BMW : Press Release Half-Year Report to 30 June 2021

Corporate Communications

Media Information

3 August 2021

Company

Bayerische

Motoren Werke

Aktiengesellschaft

Postal address

BMW AG

80788 Munich

Germany

Telephone [phone]

Internet www.bmwgroup.com

BMW Group boosts profitability and earnings in second quarter despite semiconductor shortage

• Zipse: "Great innovative strength and successful transformation"
• Group EBT at just under € 6 billion following release of provision for EU antitrust proceedings
• Earnings driven up by higher sales volume and good pricing - Automotive segment EBIT margin at 15.8%
• Free cash flow of € 4.9 billion for six-month period to 30 June
• Deliveries of electrified vehicles more than doubled (+167%)
• Second half-year likely to be affected by supply bottlenecks and high prices for raw materials

Munich. The BMW Group continued performing dynamically in the second quarter, setting new record figures for sales, earnings and net profit. Demand for the Group's premium vehicles has remained strong, with continued good pricing.

Reported figures for the second quarter improved significantly compared to one year earlier, when the BMW Group posted a loss due to the coronavirus pandemic. However, sales and earnings have also grown solidly compared with the financial year 2019.

"Our performance has benefited from strong customer demand during the first half of the year, enabling us to achieve significant growth. However, in light of a number of prevailing risks, including raw materials prices and a shortage of semiconductors, the second six-month period is likely to be more volatile for the BMW Group," said Oliver Zipse, Chairman of the Board of Management of BMW AG, in Munich on Tuesday: "Despite short-term challenges, we remain focused on the Group's long-term strategy of leveraging our great innovative strength and sustainable profitability as the basis for successfully shaping the transformation of our industry. In doing so, we are committed to finding the best technological solutions to drive forward the progress of digital connectivity and sustainable mobility."

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The BMW Group is pushing ahead with its comprehensive strategy of achieving sustainable, emission-free mobility. In line with the goals of the Paris Climate Agreement, the BMW Group's corporate strategy is fully committed to ramping up e-mobility as swiftly as possible. After the successful market launch of the BMW iX3*, the all-electric BMW i4 and iX models are set to follow in the autumn, equipped with the first powerful variants of the new e-motor range. The

BMW Group's all-electric vehicles are synonymous with pure electric driving pleasure and outstanding customer convenience. For example, the BMW iX3* achieves a range of 100 km (WLTP) after just 10 minutes of charging at an HPC charging station. The new all-electric models have generated a highly positive response in recent vehicle tests.

Further models will be presented in the near future. Over the next two years, electrification will cover nearly the entire breadth of the BMW Group's product portfolio. In the period up to 2025, the Group is set to grow its sales of all- electric vehicles by an average of more than 50% p.a., delivering around two million all-electricvehicles to customers by the middle of the decade.

The Neue Klasse is set to play a key role in this move towards low-emission, sustainable mobility. From the middle of the decade onwards, all future BMW Group models will share the core features of the new vehicle architecture, uncompromisingly designed for electric drive systems. The Neue Klasse will feature a completely redefined IT and software architecture, a powerful, newly developed generation of electric drive and battery systems and a higher level of sustainability across the entire life cycle.

Over-the-air software upgrades for 2.5 million vehicles this year

The BMW Group has been improving the connectivity of its vehicles for many years, continuously providing customers with the latest software and functionality enhancements via remote software upgrades. At the present time, more than two million BMW Group vehicles are capable of being upgraded 'over-the-air'. With its new BMW Operating System 8, now installed for the first time in the BMW iX, the

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premium manufacturer is incorporating the most powerful data processing system available to date in its products, enabling customers to order functions on demand at any time and on a flexible basis.

The BMW Group is also making progress in establishing a sustainable circular economy. In collaboration with suppliers, the Group is developing new production technologies as well as suitable sustainable substitutes and far- reaching recycling concepts. This not only applies to raw materials that are in limited supply, such as the lithium required to manufacture batteries, but also to plastics and aluminium. In the case of aluminium, one of the key materials used for vehicle production, procedures are already in place at some sites to separate this reusable resource.

The BMW Group has placed sustainability and resource conservation at the centre of its corporate strategy going forward, thereby embarking on a path significantly more ambitious than the two-degree target set for limiting global warming. In this context, the measurable and verifiable targets the BMW Group has set for the entire life cycle of its vehicles across all the three emissions categories ('Scopes 1-3') have meanwhile been validated by the Science Based Targets Initiative. By 2030, the target is to reduce the BMW Group's total global carbon footprint per vehicle by at least one third compared to 2019, which will lead to more than 200 million tonnes of carbon emissions being avoided via technological measures.

"The progress we are making towards climate neutrality is being documented in a way that is verifiable and transparent for everyone. In line with the Paris Climate Agreement, our clearly defined aims put us on a path significantly more ambitious than the two-degree target. Moreover, we are fully committed to achieving these goals without reservation or exception. It is our vision to create a value chain with increasingly lower levels of emissions, culminating in a circular economy," stated Oliver Zipse.

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With this approach, the BMW Group is preparing for the European Green Deal. However, the EU Commission's recent call for a further tightening of the 2030 decarbonisation targets for automobiles (by 55% compared to 2021) can only be achieved with the appropriate framework conditions and the joint efforts of industry and policymakers. The expansion of charging infrastructure by the member states envisaged in the EU is not ambitious enough and needs to be implemented far more swiftly in order to be successful. The BMW Group is stepping up its efforts to improve the charging infrastructure - both at its own locations and in close cooperation with its business partners. In line with this approach, the Group has installed over 15,000 charging points worldwide, including over 4,350 charging points at its own locations, all of which are powered solely by green electricity.

BMW Group highly profitable in first half-year

The BMW Group continued to perform well during the first six months of 2021. Despite the challenges posed by the global pandemic restrictions and the limited availability of semiconductor components, which necessitated adjustments to the production schedule, sales figures increased significantly. A total of 1,339,047 BMW, MINI and Rolls-Roycebrand vehicles were delivered to customers in the first six months of 2021, up by nearly 40% on the previous year (2020: 962,575 units/ +39.1%) and setting a new Group record for a first half- year period. All major sales regions contributed to the overall growth in sales volume worldwide. The picture was similar in the second quarter, with deliveries to customers up by 44.7% year-on-year to 702,441 units (2020: 485,464 units).

Sustained high demand for the BMW Group's electrified vehicles also provided strong momentum for growth. Between January and June 2021, 153,243 all- electric vehicles and plug-inhybrids were delivered to customers (2020:

61,652 units), an increase of 148.6% compared to one year earlier. The high rate of growth in the sale of electrified vehicles gathered even greater momentum in the second quarter, rising by as much as 167.0%.

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Significant growth in Group revenues and earnings

Revenues were significantly higher year on year, both in the first six-month period at € 55,360 million (2020: € 43,225 million/ +28.1%, currency- adjusted: +31.1%) and in the second quarter 2021 at € 28,582 million (2020:

• 19,973 million/ +43.1%, currency-adjusted: +45.2%), driven by higher sales volumes and better selling prices achieved across both new and pre-owned automobile markets.
  The favourable market environment also led to a lower risk provisioning for expected residual value and credit risks compared to one year earlier, as well as partial releases of credit risks. Earnings also benefited from the partial release of the provision in conjunction with EU antitrust proceedings, which were concluded in July with the payment of a fine amounting to € 372.8 million.

Group research and development expenditure totalled € 2,574 million

(2020: € 2,852 million/ -9.7%,Q2/2021: € 1,287 million/ -15.8%, Q2/2020:

• 1,528 million). The BMW Group has striven forward substantial future technologies in the first half-year with focus on the further development of electric drive systems, automated driving and the digitisation of the Group's model portfolio. The R&D figures reported for 2021 also include initial upfront expenditure for the Neue Klasse.

The R&D ratio was 4.6% for the half-year under report and 4.5% for the second quarter (R&D ratio HY1/2020: 6.6%; Q2/2020: 7.7%). The lower ratios year on year were also partly due to the higher revenues generated in the corresponding periods.

The financial result for the six-month period was a positive amount of

• 1,706 million (HY1/2020: negative € 211 million; Q2/2021: positive € 974 million, Q2/2020: positive € 366 million). The main reason for the improvement was the Group's share of the profit generated by the Chinese joint venture