2014 Car of the Year: BMW i3

NEW YORK ( TheStreet) -- Automotive history has its iconic milestones. Ford's ( F) Model T brought assembly-line mass production. Volkswagen's Beetle brought the automobile to the masses starting around World War II. The 1982 Audi 100 brought the modern aerodynamic design.

In the last couple of years, however, electrification of the automobile has accelerated the change we have seen in the industry. This electrification comes in many stages and variants, from pure electric cars to those with only mild electric assistance to a gasoline engine.

The 2011 car of the year was the Chevrolet Volt. It is a zero-compromise car where full power is available using any combination of electricity and gasoline. The first 38 miles are on electricity, and after that, a 9-gallon gasoline tank takes you another 340 miles. The price is around $40,000. (Chevrolet is a unit of GM ( GM).)

The 2013 car of the year is the Tesla ( TSLA) Model S. It's a pure electric car, and a giant 85 kWh battery takes you 265 miles with tremendous performance. The price for a Tesla with this size battery is $80,000 .

The next major automotive achievement looks to be the BMW i3, and it comes to market in December 2013, according to BMW. This car is the first to define a whole new class of electrification, presenting a new compromise between electric range and gasoline capabilities.

Actually, there will be two versions of the BMW i3. One version will be a very simple all-electric version with a range of 80-100 miles. As such, it slots in well below the Tesla Model S, but perhaps slightly above Nissan ( NSANY) LEAF, Ford Focus Electric, and some others such as Chevrolet Spark EV, which will hit the market in 2013 shortly before the BMW i3.

The far more interesting version of the BMW i3 will be the version that includes a so-called range extender. In English, this means a gasoline engine, which provides extra range when the battery has been drawn down.

So how is this different from the Chevrolet Volt, you say? The Chevrolet Volt has 38 miles of electric range, and then a sizable 1.4 liter, four-cylinder engine kicks in to provide full driving power after those 38 electric miles. With a 9-gallon tank, this extended range is more than 340 miles, making this car suitable for road trips between places such as Los Angeles and San Francisco.

The BMW i3's range extender provides for a very different mix of electricity vs. gasoline. The electric range will be 80-100 miles, but the range extender is a much smaller engine than in the Volt. Perhaps it will be a two-cylinder motorcycle engine with 650 cc displacement. BMW has not given the exact data of the final version.

Obviously, the power output of such a tiny gasoline engine may be insufficient to recharge the battery fast enough to enable the battery to provide highway-speed propulsion. Perhaps it will only allow you to drive at less than 40 mph, or perhaps you won't be able to drive at all while this little engine builds up juice for the battery. You may have to pull over and wait 15 minutes to give you that extra 10 miles worth of power. BMW has just not provided these specifications yet.

Equally debilitating will be that the gasoline tank will probably not be larger than 2.5 gallons, in order to fit a new California government requirement for this particular class of plug-in hybrid car. Yes, I kid you not: It's California's equivalent of New York City Mayor Bloomberg's large soda ban. The gasoline tank will not allow you to drive more than 100 miles on one gasoline tank. Perhaps the civilized, i.e. non-California, world will get a version of the BMW i3 with a larger gasoline tank.

Anyway, you see the difference here: The BMW will give you 80-100 miles on electric power, and then another 80-100 miles on gasoline. This ensures that you will never get stuck, having miscalculated the electric range, failed to charge somewhere, or simply had an emergency occur. However, this 80-100 mile worth of gasoline range may come with a significant degree of inconvenience, as described above. If so, it'll be there only for emergencies -- not for everyday or long-distance practical use, as in the Chevrolet Volt.

Many people want an electric car, and they are fairly confident that on 99% of days they will not drive more than 40-80 miles. However, 99% is not the same as 100%, and they need a reserve that can ensure they will never get stuck and that can handle the unexpected change of plan.

The target BMW i3 consumers don't aim to take this car on a road trip from Los Angeles to San Francisco. They plan on driving it only inside any one of these metropolitan areas. There are many who fit this description, and for these people the BMW i3 with range extender could be the right tool.

The Chevrolet Volt gives you zero compromise: Drive it like any other car, period -- just charge it when you can. The BMW i3 with range extender is far from zero compromise, but it may be a tolerable compromise for some people.

The bonus kicker here is that the BMW i3 with range extender will be the only gasoline-enabled car eligible for the California carpool sticker for sale after late 2013. This means that once the 40,000 green stickers applicable to Chevrolet Volt, Toyota Prius Plug-In and other cars run out (probably in the second half of 2013), the BMW will be the only gasoline car sold eligible for the carpool lane.

This alone guarantees it California market sales success.

I published more details on the California "BMW exemption" for the 2014 carpool lane here.

There is also "one more thing" about the BMW i3 worth mentioning: The interior. You have not seen a car interior like this. The styling makes it eligible for display at The Museum of Modern Art. Regardless of the car's other benefits, this alone will sell this car. See interior photos at Autoblog.

For those of you who have spent time inside the Tesla Model S, you know what a radically different car interior means in terms of the "wow" factor. Well, the BMW i3 is right up there, or even ahead, of the Tesla Model S. You have to see it to believe it.

In conclusion, the electrification of the automobile means that there is a new segmentation of capabilities -- range, performance and refueling methods -- emerging in the marketplace. The BMW i3 with range extender clearly isn't the same class of animal as the Chevrolet Volt, but rather it is the first car of a new class of plug-in hybrids.

As icing on the cake, the i3 also has the most beautiful interior I have seen in a car to date. If BMW delivers on all of these items in the final production version of the car, and does it on time as promised by December 2013, I think it is a shoe-in as the 2014 car of the year.

At the time of submitting this article, the author had no positions in the companies mentioned.

If you liked this article you might like

Goldman Sachs Has a Sinister View on Tesla's Next Two Years

Goldman Sachs Has a Sinister View on Tesla's Next Two Years

Ford Betting Big on Trucks, SUVs and Hybrids

Ford Betting Big on Trucks, SUVs and Hybrids

Novice Trade: Ford

Novice Trade: Ford



Ford Revs Higher After Rare 'Double Upgrade' From Morgan Stanley

Ford Revs Higher After Rare 'Double Upgrade' From Morgan Stanley