Is Petrol *Ban* a Massive Mistake? And how has BMW engineered around it?

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0:43Even though perception is always important for humans, if we look at the facts, there's no reason why sustainability should no longer be a top priority because the state of the planet has never been worse than it is now. And so it still needs to be the number one priority. Hello, and welcome to another episode of the Everything Electric podcast, where today I'm catching up with Glenn Schmidt, VP of Global Sustainability at BMW. And in our conversation, we spoke a lot about how sustainability is the key to resilience within an organization and should be the thing that is connecting us in an otherwise divided world.

1:23However, many of you listening will be thinking, hmm, the same BMW that are also exploring a multi-pathway or a multi-powertrain pathway? Yes, the very same. And we do explore that as well, thinking about how on earth as an organisation like BMW navigate the path towards sustainability and electrification whilst also sustaining its current workforce. Hmm, very controversial indeed. and hopefully a good source of debate in the comments. I have absolutely no doubt. So all of that to come, but first, a very quick advert break. Our three free YouTube channels on EVs and clean energy tech are funded by our fun-packed Test Drive-tastic events in the North, West and Greater London, and our events Down Under.

2:11Next up, Everything Electric heads to Cheltenham, and then Twickenham. All events include a B2B EV day and commercial vehicles too. Glenn, thank you so much for joining us on the podcast today. I guess important question first. Could you just describe who you are and what you actually do? Yeah, thank you very much for the opportunity. Great to have this conversation. My name is Glenn Schmidt. I'm originally from Vancouver, Canada. So I was born and raised on the West Coast, beautiful West Coast of Canada. And I moved to Germany 30 years ago. and I've been working in the German automotive industry since then.

2:47And I've been with BMW now for 21 years. Time really flies and I had a lot of interesting jobs. My last job, I was responsible for external and government affairs. And in my new role, which I've had for about a year now, I'm responsible for sustainability within the BMW group. But of course, sustainability is everybody's responsibility, but I try to coordinate things and my team kind of ties together all the strategic elements that you need for sustainability. Well, I mean, there are a couple of things there. Firstly, Vancouver is maybe my favourite place in the entire world. We've been looking after a lot of episodes there over the past few years.

3:24And I just, yeah, it's incredible. The other thing I just want to mention is that whilst 21 years, I'm sure there's many people listening who think that that's a long time. That's probably kind of slightly middle of the road when it comes to OEM terms. And I suspect you have colleagues who've been there for 30, 30 plus years. That's true. I mean, whenever I'm in meetings with BMW colleagues and we do this round of introduction and often I will kick off and I'll say, you know, I've been with BMW for 21 years, but it doesn't take very long to have somebody in the meeting who says, well, I can top that.

3:57I've been with BMW for 25 or for 30 years as well. Yeah, I like to always coin it this way. You know, once you join BMW, you don't need to leave BMW. And it's a fantastic company and it offers a lot of different exciting opportunities. And if you want to have a different job, then you don't really need to be leaving BMW because you can go into international roles, you can go into strategic roles, you can do operative roles in terms of production. There is almost really no, let's say, professional trade that you can't find within an OEM like this. I think this is one of the things that makes the automotive industry so exciting and so challenging is it's an integrator.

4:38There are just so many different industries that kind of come together when it comes to building or designing, building and selling a vehicle. And it's a global industry as well. So there's an international side to that. And yeah, BMW really has all of these facets. Well, I think you put it absolutely perfectly there that the breadth of the automotive industry is so interesting because it's one of the only industries that is absolutely incredibly complicated but can also span or is impacted by geopolitics by just everything that's going on in the world and at the same time is a consumer good and has to be a product that people really fall in love with and people can immediately understand what different products are what they say about people what people aspire to have etc etc so it's it's a hugely exciting industry and you've obviously seen a breadth of different roles within it your most recent role of course being sustainability and that is what we want to spend a big chunk of the rest of the discussion talking about so sustainability I mean it's incredibly broad term it means all manner of things what does it specifically mean at BMW and I suppose in your sort of performance review if you would have one what's your kind of KPI or your objective well I think one of the fundamental points of sustainability has been and still is decarbonizing, right?

6:04So offering solutions to combat global warming, that's still very much at the core of what we do. And BMW's conviction there is you need to be taking a holistic approach. So when it comes to the vehicle, don't just look at the tailpipe, Don't just look at the product itself, but also take a bolder and take a broader view of things. Where is the vehicle coming from? What are the raw materials that you need? How were they extracted and produced? How is the vehicle being produced? And then later on, of course, how is the vehicle being used? So that holistic approach, I think, is a very, very important element as well.

6:49um then of course there's a second dimension of sustainability and that's when you think of esg it's the s right it's the social element as well which i think is turning into also the socio-economic element as well um a bmw group employs over 150 000 people uh in many nations around the world um how is the bmw group contributing to society um what are what are concrete activities. So that's one element as well. And then there's, of course, the G, right, which stands for governance. How are you governing this? What targets do you have for the organization? And how do you coordinate a sustainability community at a global level within such a complex corporation?

7:41So sustainability, in its narrow sense, is the environmental aspect, but in its broader sense, is much larger. It's how we as a global corporation with our suppliers, with our employees, and with all of our partners around the world, how we engage. And I think one way of looking at it that really kind of captures things quite nicely, and at first glance, it may seem like a bit of a contradiction, is sustainability and And competitiveness, these aren't contradictions, but these are two sides of the same coin, as you would say, two sides of the same equation. If a company is sustainable in terms of the way it operates, it's also competitive as well.

8:28I think it's fair to say that sustainability is coming under a certain degree of pressure in a period. and you referred to this as well, Imogen, where the world is turning geopolitical, inward looking, more regional, where existing business models or business models that have been successful for many decades are coming under strain, where it would be easy to say, well, we need to be focusing on other things, competitiveness, let's put sustainability in the backseat for a while. I think that's the true challenge. And also the conviction to say, wait a second, sustainability, if you're doing it correctly, easier said than done, of course.

9:08But sustainability is a competitive value. It's something that should be not just added onto your business model, but that should be ingrained in your business model. And it's always easy to be in podcasts like this or to be on the stage and to talk about all the shiny and glossy things about sustainability. It's a lot of hard work. It's also sometimes resistance within the organization. but at the end BMW has often been able to find good solutions that are sustainable at their core that prove to also be successful in the market. Well there are so many things there but I just guess I just want to pick up on that fact that like sustainability can be something that's deeply competitive and can make products infinitely better and really when we talk about sustainability in those terms, what we're actually talking about is resilience.

9:58And resilience feels like a slightly more palatable world in this climate today than sustainability, which I think gets a lot of people's backs up. They tend to associate it with this sort of slightly polarized narrative that's playing out, when actually we're just talking about making sure that businesses can survive in a really resilient and healthy kind of way. I suppose, okay, so there's a couple of things. here we've got how the products are actually sourced manufactured used and then recycled at the end of their life we've also got some aspects of sort of building that resilience what does the fabric of an organization look like and then governance but let's start with the vehicles themselves because we know what many people are extremely excited about the bmw ix3 the new bmw ix3 for a multitude of reasons not least the fact that you know it's got 500 miles range It looks fantastic.

10:55The tech is amazing, et cetera, et cetera. But there are many, many things that I'm sure as an organization, you're extremely proud of from a sustainability perspective. And I wonder if you could share some of those. Yeah, thank you. I mean, you've, it sounds like you share our excitement as well. And the BMW iX3, it's the first vehicle of what we refer to as the Neue Classe. and the Neue Klasse is a vehicle architecture but it's more than just an architecture it's also a whole suite of technologies that we've introduced with the iX3 that we're also rolling out and if you start I guess with the positioning of the Neue Klasse there were sort of three elements in the early strategic phase but they also played a really big role also in shaping how the vehicle and the architecture is positioned.

11:48One of them is electric. So it's about electric driving. The second point is digital connectivity, new levels of connectivity. And the third element is circularity, sustainability. So this new vehicle architecture, this whole new generation of technologies is also positioned around sustainability. And it's the first time where the BMW group has from the very first moment from the that that first sheet of white paper that designing and developing a vehicle from scratch has baked in sustainability and into the concept as well and there are a number of number of highlights I think that you know we can touch on briefly one of the things and this is something that the organization is very proud of is the BMW iX3 has a secondary raw material quota of one-third.

12:41Now that means one-third of the vehicle is secondary and that adds up to over 700 kilograms. Of course, easy math to then calculate what the weight is of the vehicle in total, but electric vehicles are heavy. And I think this is an important point. Often we say to our customers, wait a second, just because is one third secondary doesn't mean that it's it's used you're getting a very modern very sleek vehicle um that's an important point the other point that we also like to stress is comparing the vehicle also to other drivetrain technologies and taking that holistic approach and that holistic approach was really how the vehicle was was designed so how do you design the vehicle so that you can recycle it easily?

13:31How do you incorporate the suppliers? 70 % of the value of a vehicle is coming from suppliers. So this is a route that you can't go on your own. You need to be mobilizing and working together with your supplier base. Then also thinking about how the vehicle itself is being produced in the plant. How can you reduce CO2 and make that sustainable? And then all the way down to the use phase of the vehicle as well. How is it getting used? So taking that very holistic approach. And we always say every gram of CO2 counts. Every ton of CO2 that you don't emit is a good ton of CO2 that's not being emitted.

14:12So at first glance, you would always say, well, an electric vehicle, because it's zero emission and tailpipe, it's sustainable. But you really need to take a look at the entire life cycle and And what we've done with the BMW iX3 is calculated the overall product CO2 footprint of the vehicle and compared it to a conventional BMW iX3. And here you have to be, of course, transparent because an internal combustion engine vehicle emits less CO2 during the supply chain phase, during the production, than a battery electric vehicle. But we've taken a lot of innovation into the production and supply chain phase so that we've been able to reduce it by about 35 % compared to not doing any activities in sustainable innovation.

15:03And then if you look at the entire product span and usage phase of the vehicle, and we calculate 200 ,000 kilometers overall, the BMW iX3 has a CO2, if you will, break even point compared to the BMW i, the BMW X3 conventional vehicle after one year. So after one year of driving the BMW iX3, you are emitting less CO2 than the conventional counterpart. And that transparency is something that a lot of customers appreciate. Certainly the fleet customers appreciate this as well, because fleet customers and over 50 % of our customers in Europe are in some form fleet customers purchasing vehicles as company cars or for larger fleets or for rental, are managing CO2 of their fleets.

15:51So that level of transparency when it comes to emissions, the data driven approach that we have, and at the end of the day, arguing it and making that point to our customers and to stakeholders is something that makes this concept quite distinct and unique because we've never taken it to this extent. Oh, my goodness. I have so many questions. I'm like, OK, which thread shall we put on? um well i guess my first question perhaps is that with a third of the materials being recycled presumably that also can change what your supply chain looks like from a regulatory perspective so for example if those materials have been recycled within germany then that's a domestic sourcing of that material so how much has anticipation of future regulations and existing regulations shaped the necessity to also do that above and beyond doing the right thing from a sustainability perspective?

16:55I think that that question, because a vehicle is very complex, very complicated, and consists of a lot of different materials and material groups, it's difficult to answer that on an overall vehicle level. I think we need to be making that distinction. So let's take aluminum, for example. The BMW iX3 uses aluminum rims. They're made of 70 % secondary material, secondary aluminum. There you can really reduce the CO2 immensely. And the market for secondary aluminum is quite established, right? Then there are other product groups, like for example, the plastics. And we have that. It's an interesting play on words is called the frunk.

17:41So it's the front trunk, the frunk of the BMW iX3, which is used as a storage compartment for the charging cable. There we're able to reach a 30 % secondary material quota using recycled ocean plastic. This is, just to make it clear to all the listeners, this is not plastic that we're retrieving from the ocean, but this is plastic that we're purchasing from fissures around the world to prevent it from going into the ocean. They were able to reach 30 % for the frunk, which is the highest that you can possibly do because with plastic, you have a lot of degradation, right? And you can't maintain the level of quality that you need for the automotive grade components that you're using.

18:26And when it comes to the battery, there were around 50 % secondary raw material quota. when it comes to the lithium, the cobalt, as well as the nickel as well. And we're trying to close the loops in Europe, but we're at the start of battery electric vehicles, right? So there still is mining to extract these minerals. But the strategic intent is to close the loops for a number of reasons, in terms of resilience, in terms of protecting the environment, reducing CO2. So a complicated answer to a very simple question that you asked Imogen. And then the other question that you have, you know, what is it?

19:10It's sort of chicken egg. Is it the strategy or is it fulfilling regulations, right? And, you know, in an ideal world, you would say business is coming up with a business case and it's inherently sustainable. And then you would regulate where you need to be regulating. in an imperfect world, and we've had this, unfortunately, in Europe for a long time, is you're trying to regulate the future that you want to do it, and you're relying more on bans than you are in impiring and creating the supply chains, and then you're creating unnecessary roadblocks. So the diplomatic answer to your question, Imogen, is it's a mix of both, right?

19:50But it is, of course, and if I look at circularity, it's thinking of circularity in broader terms, not just to reduce CO2, but also to have resilient, robust supply chains. And that space is regulated and will continue to be regulated in the future. So that, of course, you're prepared for that regulation when it comes. so i've got two questions which i suppose are slightly more existential questions and they won't be unique to to bmw i think every single car company is having the exact same debate but if we look at something like the bm the new bmw ix3 it's an incredible machine as we've said the stats are extraordinary 800 volt architecture 500 miles range etc etc and i know that our audience will be thinking two things on the one hand they'll be thinking fantastic 800 volt architecture means that you've got thinner cables less cooling requirement that's a lighter vehicle it's a more efficient vehicle at the same time 500 miles of range is lovely but it it's a big battery and that will have a sort of bigger environmental footprint ultimately you need to be able to sell these vehicles and to have those performance stats to help sell them as well and then equally on the software side these software defined vehicles as we know enable sort of those ongoing evolution updates can happen over the air in theory that vehicle can continue to improve for a long time over its lifetime but equally car brands have to drive more sales on an ongoing basis and have to kind of plan redundancy into it in order to kind of get people to move on to the next vehicle so the sort of I guess the existential question is how on earth to you as organizations balance the need to be sustainable, extend the life of these products, make them more efficient, but also serve customers and drive sales and continue to drive and build sales as well?

21:51Well, the best way to guarantee current sales is to build in a superior product, right at the end of the day um and i was sort of getting the feeling listening to you that maybe between the lines you were saying well is does a car company like bmw at a global level sort of maybe build in some inherent faults into the vehicle so that they have a limited lifespan so that you're ensuring that uh sales will be coming um down the road and i think that's that's not quite the case right i would soften that slightly just to say that like you know you've got to as an organization i would never suggest that be like oh we'll put this little fault in but that you know you're thinking about a customer and thinking about the lifetime of that customer thinking like okay they will probably own this vehicle for x amount of time what happens to keep them in the brand and like the you know the purest sustainability person would be like no we want them to own that one vehicle for a thousand years and never buy another vehicle again but like that's not the reality of running a business.

22:57So that's the sort of slightly softer way to sort of phrase that question, maybe. Right, right. Yeah. And I think it's, you know, at the end, it's about coming up with a proposition for the customer that really checks all of the boxes, right? And design and performance, these are still the number one purchase reasons for a vehicle. but we believe in you know in a world where you need more differentiation that sustainability and sustainability virtues virtues can also play an important role and I think you also have to realize that you have not one owner of a vehicle in most cases you know there are many customers that fall in love with their BMWs and say well I will keep my BMW for decades and wait for it to become a classic vehicle on a and in some cases that's also a good investment because as classic vehicles later on the value of the vehicle even increases but typically you will have a customer that will own the vehicle for a couple of years or at least the vehicle and then will be passed on as a used vehicle to another vehicle and then oftentimes these vehicles then move also to other markets as well where they are used.

24:15So you need to be thinking about that entire time. And sustainability is also about durability, right? So if you have a durable vehicle that fulfills very, very high quality standards, then you are ensuring happy customers and these customers that are pleased with the vehicle quality, then we'll come back and be repeat owners as well. And what we've done with our vehicles, and especially with the BMW iX3 as the first vehicle in the neue classe, is thinking also from cradle to grave. Because thinking for the longest time in industry has been very linear, right? You're extracting material, you're using it, and then you're tossing it away.

25:00But how do you actually close the loop so that you design a vehicle so that you can take it apart, that you have a different view on materials, that it's not at the end of life when the vehicle's life finally ends after many decades, but it's not just scrap, right? But it's a source of raw materials as well. And if we use the example of a battery electric vehicle, I'm exaggerating a little bit, but just to make it a visualization, you could almost think of these vehicles as mines on wheels, right? You have the lithium, you have the cobalt, the nickel, the metal, the aluminum, the plastics to a lesser degree that can all be used again and being put into a closed loop for the next generation of vehicles.

25:47And there's no reason why you shouldn't do that going forward. And that just ticks so many different boxes as well. It's reducing CO2. It's reducing our independence on other geopolitical regions. Unfortunately, we're in a world where you have more regionalization moving forward. And if you do it correctly, it's also a good business model as well. It makes a lot of economic sense. yeah and i guess ultimately enables that sort of or broader ownership of the supply chain as well like if that that model is taken further into the future um what so a few weeks ago i was i was okay i've got one more question before i come to that question um but a few weeks ago i listened to your colleague at the financial times future of the car event and he was talking about how actually AI enables us to, well, enables BMW to talk to all sorts of different customers and actually to really talk in a way that that customer wants to be spoken to.

26:49So I'm curious to know for which sort of people is sustainability a key concern or a key criteria when exploring their next vehicle purchase?

27:04So there are two ways of looking at this. There's one way of looking at it is to say the customers will tend to look at things that just pertain to them, the design, the price for value, the performance in the vehicle. And some customers, the sustainability will be really important to them. But that's kind of a smaller group that's not as relevant. And I think our thinking at BMW is the vehicle needs to look good. It needs to have an incredible functionality. You need to get the customer enthusiastic and proud to own. And then on top of that, by the way, this vehicle is very sustainable. So let's use the example of the aluminum rim.

27:57It's perfect. It's perfect. It has a beautiful design, but it's 70 % secondary. Look at the BMW iX3. Recently received a number of awards for 2026. It's the world car of the year. It is the world electric car of the year. It has incredible driving characteristics with a super brain that we refer to as the heart of joy. because it proves that this reinterpretation of driving is exhilarating and fun, and you're doing it in an electric form, and the vehicle is efficient. And if you're driving an electric vehicle, total cost of ownership, you can also be saving money compared to conventional alternatives.

28:43And all these things, that sustainability at second glance, all of these things get customers excited. it. And I think that's ultimately what's often missed in these debates. I mean, we always talk about electric mobility from the regulatory perspective and promoting it with a ban or EV quotas or a lot of indirect regulation as well, kind of forcing the consumer to go in that direction. But I think the true, and ultimately you can't force consumers, right? They need to be doing this out of conviction. Otherwise they will continue driving their vehicles. and at the end it's the proposition it's the gribing it's what is the impact for your wallet what is the emotion that you have and I think this is a little bit underrated with electric vehicles and you know once you go electric you're not very likely to go back because it's such an exhilarating exhilarating feeling so that's the emotional level of things and I think and I touched on this very briefly you I mean fleet customers these are you shouldn't be underrated as well business customers because they have co2 targets for their fleets sustainability policies so you're a large corporation you will have a sustainability strategy how can you support your sustainability strategy with the fleet that you're driving as well and having a sustainable Fleet is something that's also important as well.

30:12So this is one next to the private consumer. Also, the fleet customer, I think, is an important lever also to kind of leverage electric mobility and to lift it to the next level.

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31:03so again at the the future of the car event a theme that really emerged was the desire for certain european car brands to pursue a multi-energy strategy something which i know that bmw is keen to do and really when you kind of distill that that down it's saying well customers are on different trajectories which you have to accommodate car brands have to function as global organizations and regionally there's different things going on and also these organizations are huge employers and hugely responsible for driving livelihoods within within a country and when we talk about ESG and we talk about sustainability yes we're talking about emissions, but you can't just ignore this major, major workforce as well, which is a bit of a conflict that on the one hand, pursuing decarbonisation, pursuing electric vehicles, but also having to transition to a workforce in the right kind of way.

32:03And you sort of alluded to earlier that some of the regulations, some of the sort of policies that may be in place might not be the most favorable thing for BMW and others like you. And I wonder if we were to put you in charge of both BMW and let's say Europe, a big role, what do you think seems like the really logical response that arrives at a conclusion that does the maximum amount of good in the world? well there's a bit of a jump there between the bmw responsibility and then the responsibility for europe exactly and it's a good question uh and uh i'll give it a shot i think we should you know we not be coming from let's say mandating the future the way we want to have it what we should be mandating are the targets you know and the overarching target of course is to reduce CO2, to be compliant with the Paris Climate Agreement, and to make sure that we have this trajectory to 2050 to be net zero, right?

33:10And the BMW Group has embraced this target of becoming net zero by 2050. And this is also the target of the European Union. So you can't change that, right? That's the pathway that you're on. The question is, however, how do you get there? and if you're taking the approach when it comes to drivetrain technologies and co2 flip regulation of banning one specific technology and forcing the other technology then you're creating a a constraint you know often i hear the argument well you need to have planning certainty right and that would give planning certainty to the industry to know that in 2035 you will have no new internal combustion engines being registered but how can or how could i if i was responsible for the European Union, say that on the 31st of December, 2034, that's the day where you sell your final internal combustion engine vehicle and segue into another technology.