BMW CEO Harald Krüger has resigned his post, citing "enormous changes, which have brought about more transformation than in the previous 30 years." He is referring to the rapid rise of Tesla's compelling electric vehicles, which are crushing BMW's car offerings in the US market and are now threatening to disrupt sales in key Europe and Chinese markets as well.

Krüger, 53, leaves the post after less than 5 years in office. Commentators feel that his inadequate and indecisive response to the fast shift of the premium segments towards EVs, especially the rise of Tesla, are a large part of the reason for him leaving the post. Krüger said at the recent BMW Group annual general meeting, held in May:

"At this point, no one can reliably predict how quickly electromobility will progress, or which drive train will prevail."

Whilst this makes clear that Krüger has deemed it wise to remain on the fence, BMW's sedan sales have fallen off a cliff in the US market over the past 12 months directly as a result of Tesla's fully electric Model 3. As we predicted early on and have frequently documented over the past year, the Tesla Model 3 has stolen significant US market share in the premium sedan segment.

Sales of BMW US passenger cars in the 12 months through June 2019 were just 84,467, down 14.5% from 98,752 a year ago. Tesla meanwhile sold around 184,000 Model 3 sedans in the US over the past 12 months, ramping up from just a few thousands over the previous 12 months. Tesla also sold around 22,000 Model S sedans in the US in the 12 months ending June 2019.

Thanks to the steep production and delivery ramp of the Tesla Model 3 in 2018, overall US sedan sales figures of the world's leading BEV maker are now over twice the volume of BMW's US car sales. BMW still does well in the SUV space in the US, but the company certainly knows that its SUVs will come under similar assault in the US in late 2020, with the introduction of the Tesla Model Y.

Against this backdrop, for Krüger to say as recently as May 2019 that, "no one can reliably predict how quickly electromobility will progress," displays neither the awareness nor leadership expected of a CEO at this level.

There are two potential candidates to replace him: Oliver Zipse, BMW's head of production, and Klaus Fröhlich, head of development. We recently saw that Fröhlich is, like Krueger, unconvinced about the shift to EVs. It would therefore make little sense for Fröhlich to step into Krueger's role. The German newspaper FAZ has Zipse down as the favorite to take over the CEO position.