At CES 2014, BMW Showed How It's Done

NEW YORK (TheStreet) -- The annual January Consumer Electronics Show (CES) in Las Vegas is the largest one of its kind in the world. Over 100,000 technology professionals gather to see what the major vendors have in store for the upcoming year.

The first companies that come to mind in the area of Consumer Electronics are Google (GOOG), Apple (AAPL) and Microsoft (MSFT). Those are the big three around which the entire industry revolves.

None of them have a formal presence at CES.

Yes, I know, they are there, somewhere -- looming in the hallways, undercover, checking stuff out. And numerous technology partners offer accessories and other devices built on and around their products. But unlike companies such as Samsung, Sony (SNE) and LG, Google, Apple and Microsoft don't host any formal exhibits.

With CES unable to get the Big Three to exhibit, they went after the other Big Three -- General Motors (GM), Ford (F) and Chrysler/Fiat. Actually, the auto industry these days is far broader than it was in the days immediately following World War Two: Mercedes, BMW, Audi, Mazda, Toyota (TM) and Kia were also exhibiting at CES this year, for a truly global automotive flair.

From an in-car infotainment and related perspective, I thought Mercedes had the most interesting invention, straight from its Silicon Valley technology center. It's basically a prediction engine that looks a whole lot like Google's NOW, which is included on Android 4.1 and above.

The point of this system is to predict what you will be doing with the car and where you will be going. The car already knows the location, weather, time of day and how many passengers are in the car. Based on this, it learns what you typically do at that point.

For example, if at 5:30 p.m. every weekday when it's raining and you're alone in the car leaving work you tend to set the climate system a certain way and drive a particular route to the gym, it will set the systems accordingly. It may just have a 94% probability of hitting your actual preferences right on the money, saving you the time to enter the preferred settings.

In the broader context, however, it was BMW that stole the CES attention this year. Why? No, I'm not talking about the company's impressive self-driving race car demonstration. Good or bad, self-driving cars remain several years out and don't determine purchase decisions in 2014.

Rather, it was BMW's fleet of well over 50 i3 cars available for anyone to drive that proved to be the 2014 CES highlight. Why is this?

The BMW i3 is without a doubt the single most innovative and differentiated car that is hitting the market this year. Only the Tesla (TSLA) and the two GM cars -- Chevrolet Volt and Cadillac ELR -- can match or exceed it in overall capability, such as total range.

The BMW i3 is different than all other cars for some visible reasons: It has an overall geometry that does not resemble any other car in the market. It's short, slightly on the narrow side, somewhat tall, has huge 20-inch wheels that are almost as narrow as motorcycle tires, coach ("suicide") doors and a radically new kind of open interior where you can move from side to side with ease.

Under the skin, the BMW i3 has an unique composition in the form of carbon fiber and plastic body panels, resulting in a weight that starts close to 2,000 lbs lower than a Tesla Model S, just as an example. Aside from Tesla and GM's two range-extended electric cars, the BMW i3 stands alone as the most radical car in the market for 2014 -- and you can see it from the first glance.

As a result, when a normal person -- who isn't already familiar with the i3 and its engineering -- sees the i3 for the first time, it's one of suspicion. The BMW i3 doesn't look like any other car, and certainly not like a BMW.

So how does BMW overcome this potential hurdle of radical unfamiliarity? It has decided to do it in the only way that's certain to work: get people to drive the car -- as many people as possible, and as many influential people as possible. That meant CES.

At CES, I am told that as many as over 3,000 attendees stood in line to take the BMW i3 for a brief test drive. I spent over one hour asking more than 20 of them what they thought as they emerged from their drives.

The feedback was this: Every single person with whom I spoke gave the BMW i3 a perfect 10 out of 10 as a bottom-line verdict following their test drive. Several people were beyond enthusiastic and told me they would very seriously consider buying the BMW i3 as soon as possible.

One way of interpreting this feedback is that Tesla might not be the only car to obtain a record-high 99% ownership satisfaction rating in the next year. I imagine it may be a little lower in the BMW given the shorter driving range, a drawback that these CES attendees did not have to face in their brief test drives.

I had, of course, driven the BMW i3 before, and published my comparison with the Tesla Model S here at TheStreet.

The question people always want to know is this: Does the BMW i3 compete with the Tesla? First of all, there are two versions of the BMW i3: the pure electric one, which might have an average range of around 90 miles, and the one with the range-extender, which means you can refill with gasoline after you have used up the first 90 miles.

The first version -- the pure EV -- decidedly does not compete with Tesla by any standard. It competes with the Nissan Leaf, Ford Focus and the upcoming (August 2014) Mercedes B-Class.

However, the other version of the BMW i3 -- the one with the optional range-extender -- does compete with the Tesla Model S to a far more relevant degree. After the first 160 to 200 miles of driving the car, you can refuel 60 to 80 miles of range in less than two minutes.

There is no doubt in my mind that some people who would otherwise have bought the Tesla will change their minds in favor of the BMW i3 with range-extender -- but only if they get into the car and drive it first. The i3 is hard to grasp until you get into the car and drive it.

On the plus side, the BMW i3 is easier to step into and the interior looks better. You sit higher up and with better visibility. The car is narrower and shorter, so it's easier to drive and park in small spaces. Then consider the significantly lower price tag -- and BMW will take some sales from Tesla.

Of course, Tesla retains obvious advantages: You can fit a third person in the back seat, and even two short kids in the trunk. There is more luggage space. The car is simply faster -- but the BMW i3 is already more than fast enough for 99% of car buyers -- and of course Tesla's 17-inch infotainment screen and software are unmatched in the industry.

The bottom line is this: The BMW i3 is the kind of car that would be very difficult to sell to most Americans based on a brochure. You need to get into the car and drive it, more so than any other car I have seen. For this reason, BMW's decision to focus its CES presence on conducting as many test drives as possible was the best thing it could have done to promote sales of this lovely new car.

At the time of publication, the author was long on GOOG and AAPL, but held no positions in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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