change our business model in its cornerstones. On the battery side, we were just able this year to increase the battery capacity from 4 of our suppliers. We're not depending on 1, from 4 of our suppliers who sit in China, in Korea and in Europe. So we have a pretty good footprint all over the world, and we were able to increase the complete volume for our current product offenses from EUR 12 billion to over EUR 22 billion. So that tells us first of all, that there is market capacity in there if you are ready to invest and if you know what you want, and you're perceived as a reliable partner, which the BMW critics. And we are not in an oligopoled situation or a monopole situation, that's not where this industry. That industry, that supply industry is growing by leaps and bounds in Europe, in parts of Asia, in China, of course. And we would like to keep that competition on to select the best technologies, and it's not that we buy a standard product. We define the technology for our EVs. So at this point in time, we are absolutely sure that our approach to partner up with suppliers to have very long-term relationship is exactly the right strategy for this phase of the development. And no, we do not foresee shortages for BMW on the sell side.

Okay. So I know, Kai, you had a follow-on question or and then the front.

Yes. Just as a follow-on, it's a little bit similar on the battery side. You mentioned, of course, the iX and the i4 were later, but therefore, you could put some new technology into these vehicles. To what extent does a later launch, though impact your sourcing capabilities because there are, of course, others also ahead of you demanding these capacities? And in what way has that potentially impacted the prices you're having to pay for your battery capacity that you're sourcing?

Well, the eternal loss of economies of scale, how it's true here. When you buy more, you get lower prices. This is also true for batteries. And that is the same thing here. And while we are ramping up this massive doubling up of the capacity for the Generation 5 and all these cars, which just coming up, they're all based on the same technology. They look different to cars. But underneath, it's pretty much the same technology on the electric drivetrain. And there, we have a lot of synergies, of course. And we currently don't foresee that this is a restriction. And at the same time, we're already working on the sixth generation, which will then come up with our, Neue Klasse in a couple of years. And of course, these cars will carry us until the end of 20s. So the overall set of the stability of the markets to bring not only CATL, but also EV, Samsung and a Northvolt into the play, I think it's a very -- for us, at least, a very robust strategy.

Okay. Then was there another question here in the front? Yes, please, in the front. Sorry, I don't know your name.

Yes. Mike Raab, Kepler Chevreux. Traditionally, your strategic midterm target of an 8% to 10% auto EBIT margin had always taken center stage but as of late, at least judging it by the frequency you're mentioning it with, it seemed to have taken somewhat of a backstage position. So where do we stand on that? And would you ultimately be willing to transform midterm into a specific year, please?

The answer is very straightforward and clear. We stick first of all, to our 8% to 10% margin corridor in the Automotive segment. Despite on the investments and in particular, R&D costs, we are investing in this decade of transformation. If you look now very specifically already in this year, we guide an EBIT margin in the Automotive segment in the upper part of our corridor. Now you deduct the one-off -- the onetime effect of the release of our antitrust provision. And most likely, we will be already at the lower end of our strategic margin corridor. So number one. Number two, if you take -- in particular, moving forward, Neue Klasse, which will be launched at the midst of this decade, we fix exactly, exactly the same profit target, the same EBIT target for this BEV-only architecture as for the cars we've launched in the past. And I just gave an example why we believe that now with all the measures we implement, for example, reducing the drivetrain complexity with EVs, we will, on the other hand side, despite the add-on costs we have for EVs, we will be in a position to bridge in a very, very smart way in this decade of transformation. And whilst we talk, we continue our performance program, which we have launched 3 years ago and which is addressing all parts and all areas of the organization. If you take the year 2020 and '21, despite the fact that we have reduced our overall workforce, we have significantly increased the number of software engineers. Why? Because we believe that this particular competence is a competence which is needed in the future. So therefore, I think we are definitely in a strong position to -- does it mean that we can guarantee that every single year, we will deliver between 8% to 10%. No, of course, because it's depending we've seen this last year on many external factors. However, in on, let's say, in a regular way market environment is developing, we are confident that we will be in a position to continue to maintain our EBIT margin in the 8% to 10% area. And of course, what Oliver just mentioned the fact that we have a strong position in China. While at the same time, we have not only improved our position in China, but further improved contribution margin in particular in the U.S. that despite all the volatility in the market, residual values have significantly improved. And we are confident that this is not just a one-off effect and will revert back to previous levels in 6 or 9 months, but that we are implementing, as Oliver just said, the right measures in order also to protect from this perspective, our contribution margin per unit.

Okay. So -- thank you. I think we'll have time for one more question. If there's still a question in the room. Stephen, yes.

Stephen Reitman, Societe Generale in London. Going back to that margin guidance range, does that get rebased when you fully consolidate your Chinese JV, which we can already see would have had a substantial impact on profitability in your margin in the first half of this year, if you fully consolidating that? And secondly, could you talk about production. You are going to localize the X5 in China following on from your full consolidation of that venture. Clearly, demand for that vehicle has been much stronger than you've been able to supply. So could you give some idea about the sort of increase we could expect there? And just finally as well, you've talked about the very high demand you've seen already for the i4 and the iX. Could you comment a little bit about the order book, what it looks like in terms of new customers to BMW, people switching from ICE to EV and the like?

Stephen, maybe let's start, and you are absolutely right, the fact that we will localize the X5 in China gives us an additional profit momentum on our EBIT margin, why, because it's very, very simple. The X5 is one of the most profitable products we have in our portfolio. It's an extremely high demand in all regions of the world, including China. We will maintain the capacity in the U.S. in our plant in Spartanburg. And this means we will be able to grow this very profitable business. So another element to be confident that we are able to obtain our 8% to 10% margin corridor. We will update you probably end of the year more in detail what exactly the effects are of this increase in our JV joint venture from 50% to 75%. So this is something which is planned for the end of the year because you're absolutely right, this will have an impact on the P&L and balance sheet and liquidity and free cash flow. Of course, overall, this should be and will be a positive -- and positive impact. And your third answer was on i4 and iX, I will not disclose now very specific numbers. But just to give you -- and you know it, of course, extremely well, those 2 cars are not niche models. The segment is not a niche for BMW. This is really in the car in the essence of the BMW brand. And this is why we are very confident that with those 2 cars, we will see a strong development of sales and profitability in all 3 sales regions, so Europe, U.S. and China.

Okay. Great. So thank you very much for the great questions. Thank you, Oliver. Nicolas, for this good dialogue. We will now have here the chance to continue the discussion with the 2 of you and other senior experts here from BMW. So I hope we have a nice evening still until 9:00 p.m., and then that you continue to enjoy this event, enjoy the wonderful moments with our fascinating products. And for all of you who've joined us online, thank you very much for joining, and we also wish you a great evening. Goodbye.