BMW: Slow and Steady is the Way to Green the Car

It is a truth universally acknowledged that gasoline-electric hybrids and battery-powered electric vehicles are the best path to achieve better gas mileage. BMW (BAMXY.PK) doesn't see it that way.

BMW's priority is to adopt first the gas-saving technologies that offer the most bang for the buck, said Tom Baloga, BMW vice president, engineering. And price matters, as my BNET Auto colleague Jim Motavalli recently noted. "People ask us, why are we late to the party with hybrids? Where are (U.S.) diesels, when you have great diesels in Europe?" Baloga said, in a presentation at the International Motor Press Association in New York.

In fact, the German automaker is introducing hybrids and EVs, and has started offering diesel power in the United States. One BMW concept car gets up to 62.5 mpg.

But those models come as Toyota (TM) is already on its third-generation Toyota Prius, and a couple of model years after rival Mercedes-Benz (DAI) reintroduced clean-burning, modern diesels to the U.S. It isn't that BMW isn't interested in better gas mileage, Baloga said -- on the contrary. "Believe me," he said. "Future requirements on CO2 are very, very tough. We have to look for every tenth of (CO2 emissions) reduction we can get, anywhere."

(U.S. regulations for Corporate Average Fuel Economy dictate miles per gallon. The European Community regulates carbon-dioxide emissions, but it amounts to much the same thing.)

Rather, Baloga said, BMW thinks incremental improvements in fuel economy spread over a large vehicle population, offer the greatest benefit for the least cost to the consumer. Baloga showed a slide (pictured) that illustrates BMW's view of the maximum cost-benefits to fuel economy for a laundry list of technologies.

At the high end are a shift-point indicator for manual transmissions, to cue the driver when to shift; better aerodynamics and low-friction tires; optimized transmissions that allow the engine to run at lower rpms to save fuel. At the lowest end in terms of cost-benefits were diesel, hybrids and electric vehicles.

BMW's strategy makes a virtue out of necessity: What saves the consumer money also saves BMW money. Hybrids and EVs are expensive to buy because they are expensive to build.

Toyota spent a ton of money developing the Prius. BMW could have put its chips on hybrids earlier, too, but either couldn't or wouldn't spend the money.