The BMW strategic plan from 2015-2035 aims to position BMW as a leader in the luxury autonomous car industry, especially in China. BMW plans to sell between 3-6.7 million cars globally by 2035, with 800k-1.8 million in China. This will be achieved through strategic partnerships, an agile corporate culture, and focusing on innovation, collaboration and automation. BMW will monitor trends and regulations closely and remain flexible to changing conditions over the 20 year period.

1. BMW Strategic Plan
2015-2035
Presidio Team 1

2. Executive Summary
 Opportunity: Build strategic capabilities to become a
leader in the luxury autonomous car industry, with a
focus on China
 How: Position BMW as a leader in the next generation
of innovation, collaboration, and automation through
value chain integration, culture evolution, and strategic
partnerships
 Outlook: By 2035 sell between 3 and 6.7 million cars,
with between 800K and 1.8MM in China. Market share
of 40% globally, 1.3x relative market share in China

3. Global Trends
 Technology and automation are getting faster and
cheaper
 Global economy is uncertain
 Increasingly regulated world
 Growing urban populations
 Limitations on environmental resources
 Increased concern regarding privacy and data
protection

4. Luxury Market Attractiveness:
Similar Across Scenarios
0
1
2
3
4
5
Supplier
Buyer
EntrantsSubstitutes
Rivalry
Scenario 1
Scenario 2
2015
 The market for luxury vehicles doesn’t become
significantly more or less attractive as we move forward
into uncertainty

5. Global Attainable Market
Total Car Market: 126M
units
Luxury Auto market:
16.77M units
BMW’s Share of 40%:
6.7M cars
BMW’s fully autonomous
cars: 5.0M units
BMW’s partially automated
cars: 1.7M units
Total Car market: 119M
units
Luxury Auto market:
9.8M units
BMW’s Share of 30.94%:
3.06M cars
BMW’s partially automated
cars: 2.76 M
BMW’s fully automated
cars: 0.3 M
Scenario 1 2035 Scenario 2 2035
Projected Chinese Sales
Scenario 1: 1.81M Units
Projected Chinese Sales
Scenario 2: 0.82M Units

6. Build on Our Advantages
Core Competencies:
Branding, Innovation, Customer Relationship
Capabilities:
Branding, innovation, customer relationships, distribution, employee
satisfaction, engineering excellence
Resources:
Technology, R&D, high quality labor, physical and financial capital,
engineering excellence

7. Strategy 2015-2035
• AI Unit In-House
• OS development Investment
• Sensor Unit Specialization
• Baidu partnership
Leader in Innovation
• Create agility: Faster, freer, more reactive corporate culture
• Guide posts indicate opportunities to pivotStrategic Agility
• Global presence with focus on China: Baidu partnership as
leverageTargeted Markets
• Consumers who look for quality, innovation and statusLoyal Consumers
• Product Portfolio: L2, L3 and L4
• Outsource non-critical driving specialization
• Time luxuriously well spent
Product Offering

8. Where We Play in the New
Value Chain
Hardware Software OEM Distribution Maintenance
Hardware
• Imaging
Sensors
• DGPS
• LIDAR
• Processors
• CPU – GPU
• Entertainment
hardware
Software
• AI
• Operating
System
• Processing
• Security
• Maps
• Applications
• V2V
• Cloud Service
• Connectivity
OEM
• Automobile
• Engine
Distribution
• Sale Centers
(China)
Maintenance
• Trained
Professionals
in new
technologies
in China and
around the
world

9. Diagonal Integration
 Software
 Build Artificial Intelligence as strategic core competency –
Acquire and integrate Zoox as business unit
 Build Human Machine Interface as core competency –
Invest & Develop internally. Open source application
development
 Cloud services and maps – Strengthen relationship with
Baidu
 Security and privacy - Collaboration with McAfee and
Cisco
 Data processing: Continue relationship with Baidu

10. Diagonal Integration
 Hardware
 Imaging sensors as strategic competitive resource -
Acquire 51% stake in Mobileye:
 IS could replace LIDAR as more cost effective
 Supply IS to competitors
 Continue collaboration with suppliers:
 DGPS
 LIDAR
 CPU/GPU
 Processors (Qualcomm)
 Entertainment hardware, gaming, screens, etc.

11. Uncertainty Management
 Safety:
 Position BMW as safest automated vehicle manufacturer.
 Educate market:
 Create targeted advertising highlighting the benefits of automated
vehicles.
 Insurance and Liabilities:
 Create hardware and software to diagnose liability of accidents
 Regulations:
 Collaborate with other OEM car manufacturers to lobby for
favorable autonomous regulations, including liability
 Environment
 Position company as innovative leader in environmentally friendly
manufacturing, sourcing and product design
 Reduce carbon footprint to zero by 2035

12. Guide Posts
Scenario 1
 2020
 Sales of new model Level 2 and Level 3 vehicles
exceed sales of Level 0 and Level 1
 Increased regulation on carbon emissions
creates high costs
 Economies around the world have recovered
 2025
 The EU and US set goal for 80% of all cars to be
Self-Driving by 2050
 China’s growth has created more middle and
upper class
 2030
 Liability, for autonomous vehicles involved in
accidents, is assigned
 2035
 75% of all light duty vehicles sold are Self-
Driving, accounting for 95.4 million units
Scenario 2
 2020
 Economies around the world continue through periods
of growth and recession
 Regulations still continue to be unfavorable towards
autonomous vehicles
 Hackers are able to penetrate all autonomous software
systems decreasing consumer confidence
 2025
 Google, Apple, and other car makers have
experienced hiccups in their autonomous car
programs
 Baidu offers their own car autopilot systems that
are installed much affordably than new cars with
preinstalled systems
 2030
 Regulations still unfavorable for autonomous
vehicles
 2035
 Scaling of technologies continues to be unattainable
therefore R&D is continuously slashed at major firms

13. What Kind of Company Will BMW Be
 The leader in luxury automobiles
 The leader in innovation:
 Efficiency
 Integration with applications and internet of everything
(IOE)
 Artificial Intelligence
 Design
 The leader in luxury autonomous travel:
 Safety
 Privacy
 Time luxuriously well spent

14. Learning Objectives
 How are people are reacting to this technology?
 How are they actually using it?
 What is the feasibility of having a wireless car that is completely
secure?
 What are our competitors doing? Are they making it to market
before us?
 Are our competitors eroding our competitive advantages?
 How is our China strategy differing from our global strategy?
 Our our consumers globally reacting differently than our Chinese
consumers?
 Who is capturing most of the value from our partnerships?
 What happens if we do not develop AI?

15. Objectives
 Leading market share of 40% for global luxury vehicles
 Luxury vehicle market leader with 1.3x relative market
share in China
 Return on R&D investment, six years from TTM
 Value captured – 6%
 Customer Satisfaction of 90%, globally

16. Thank You!

17. Source: Scotiabank, Global Auto Report, Feb 6, 2015
Global Automotive Industry - Market Sizes & Major Markets
Source: Scotiabank, Global Auto Report, Feb 6, 2015
(millioins of Units)
1990-1999 2000-2011 2012 2013 2014 2015f
TOTAL 39.2 51.55 64.98 68.69 71.02 74.02
North America 16.36 17.74 17.11 18.33 19.38 20.03
Canada 1.27 1.59 1.68 1.74 1.85 1.86
US 14.55 15.18 14.44 15.53 16.4 17
Mexico 0.54 0.97 0.99 1.06 1.13 1.17
Western Europe 13.11 14.14 11.76 11.55 12 12.5
Germany 3.57 3.29 3.08 2.95 3.04 3.18
Eastern Europe 1.18 2.85 4.14 4.08 3.8 3.65
Global Share 3% 6% 6% 6% 5% 5%
Russia 0.78 1.66 2.93 2.78 2.36 2.08
Assia 6.91 13.99 27.25 29.98 31.69 33.75
China 0.43 5.15 13.18 16.3 18.37 19.65
India 0.31 1.06 2.02 1.87 1.88 1.97
South America 1.64 2.83 4.72 4.75 4.15 4.09
Brasil 0.94 1.75 2.84 2.76 2.6 2.63
Exhibit 1

18. Source: http://www.best-selling-cars.com/china/2014-full-year-china-worldwide-german-luxury-car-sales/
Current Market Share in China - Premium Segment
Sales by manufacturers in China and Worldwide
Manufacturer
Car Sales
in China
2014
Car Sales
Worldwide
2014
% Sold in
China
Rel. MS
China
Rel. MS
WorldWide
Audi 578,932 1,741,100 33% 1.27 x 0.96 x
BMW Group 455,979 1,811,720 25% 0.79 x 1.04 x
Mercedes Benz 281,588 1,650,010 17% 0.49 x 0.91 x
Exhibit 2

19. Exhibit 3a
Source: Scotiabank, Global Auto Report, Feb 6, 2015
Regions Global Share Evolution
90-99 2000-2011 2012 2013 2014 2015f
North America 42% 34% 26% 27% 27% 27%
Western Europe 33% 27% 18% 17% 17% 17%
Eastern Europe 3% 6% 6% 6% 5% 5%
Asia 18% 27% 42% 44% 45% 46%
South America 4% 5% 7% 7% 6% 6%

20. Source: Scotiabank, Global Auto Report, Feb 6, 2015
42%
34%
26% 27% 27% 27%
33%
27%
18%
17% 17% 17%
3%
6% 6% 6% 5% 5%
18%
27%
42%
44% 45% 46%
90-99 2000-2011 2012 2013 2014 2015F
Global Share Evolution
North America Western Europe Eastern Europe Asia South America
Exhibit 3b

21. 42%
34%
26% 27% 27% 27%
33%
27%
18% 17% 17% 17%
3%
6%
6% 6% 5% 5%
18%
27%
42% 44% 45% 46%
4% 5% 7% 7% 6% 6%
0%
20%
40%
60%
80%
100%
90-99 2000-2011 2012 2013 2014 2015f
Global Share Evolution
North America Western Europe Eastern Europe Asia South America
Source: Scotiabank, Global Auto Report, Feb 6, 2015
Exhibit 3c

22. Source: Scotiabank, Global Auto Report, Feb 6, 2015
Major Countries Global Share Evolution
1990-1999 2000-2011 2012 2013 2014 2015f
US 37% 29% 22% 23% 23% 23%
Germany 9% 6% 5% 4% 4% 4%
Russia 2% 3% 5% 4% 3% 3%
China 1% 10% 20% 24% 26% 27%
Brasil 2% 3% 4% 4% 4% 4%
Others 62% 61% 57% 54% 51% 50%
Exhibit 4a

23. Source: Scotiabank, Global Auto Report, Feb 6, 2015
37%
29%
22% 23% 23% 23%
1%
10%
20%
24%
26% 27%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1990-1999 2000-2011 2012 2013 2014 2015F
Major Countries Global Share
US China
62% 61% 57%
54% 51% 50%
0%
20%
40%
60%
80%
Rest of the world
Exhibit 4b

24. Exhibit 5: Automation Levels
 Level 0: The human driver is in complete control of all
functions of the car
 Level 1: One function is automated
 Level 2: More than one function is automated at the same
time (e.g., steering and acceleration), but the driver must
remain constantly attentive
 Level 3: The driving functions are sufficiently automated
that the driver can safely engage in other activities
 Level 4: The car can drive itself without a human driver
Source: Autonomous Vehicle Technology, A Guide for Policymakers, James M. Anderson, 2014

25. Exhibit 6: Financial Forecast
BMW FINANCIAL PROJECTION
SCENARIO 1 SCENARIO 2
(in million €) 2013 2035 2013 2035
Current Assets 20,932 175,228 20,932 36,308
Noncurrent Assets 12,833 107,429 12,833 22,259
Total Assets 33,765 282,656 33,765 58,567
Liabilities 14,414 120,664 14,414 25,002
Equity 19,351 161,993 19,351 33,565
Total Liabilities and Equity 33,765 282,656 33,765 58,567
Revenues 57,474 781,738 57,474 134,636
Net Income 2,175 14,479 2,175 3,735
Scenario
Assumptions:
ROA
Growth
ROS
Growth
Revenue
Growth
Current Growth 5.07% 4.50% 7.41%
Scenario 1 Growth 10.14% 9.00% 12.60%
Scenario 2 Growth 2.54% 2.25% 3.71%

26. Exhibit 7: R&D Spending in
Automotive Industry
R&D Spending as a %
of Revenue 2005 2006 2007 2008 2009 2010 2011 2012 2013
AVE
GROWTH
Global Average 4.00% 3.90% 3.70% 3.85% 4.10% 3.90% 3.60% 3.75% 3.90% 3.86%
Europe 4.30% 4.10% 3.90% 4.15% 3.95% 3.80% 3.90% 3.75% 4.20% 4.01%
SOURCE: http://www.strategyand.pwc.com/global/home/what-we-think/global-innovation-1000/rd-intensity-vs-spend-2013-
v2stage

27. Exhibit 8: Peer Analysis
Revenue Net income
Net
income
CAPEX Dividend
Return on
Assets
Return on
Assets
Return on
Investment
Return on
Investment
(5 yr
growth
rate)
(Year-over-
year
change%)
(5 Yr
growth
rate)
(5 Yr
growth
rate)
(5 yr
growth
rate)
(TTM)
(5 yr
average)
(TTM)
(5 yr
average)
Bayerische Motoren Werke AG
7.41 4.5 74.97 9.67 54.02
4.08 5.07 6.38 5.07
Daimler AG
10.47 1.75 -- 10.4 --
4.07 6.92 6.33 6.92
Ford Motor Company
4.38 -55.6252 3.28 12.95 --
1.55 7.41 2.26 7.41
General Motors Company
8.31 -25.6233 -51.5187 17.15 --
2.34 6.26 3.74 6.26
Honda Motor Co Ltd
3.42 56.37 33.18 7.85 5.41
3.05 3.58 4.37 3.58
Jardine Matheson Holdings Limited
12.03 -6.2837 18.65 11.34 13.3
6.07 26.72 14.57 26.72
Nissan Motor Co Ltd
4.44 14.05 -- 8.18 22.22
3.08 4.55 4.89 4.55
SAIC Motor Corporation Limited
39.82 19.53 106.78 16.3 126.79
10.57 26.39 23.77 26.39
Volkswagen AG
11.6 -58.2443 13.79 17.44 16.04
3.32 7.59 5.27 7.59
SOURCE: http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=BMWX:GER (www.ft.com)

28. Exhibit 9: Economic Projections in
2030 and 2050
-
10,000
20,000
30,000
40,000
50,000
60,000
GDPATPPPINUS$BN
China US India Brazil Japan Russia Mexico
Indonesi
a
German
y
France UK Turkey Nigeria Italy Spain Canada
South
Korea
Saudi
Arabia
Vietnam
Argentin
a
2030 30,634 23,376 13,716 5,842 5,308 4,685 4,118 3,662 3,499 3,427 2,912 2,760 2,629 2,454 2,327 2,148 1,582 1,535 1,415 1,407
2050 53,856 37,998 34,704 8,825 8,065 8,013 7,409 6,346 5,822 5,714 5,598 5,032 3,964 3,867 3,612 3,549 3,545 3,090 2,715 2,620
Economic Tigers in 2030 and 2050
Source: PwC Economics, World in 2050: The BRICs and beyond: prospects, challenges and opportunities,
January 2013
The world is projected to grow at an average rate of 3% per annum from 2011 to 2050.

29. Exhibit 10: Value Captured
VALUE CREATED
(Based on 2013 FS) BMW AUDI Mercedes-Benz
Sales 60,474 41,732 75,531
Cost of Sales (43,402) (28,218) (54,722)
Total Value Created 17,072 13,514 20,809
Direct Labor (3,665) (4,552) (7,385)
R&D (4,362) (2,822) (5,472)
Selling, G&A (5,669) (3,436) (8,626)
Depreciation (1,732) (1,306) (2,313)
Value Captured 1,644 1,398 (2,987)
Value Captured (%) 2.72% 3.35% -3.95%
Value Created (%) 28.23% 32.38% 27.55%

30. Exhibit 11: Scenario Assumptions to Project
Unit Sales (Realistic Attainable Market)
SCENARIO ASSUMPTIONS 1
Based on the case (Autonomous only) - 75% 95,000,000
Assumed Market Segment of Luxury cars 13.24%
# of units sold - Autonomous Luxury cars by
2035 12,582,430
Non-autonomous - 25% 31,666,667
Assumed Market Segment of Luxury cars 13.24%
# of units sold - Non-autonomous Luxury cars
by 2035 4,194,143
Total Market Segment of Luxury Cars by
2035 16,776,574
Assumed MS of BMW 40.00%
Forecasted units sold by BMW in 2035 6,710,629
SCENARIO ASSUMPTIONS 2
Forecasted units sold by automotive industry 119,878,273
Autonomous Market Segment (10%) 11,987,827
Non-Autonomous Market Segment (90%) 107,890,445
Autonomous Market Segment 11,987,827
Assumed Market Segment of Luxury cars 8.24%
# of units sold - Autonomous Luxury cars by 2035 988,356
Non-Autonomous Market Segment 107,890,445
Assumed Market Segment of Luxury cars 8.24%
# of units sold - Non-autonomous Luxury cars by 2035 8,895,204
Total Market Segment of Luxury Cars by 2035 9,883,560
Assumed MS of BMW 30.94%
Forecasted units sold by BMW in 2035 3,058,094

31. Exhibit 12: Scenario Assumptions to Project Unit
Sales (Realistic Attainable Market) – con’t
Scenario 1 2
Auto Level Level 3 Level 4 Level 2 Level 3 Level 4
Target Sales Mix 25% 75% 30% 60% 10%
# of units sold 1,677,657 5,032,972 917,428 1,834,857 305,809
2013
2035
S1
(10%) S2 (1%)
Luxury Car Market (€ bil) 319 2,361 393
Luxury Car Market ( '000 units) 5,855 16,777 9,884
BMW Revenues (€ bil) 57 782 157
BMW Revenue (%) 18% 33% 31%
BMW units sold 1,812 6,711 3,058
BMW units sold (%) 31% 40% 31%
Average Price (€ '000 ) 31.46 116.49 51.42

32. Exhibit 13: Basis of Market
Funnel
Number of cars sold worldwide (1990-
2015) Units (in mil)
1990-1999 39.20
2000-2011 50.71
2012 64.98
2013 68.69
2014 71.02
2015* 74.02
CAGR (2000-2014) 2.44%
SOURCE:
http://www.statista.com/statistics/200002/international-car-
sales-since-1990/
Luxury Car Sales in 2014
(in '000s) Units MS Rel. MS
BMW 1,811.72 30.94% 1.04
Audi 1,741.10 29.74% 0.96
Mercedes-Benz 1,650.01 28.18% 0.91
Land Rover 381.11 6.51% 0.21
Porsche 189.85 3.24% 0.10
Jaguar 81.57 1.39% 0.05
5,855.36 100.00%
Luxury Car Sales Share in
the Automotive Industry 8.24%
SOURCE: http://www.statista.com/statistics/287682/luxury-vehicle-sales-by-
brand/

33. Exhibit 14a: Mobileye Acquisition
 Acquire 51% of
Mobileye thru cash and
stock deal
 Mobileye’s market
capitalization is
currently valued at
7.6B and its stock price
is traded at $35/share
http://www.mobileye.com/

34. Exhibit 14b: Zoox Acquisition
 Car Automation
 Intelligence
 Control Software
 Capabilities
http://www.electric-vehiclenews.com/2013/12/zoox-reveal-autonomous-bi-directional.html

35. Exhibit 14c: McAfee Partnership
 Software Security
 Firewalls
http://www.mcafee.com/

36. Exhibit 14d: Cisco Partnership
 Security Software &
Hardware
 Firewalls
 Cloud Service
 Cloud Software
http://www.cisco.com/

37. Exhibit 14e: Baidu Partnership
 Mapping
 Clouding
 IT
http://www.baidu.com/

38. Exhibit 15: SWOT Analysis
Relative Strengths Relative Weaknesses
• R&D
• Premium positioning
• Collaboration with Baidu
• Brand
• Global presence
• Product offering
• Customer Relationship
• Product recalls
• Unfunded pension liabilities
• Lacking technology needed
to be fully autonomous
• Agility
Opportunities Threats
• Growing Electric market
• Fully autonomous cars
• Asia
• Intense competition in the
luxury market
• Loose relationship with
Baidu

39. Exhibit 16: Indicators Scenario 1
 Starting in 2016 deregulation of autonomous vehicles accelerates around the
globe.
 Increased regulation on Carbon emissions continues to take place every few years
creating high costs for cars without increasingly adequate environmentally friendly
features.
 By 2017 – US Department of Transportation issues mandate requiring V2V
communication installed in all new model cars by 2025
 Sales of new model Level 2 and Level 3 vehicles exceed sales of Level 0 and Level
1. Consumer expectation is each new vehicle should have some basic automation.
 By 2020 – All new car models have autonomous features some achieving level 4
status.

40.  The entire US has legalized fully autonomous cars, as have China and the EU.
 The EU and US jointly set goal to have 80% of all cars on road Self-Driving by
2050.
 By 2024 – US regulations require all roads to begin being digitalized and
infrastructure is built for autonomous cars.
 Taxes are extreme for non-autonomous cars and privately owned cars.
 By 2030
 Governments around the world create legislation for who is liable for accidents.
 By 2035
 75% of all light duty vehicles sold are Self-Driving, accounting for 95.4 million.
Exhibit 17: Indicators Scenario 1

41.  By 2016 – EU collapses
 By 2020 – Google has experimented road bumps in its auto vehicle testing
 Hacking consistently threatens all aspects of technology including Self-Driving cars
 Fully autonomous vehicles are not legal to be driven commercially in any state or
most of the world. Most US states still do not allow testing.
 By 2022 – Self-Driving system manufacturers start to install anti-malware solutions,
albeit much later than is socially acceptable.
 Tech has not advanced sufficiently enough to make Self-Driving cars affordable for
mass production or consumers.
Exhibit 18: Indicators Scenario 2

42.  By 2025 – Baidu offers their own car autopilot systems that are installed much
cheaper than new cars with preinstalled systems.
 By 2030 – Legislation is still lacking for fully autonomous vehicles as well as
affordability for the mass has not been reached.
 By 2035 – Consumer confidence is fully autonomous vehicles is still low.
 Scaling of technologies continues to be unattainable therefore R&D is continuously
slashed at major firms.
Exhibit 19: Indicators Scenario 2

43. Raw
Materials
BMW: Production
and
Manufacturing
Sales and
Marketing
Distributors
Maintenance
and Service
Disposal
Exhibit 20: Current Value Chain

44. Exhibit 21: Buyer Profiles