Veteran automobile companies P.S.A. Peugeot Citroën and the B.M.W. Group plan to enter the fast-growing electric vehicle market through a new joint venture that will develop components for hybrid vehicles.
The 50-50 joint venture, dubbed B.M.W. Peugeot Citroën Electrification, will develop and produce parts for hybrid vehicles such as battery packs, electric machines, generators, power electronics and electric-vehicle chargers. It will also configure software needed to run hybrid vehicle systems.
The two companies finalized the decision on Tuesday with a signing of the agreement by Norbert Reithofer, chairman of the Board of Management of B.M.W. AG, and Philippe Varin, chairman of the Managing Board of P.S.A. Peugeot Citroën.
This signing follows a Memorandum of Understanding between the two companies designed to expand their existing cooperation to develop hybrid systems.
“With this joint venture, we are sure to develop and expand our expertise and to build a European leader in the field of automotive hybrid innovation,” said Philippe Varin, chairman of the managing board of P.S.A, Peugeot Citroën.
The company will initially design standard hybrid components for the electrification of vehicles under the B.M.W. and Peugeot brand. It says that standardization will help Europe’s vehicle industry shift to cleaner hybrid or electric drive technologies faster.
To ensure a wide reach, the company plans to outsource development work and aims to disperse its technology through two avenues. Firstly, it would integrate component supply companies by outsourcing the development work. Secondly, it would sell hybrid components to other companies aside from its two shareholders.
“This cooperative venture will enable us to achieve significant economies of scale in the field of electrification. It also represents an important step on the road to sustainable mobility,” said Mr. Reithofer.
“With this joint venture, we are sure to develop and expand our expertise and to build a European leader in the field of automotive hybrid innovation,” added Mr. Varin.
This maneuver by B.M.W. falls in line with the company’s projections indicating that sales of gasoline and diesel-powered cars will drop in 2020. Thus, B.M.W. engineers believe a shift to battery-powered vehicles is necessary for the automobile giant’s long-term survival.
In July last year, B.M.W. undid the wraps off its Megacity vehicle, a concept electric car which will incorporate a lightweight design to improve efficiency. The vehicle is expected to be the first volume-produced vehicle with a passenger cell made from carbon.
The German vehicle company has kept the price tag and appearance of the new vehicle but reports say the Megacity vehicle will be for the upper-class market with the cost exceeding that of a comparable gasoline-powered vehicle.
