The BMW i4 is expected to rival Tesla’s Model 3.


plans for electric vehicles to account for 50% of sales by 2030 and will launch its latest EV model early, the German group said on Wednesday, as the race to match Tesla narrows among European car makers.

The German company also provided a sunny projection for profit increases in the year ahead, helping the stock rise more than 5% in Frankfurt trading.

The back story. The Covid-19 pandemic wrought havoc on car makers, as millions of people housebound around the world with nowhere to go put off buying new cars. BMW’s exposure to China—its largest and most profitable market—helped the 105-year-old company to rebound in the second half of the year as consumer demand resurged in that region.

With the worst of the pandemic in the rearview mirror, the road ahead for BMW, like many other European car makers, will be defined by electric vehicles. Governments instituted a pedal-to-the-metal push for greener transport in 2020, with incentives for consumers to buy electric vehicles and punitive fleet emissions targets for car makers.

Europe emerged as the world’s largest electric-vehicle market in 2020, and trails just behind China for EV sales in 2021. BMW lags behind


Europe’s EV leader and the key rival to


as well as Mercedes-Benz-owner


but controls around 5% of the total European EV market.

What’s new. BMW’s latest update on the strategy to shift toward electric vehicles came in the group’s annual report on Wednesday. The car maker said 90% of its market segments would have electric models by 2023, and fully-electric vehicles would account for at least 50% of global deliveries by 2030.

As it accelerates along this road, BMW will launch the electric i4 sedan—a rival against Tesla’s Model 3—three months ahead of schedule this year. From 2025 onward, the company plans to restructure its product range around a new class of electric vehicles, and make the MINI brand fully electric by the early 2030s.

“We have a clear road map for making the transformation of our industry a real competitive advantage for BMW in the coming years: uncompromisingly electric, digital and circular,” said Oliver Zipse, the chair of the board of management at BMW.

The group also revealed the impact of the pandemic on its finances in 2020, including a 5% fall in yearly revenues to €98.9 billion. Profit before tax dropped 27% last year, to €5.2 billion, which partly reflected the impact of negative currency factors, the company said.

But the outlook for 2021 is rosy. Despite the remaining volatility due to coronavirus, BMW expects “significantly higher” profit before tax in 2021 and a “solid” year-over-year increase in car deliveries.

“We have started the new year with strong momentum and are aiming to return to pre-crisis levels as swiftly as possible—and go even further,” Zipse said.

Looking ahead. BMW’s targets to accelerate along the electric-vehicle road might seem ambitious, but they are actually fairly muted when compared with German rival Volkswagen Group, which unveiled its own bold plans in a much-hyped event this week.

There are a lot of laps to come in the race to dominate the European EV market, let alone the global one, and it’s too early to make a call on BMW’s position. The strategy is sound, if even conservative, which is actually reassuring amid the intense hype around electric vehicles. And the company says it can remain competitive even if demand for EVs increases faster than expected.

BMW shares surged on Wednesday, just like Volkswagen’s rally this week, as the market starts to re-evaluate the stocks as more mainstream electric-vehicle plays. Investors should be careful to keep an eye on valuations, and not let romantic growth stories overshadow the realities of this competitive sector.

This content was originally published here.