As it seeks to keep its competitive edge, BMW’s CEO says it will place a higher emphasize on vehicle electrification and connected, automated features.

The revelation by CEO Harald Krueger came while speaking with journalists Thursday at the company’s Munich headquarters.

Sales have been particularly strong for the automaker, with BMW, Mini, and Rolls-Royce divisions bringing in a record 2.37 million sales last year. Published reports anticipate the German luxury carmaker will reach 3 million in sales by 2020.

BMW reported 62,000 plug-in electrified vehicles (PEVs) sold last year, with 25,000 being the all-electric i3 (though sales numbers do include the range-extended i3 option and do not break them out by type). The automaker aims to hit the 100,000 PEV sales mark this year.

Krueger sees being a technology leader in the global auto industry as the key benchmark with electrification and connectivity. However, the company is gearing up for more with more production capacity being added through its global network.

The company will be combining the two technologies in the iNext all-electric car scheduled to start production in 2021. It will be capable of Level 4 autonomous driving, one step below Level 5 fully automated driving under Society of Automotive Engineers standards.

The photo above, featuring the iNext concept, was taken earlier this month at the company’s 97th annual general meeting in Munich.

For now, connectivity features on a new BMW model include connected digital services and automated functions. That includes driver assistance systems, active cruise control, and parking assistance.

On the electrification front, it’s not all about battery-powered cars. The chief executive said the company is still committed to fuel cell vehicles.

He acknowledged that scarcity in hydrogen stations weakens demand for fuel cell vehicles, but he thinks that eventually a wide fueling network will be established. The company’s partnership with Toyota is helping BMW advance fuel cell technology while sharing costs, but forecasting how fuel cell vehicle sales will by 2030 isn’t clear at this point, he said.

“With Toyota, we are working on a new generation of fuel cell vehicles. Last year, we put on the road a small test fleet based on the 5-series Gran Turismo. In 2021 we plan a small series of the next step in fuel cell technology,” he said.

BMW has been kept out of the diesel cheating investigations so far, while European competitors Audi, Daimler, Renault, and Fiat Chrysler have been pulled in. Krueger doesn’t see how his company can hit European Union CO2 emission reduction targets by 2021 without using diesel engines. They’re 15 to 20 percent more efficient than gasoline engines when measuring carbon emissions.

“You need to invest in clean diesels and Euro 6 engines are clean diesels,” he said.

The German automaker is committed to hitting the 25 percent sales mark in electrified vehicles by 2025. However, 75 percent will remain internal combustion engines with diesel playing into the mix, he said.

Krueger does expect that the costs behind having to lower diesel emissions more each year will drive up their costs, making it not worthwhile to build and sell them, he said.

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BMW does see the need to bring in partnership alliances on the autonomous driving side of the business. Cooperating with suppliers is a necessity, highlighted lately by adding Delphi to its network.

“We are not the best in making radars and vision controls, so we work with Mobileye,” Krueger said. “We do not make chips, so we cooperate with Intel. We have just taken on board Delphi to cooperate on software and system knowledge.”

The automaker does have its part to play in that alliance. That comes from computing power and software as a core competence he said. Automaker expertise also comes from years of designing and selling the premium vehicle experience.

“We are in the premium business. We sell design and emotion, not just a way of getting from point A to B,” he said.

BMW may stay at Level 4 automated driving, where a human driver may have to enter the picture.

“You will never see a robo-taxi from BMW,” Krueger said.

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