Maximilian Schoberl: Good afternoon, ladies and gentlemen. I would like to welcome you all to our Telephone Conference for the First Quarter Results. With us today are Oliver Zipse Chairman of the Board of Management; and Nicolas Peter our CFO. First, Oliver Zipse will give you an update on the business performance during the quarter. Nicolas Peter will then take you through our financial results.

Afterwards, we will have time for our Q&A session. Now Oliver, please go ahead.

Oliver Zipse: Good afternoon also from my side, ladies and gentlemen. The BMW Group is a global company. We leverage this strategic strength both during the financial year 2020 and of course, in the first quarter of 2021.

When the market situation is difficult in individual regions of the world, the other markets carry us through. Since the start of the pandemic we have done everything possible to create a safe working environment for our employees. And we also offer safe and contact free delivery of vehicles to customers. In more than 60 markets, we have set up mobile sales offices. And our new customer brands and sales system is taking advantage of the momentum and growing acceptance of digital services that has been building over the past year.

Our very strong results underline the viability of our business model even during one of the worst crises the global economy has faced. It is robust in demand all over the world and full of innovations. In many areas, we have picked up the pace once again. I would like to give you a brief overview focusing on three main points. First, we are on course for growth and we are growing profitably.

Second, we are growing sustainably and have a clear road map into the future. Third, we are shaping the technology for tomorrow's mobility. Let's now start with the first point. The BMW Group delivered excellent results in the first quarter of 2021. Markets worldwide are recovering.

Our diverse product portfolio is reaching large groups of customers and our ongoing efficiency measures are paying off. This shows clearly our strategy is having a real impact. The automotive segment delivered an EBIT margin of 9.8% in the first quarter, back within our strategic medium target range for the first time in 10 quarters. As in the past, the EBIT margin does not include the edge equity result from our BBA joint venture in China. Another indicator of our operating strength is our free cash flow of €2.5 billion in the automotive segment.

Our best figure ever for a first quarter. Our first quarter deliveries also reached a new all-time high. Compared to the first quarter of 2019, in other words the comparable period before the crisis, group sales increased by 6%. Our total market share worldwide has climbed up to 3.3% from 2.9% in the same period 2019. Our performance in the Chinese market stands out in particular compared to the first quarter of 2019, again pre-crisis, our China sales increased by more than 36%.

We recently presented our model lineup for our largest market at the auto show in Shanghai 2021. With highly innovative digitalized electric and above all exceptionally high-quality products like BMW iX3, the BMW iX and the BMW i4. We intend to sustain our growth in China.

Maximilian Schoberl: Thank you very much, Oliver. Nicolas, please go ahead.

Nicolas Peter: Thanks Max. Ladies and gentlemen, good afternoon. The BMW Group made a good start to the financial year 2021. Our operating results in the first quarter was at a very high level and we exceeded market expectations. We achieved all of this despite growing headwinds from rising raw material prices and in a market environment that remains volatile due to the coronavirus pandemic.

We were also able to maintain the supply of semiconductors in the first quarter. As a result there were no interruptions in production during the reporting period. However, the situation remains difficult. Significantly improved pricing was a key driver for our strong group earnings. Additionally, the positive trend of the second half year in 2020 continued during the first quarter in all major regions of the world with over 636,000 vehicles delivered.

Maximilian Schoberl: Thank you very much, Nicolas. So let's move to our Q&A session. The line will shortly be open for questions. Please wait for some technical advice.

Operator: And the first question is from Stephen Reitman, Societe Generale.

Your line is now open.

Stephen Reitman: Thank you, very much. I have two questions. First question is about semiconductors. I can fully understand that BMW has shown in the past that is very forward thinking.

It's very aware of market conditions. And so, probably it was one of the first companies to see that the markets are recovering faster than maybe others had anticipated. And so, you made sure you had your orders for semiconductors in early. So you're getting a good supply on that. But how do you cope with the sort of acts of God like for example the Texas freeze and the firing assets, which clearly just meant that some of the suppliers were not physically able to supply.

My second question is about China and the iX3 and globally as well. Looking at the sales of the iX3, so far in China it looks like it's at about 8,000 units in the third at wholesale. Could you comment on the ramp-up of that vehicle, what your plans are? And where do you think it might do one of global scale as well? I understand, the car is not going to be sold in the United States. But what are the orders, like what indications for Europe please?

Maximilian Schoberl: Thank you very much, Stephen. Your question will be answered by our CEO, Oliver please.

Oliver Zipse: Yes, Stephen, very important questions. The semiconductor, as you rightfully noted, only one incidence where our supply chains are challenged, yes. You mentioned, the Renesas fire in Japan, you mentioned the Texas winter incident. And we are completely aware of that. Why do we comparably well-managed these things? BMW is a producer of individual vehicles.

And it's kind of normal day-to-day business to have a very precise supply chain management. Otherwise, you could not build each individual vehicle different than the one before. So we kind of trained this specific muscle of supply chain management. And of course, in terms of crisis, you can play out the strength of this trained muscle. On the other hand to have disruptions in the supply chain is kind of a normality in our industry.

Of course, this is now very publicly commentated and so on. And it is a challenge. That's why we -- last week, we already idled two plants Oxford and Nedcar in the Netherlands. And in the second quarter, you will see more is idling, but not in a magnitude, where it will endanger our business overall. And our assumption today is in quarter two.

We will adherence there. There is some challenges on the production scheduling side. But everything we lose in quarter two, we will be able to compensate in the second half of the year. So the overall effect will not be at least from today's point of view, very big. But there is disruption.

And therefore, we are careful. Because this is today's view on -- in May. And it's -- there is still two-thirds of the year ahead of us. So we will have to see. Until now, we are -- I think we have managed it very well.

The iX3, that was your second question, Stephen. It's ramping up worldwide right into our plans. And in effect, we just increased our production plans. So, we are quite happy with iX3 specifically, as I mentioned in my short speech, wherever we go into automotive testing and comparable comparing, the vehicles the iX3 is turning out to be an extremely good vehicle in many aspects. And therefore, market demand is high.

And -- but we didn't bring it to the United States. Because I think, a specific car has to fit to specific markets. And I think, the demand in China and Europe is so high that, we will concentrate on the iX and the i4 in the United States. Thank you.

Maximilian Schoberl: Thank you, Stephen.

Next question, please.

Operator: The next question is from Kai Mueller, Barclays. Your line is now open.

Kai Mueller: Thank you very much for taking my question. The first one is really around your guidance.

You indicated that, you're at the upper end of your range. Now, the 6% to 8% on the automotive side, but you're still indicating this free cash flow guide above €4 billion. Can you give us a bit of color is there more room to be really above the €4 billion maybe towards the €5 billion mark given near the upper end, or what are really the moving parts when we think about free cash flow in particular after we've seen the strong €2.5 billion in Q1? And then the second point is, you mentioned China will continue to stay strong. Is the current sales level that we've seen something we should be able to extrapolate forward for the rest of the year and into next year? And could you give us a bit of color as well? I understand, you have a big ramp-up in terms of M models as well. How does that fit in with your China strategy and also with your emission targets here in Europe?

Maximilian Schoberl: Thank you very much, Kai.

We start with your China question and – Oliver and then Nicolas. Oliver, please.

Oliver Zipse: Yeah. Thank you. Thank you for this China question, which of course was expected because China is of course is, is a booming nation.

And by the way, the United States are picking up rapidly with that pace as well. We believe that, this positive momentum we see in China will stay. This year of course, but also next year, not only because of the cyclical development, but our customer base is increasing. The middle class, which normally buys our vehicles is becoming stronger and stronger. And we have a really strong brand position in China and that is propelling our development there.

And of course, the regulation towards electrical vehicles plays right into our hands, because these cars are here or will soon be here, and therefore, we are quite confident about China. But not only China, we are also optimistic about Asia overall Korea, Japan, Southeast Asia, developing really well. So we are optimistic also about the whole Pacific region there. And regarding the mix, we have their end models. We are a supplier of all segments.

We have in the lower segments and many we have in the upper segment Rolls-Royce. We have high-performance cars like the M models. And relatively, to today's world they also – all of them are becoming better and better every day in terms of their emission levels. And it's part of our business model, and we are proving by the day and day. And also, M models they are here to stay.

Maximilian Schoberl: Nicolas?

Nicolas Peter: Kai, first of all you're absolutely right. Our Q1 free cash flow was very strong with at €2.5 billion. Now, if we look at the positive and the negative elements, we expect in the coming months, on the positive side, clearly, the development of our business x PDA. Of course, we will have a China dividend in Q2 or in Q3 in our free cash flow and we will continue to manage in a very, very focused manner our working capital. So those are the positives.

On the other hand side, we definitely will see some outflow from provisions some more outflow on the investment side and taxes arm normalizing. So we will have more tax payments, due to the development of our result in particular in the second half of the year. Having said this, I'm very confident that, we will be above €4 billion.

Maximilian Schoberl: Thank you very much.

Kai Mueller: Very clear.

Thank you.

Maximilian Schoberl: Very clear, yes, and this one our CFO. Thank you very much, Kia. Next question, please.

Operator: The next question is from Patrick Hummel at UBS.

Your line is now open.

Patrick Hummel: Thank you very much. Patrick from UBS here. Two questions. The first one really a big picture one.

And I'm not even sure if it's a CEO or CFO question. Are you focusing on growth or cash return? What I mean with that is if I look around in the global OEM landscape there are now companies that are really saying okay this is the time to invest. We want to win in the mobility business models of the future software, autonomous et cetera. And they're cutting the dividends and stopping share buyback programs et cetera. On the other hand, you have players that are very much focused on generating cash flow.

And it feels to me BMW is a little bit in the middle there. You're talking about profitable growth. You have accumulated a €21 billion of net interest-bearing assets and your dividend policy is in light of the cash flow you're generating certainly not the maximum of what you could do. So I'm just wondering where do you sit? Do you sit in the growth cap or in the cash return camp? And my second question comes back to the guidance. As far as the margin is concerned.

I hear you're loud and clear you're guiding to the upper end of that EBIT margin target range. But you're warning about commodity headwinds in the second half. I'm just wondering your pricing power is so strong right now industry-wide and BMW specifically. Why should these commodities actually be a headwind at all? Can't you just pass that on to the consumers and as a consequence with H2 demand looking very strong as well and volumes may be even better because the chip shortage industry-wide should be easing why wouldn't H2 margins be even better?

Maximilian Schoberl: Good. Thank you very much, Patrick.

We start with our CEO, Oliver.

Oliver Zipse: Yes, Patrick there's a very simple answer. We are in both camp. We're in the growth camp and the cash return camp. Why is that? The year 2021 forthcoming are not a surprise for us.

We always knew there will be a lot of technologies available in our product portfolio to grow this growth profitably. And as Nicolas said before we don't grow without being profitable these times are completely over. But when you look at the world currently we serve in more than 150 markets. And in every country the technology with which you grow profitably is a different one. Let me give you a brief example of Germany in the first three months of the year we had 40% on the petrol side 35% -- one-third on the diesel side and with a big growing proportion 25% on the electromobility side.

So very -- almost one-third, one-third, one-third, one-third on the technology side. In contrast we go to Russia 33% petrol, 37% diesel and zero percent electric, a completely different landscape. And of course, in time that will change as well. And we invested in the last five years to have this technological flexibility to serve all markets. And maybe in two years or three years there will be markets, which we will supply with 100% electromobility.

And we are prepared for that. We are not betting the farm on one technology because the markets are very different. And this is now paying off that we invested huge sum which is already behind us in flexibility to follow the markets. And that is why the 3 million is not a target, this is our plan. Yes? And by looking at markets, looking on market intelligence how do our customers develop where is wealth coming from.

And that is a very robust statement and not a target which is not able to be achieved. But to answer your question we continue to invest heavily in technologies, at the same time growing profitably. And at the end of this day investing and growing profitably they belong together. It's part of the same equation. And starting from this year on as you see this equation works for us really well.

Maximilian Schoberl: Nicolas?

Nicolas Peter: Patrick, coming to your second question guidance of EBIT in the automotive segment. On one hand side you are absolutely right. Our pricing power is excellent and is excellent in what is extremely important for us, not just in one market or in one region. We've seen a significant improvement, of course, in Asia, in the US, and the US is very much supported by the development of the used car market and the US car leasing market. And during the first quarter 2020 -- and in particular in the first quarter 2021 an improvement in Europe as well.

On the other hand side, if you look at commodities, I don't think we have a disagreement that commodity prices are a headwind for our industry. And I've made earlier today, the comment that if we look at the -- our risk scenario, it would indicate that we have a mid- to high three-digit million euro risk on the commodity side, while we have a positive impact on the currency side. So altogether, both together sum up to a risk of a negative deviation of €0.5 billion. Are we motivated to further improve our pricing power? Of course. Of course, we are.

And one of the most important projects we are running in our performance program is to use digital tools in an even better way to balance. This is maybe an additional comment to what Oliver just said, to balance in the perfect way. Supply and demand. Because at the end of the day, it's about managing supply and demand. We have probably the most flexible production system in our industry.

And with the quality of data we have now available on win number level in every market, I'm confident that we will continue to further improve the quality of our business.

Maximilian Schoberl: Thank you very much, Patrick.

Patrick Hummel: Thank you.

Maximilian Schoberl: Next question, please.

Operator: The next question is from the José Asumendi, JPMorgan.

Your line is now open.

José Asumendi: Thank you very much, Max. It's José from JPMorgan. A couple of questions please. The first one for Oliver.

Can you talk a little bit about the work you're doing on battery capacity? In three, maybe, topics. The first one, how do you think about in-sourcing all this battery cell manufacturing capabilities in the coming years. Second, if you could just give us also some insights into the work you're doing to develop sales or products for sales. And the third topic, the investment you’ve got in Solid Power. I mean you're making I think a very bold statement to be able to bring some proven technology in the coming years.

So I would be very interested to hear what kind of work we're doing there. It does seem to me that you could be ahead of other European competitors on the battery front. So any remarks you could give us there, that would be great. Second, maybe, for Nicolas, a little bit more -- if you could comment a little bit more around the earnings momentum on your Chinese joint venture for the coming quarters. It does sound like the momentum continues to accelerate.

Can you just give us maybe a little bit of the tailwinds and headwinds you see on the Chinese JV for the coming quarters? Thank you so much.

Maximilian Schoberl: Thank you very much Jose. We’ll start with Oliver about the battery question.

Oliver Zipse: Yes. I would say, batteries, of course, is a really hot topic.

But on the other hand, we are now in the fifth generation of battery technology development. And so, it's not completely new to us. We are more or less doing almost everything in-house on the battery side, the full battery pack, the battery modules, the electric drivetrain and so on. The only thing we are purchasing, for a good reason, and I'll come to that in a minute, is the battery cell itself, which is only one element of a complete electric drivetrain. Why do we do that? There is this blended very competent rapidly developing market out there.

There are no monopoly structures and a lot of technology development going on. There is no reason from our point of whatsoever to do that by yourself. We have four large delivery contracts with CATL here in Europe and in China with F in China from 2024. And with Northvolt here in Europe and also with Samsung SDI. So we have four big contracts and that will serve us on the capacity side, but also on the technology side.

So we are extremely happy with that, and we will have enough capacity to propel our growth further. Now as you rightfully mentioned, we -- on May 4, we made a statement then that we make an investment strategic investment in solid power together with other investors to prepare ourselves for the next step. We're thinking more decades and not only in today's world. We are working with solid power for quite some time. So it's not a new partner for us.

And we think that the ASSP, the all solid-state battery technology is something promising for the future not for next year, but for the future because the energy density is very promising. And energy density means higher range and so on. So that is on our plate to develop that first. And we are really happy to have from our point of view a strong partner there. And I think they think of us as a strategic investor and we are heavily involved as we said many times before into the technology development of battery cells for the future.

So we look with high expectation in the future. And as we said before, electromobility is a big part of our strategy.

Maximilian Schoberl: Thank you very much Oliver. And now the second part of the question BBA earnings out for coming quarters.

Nicolas Peter: Of course, you've asked about the earnings outlook for the coming quarters and more specifically, of course, China and BBA.

But maybe let me start with a more general comment. We are as we speak mid of the second quarter, and we are in a strong position in the second quarter. Why? Because we have -- and that's not just China, we have a strong order bank in all three major sales regions China, US and Europe. In fact we've seen that month after months Europe has developed in a positive way and we believe it will develop -- depend very, very much on the development of the pandemic in Europe, how the business will continue to develop in Europe. Now if we reflect on China, we have seen since April last year month after month every single month an improvement of the business, improvement of the sales, while at the same time keeping the margins very high month after month and it continued in the first quarter.

If I'm more specific about the second quarter, I expect the second quarter to be strong in China as well. And we have no indications that it should significantly reverse in the second half of the year. However, what will happen of course is you have a different base effect in the second half of the year. In the first half in particular in the first quarter we had the shutdown in China in February and early March and we had a very strong second half year in China already in 2020. So the growth potential is a different one compared to Q1 and Q2.

Maximilian Schoberl: Thank you. Next question please.

Operator: The next question is from Henning Cosman, HSBC. Your line is now open.

Henning Cosman: Hi.

Thank you very much and good afternoon. I was hoping to speak about your three million unit targets. I'm so conserving that most of your OEM competitors have abandoned their unit targets. Some sort of explicitly saying they are not pursuing volume anymore in favor of cash and profit. And of course, I hear you when you say you want to obviously grow profitably.

But I just find it curious that you're almost the last one left to have a specific unit target. So I was hoping you could please comment on that a little bit. And then still on the guidance, I don't want to be too blunt, right? But when I hear you say that you think Q2 will be very strong as well. And I'm sort of reading into that that you're viewing it as similar maybe to Q1 even when I consider the fact that your capitalization ratio will be much higher than the remainder of the year than it was in Q1. I'm really wondering also sort of considering what Patrick said in your response about the pricing offsetting raw materials and so on.

And I would really leave you with a very, very low implied second half. So, if you could just maybe -- I don't know if it's possible to quantify some of the specific effects that would really bring you under the ceiling of the guidance range, that would be great? Thank you very much.

Maximilian Schoberl: Oliver? You want to start? Yes?

Oliver Zipse: Yeah. Okay. As I said before, this is not volume versus profit.

This is profitable growth. And it's not a target. I think we owe it to our investors to be transparent where we are heading to. Technology-wise, market share-wise, but also volume-wise. And this is our plan.

Now this is not a target or a commitment that we have to push. If you look at the whole Pacific region on the western and on the east side, this is rapidly developing. The United States is starting a booming phase. You have all the after COVID state subsidies enormous amounts of some I hope that will create wealth at the end of the day. And of course, you see the Asian side developer and it's not only China.

And we are not so far from this €3 million volume target. And I think we owe it to our investors to be transparent. And in the past, maybe there was a target setting approach. This is not what we do here. We are transparent about our plans.

And we will see at the end of this year maybe we are not -- that plan is not even so far away anymore.

Maximilian Schoberl: Nicolas?

Nicolas Peter: If we put our cells in the situation, we were exactly 12 months ago, when we were discussing the situation in 2020. If I remember well, we had and you were joining our quarters conference and we had a completely different discussion compared to what happened in the second half of 2020. In the second half of 2020, we had our best sales result of the second half year in the history of our company and we have seen margins improving significantly. What did we learn out of this that our today's environment is extremely volatile.

It's extremely volatile. And therefore, we are really focused on managing in the best possible way supply and demand to be able to follow the market in both directions. I think we have proven in Q3, Q4, Q1 that we are performing very well in this regard. You've rightly mentioned the outlook for Q2. And as I said, regarding the second half of the year, it will very much depend on the speed of recovery in Europe.

We are confident regarding US and Asia. And it's not just China markets like Korea are performing extremely well. And of course, you have to take into account and I've mentioned this in my speech that we have a growing demand for xEVs in our portfolio. And as we both know xEV and we are really working hard to change this in the next couple of years, but still have lower margin compared to an ICE engine. On the other hand side, we are really satisfied that our xEV cars, our electrified cars be it all-electric or plug-in hybrid in such high demand.

Maximilian Schoberl: Thank you very much, Nicolas. Ladies and gentlemen its 3 o'clock, but I think we take two, three more additional questions. Next question, please?

Operator: The next question is from Daniel Schwarz. Your line is now open. Unidentified Analyst : Yes.

Thank you for taking my question. The question about residual values. So used car prices obviously at peak levels and still you have not reversed the provisions from last year. Could you say what the reason for that is? And can you give an indication what the value is of off-lease vehicles that come back to you every quarter? And my second question is, as you mentioned your market leader in plug-in hybrids and of course, that helps a lot of two cut emissions. Do you think there's a risk that the EU will change the regulation for these vehicles in June? Thank you.

Maximilian Schoberl: Oliver, you would like to start with the plug-in hybrid question, I think?

Oliver Zipse: Daniel, we are completely aware that there are a lot of discussions on the hybrid. But looking at the market, it's one of the most fascinating products for customers. And there is one epic truth about plug-in hybrids in terms of emissions, they're always better than a normal combustion engine always because of the recuperation capabilities. The discussion we have -- there will be some adoptions. In terms of what -- how is it measured on a test track and what's a real assumption depending on whether you charge the car or not.

We see that. But even if that is changed, it will stay a highly attractive customer product independent of the regulation. And so we are quite happy about that progress. And as we said before we are flexible. We can change drive cranes.

And if it goes down it goes down. And currently, it's working perfectly for us, really. And if that goes down again, we will do more best, yes. It's not such a big problem.

Maximilian Schoberl: Thank you, Oliver.

Nicolas?

Nicolas Peter: Daniel, first of all, you are absolutely right. The fact that used car markets are very supportive has a significant impact on our P&L, be it on -- in the automotive segment and in the -- of course, in the financial services segment. If we look now at the impact in Q1, it's between a low and mid-3-digit million year on number, the year positive impact. And now you can I guess relatively easily calculate because in particular relevant is this effect in markets like US, markets like UK and Germany, hardly any impact in China because China is not a leasing market. This is a really significant improvement on a per vehicle level in those markets.

If we reflect what is -- what we can see right now, the situation is on this strong level relatively stable in those three markets. And this is why we are motivated with the right strategy regarding supply and demand to keep it on this level.

Maximilian Schoberl: Thank you very much. Next question, please?

Operator: Next question is from Dorothee Cresswell, Exane. Your line is now open.

Dorothee Cresswell: Hi, there. Thanks for taking my question. It's a slightly longer-term one. There's obviously, a lot of newbie’s in the pipeline for 2022 and '23. I know, you've officially only unveiled four of the eight new launches during those two years.

But could you confirm that some of those products will be allocated to the Stockenberg plant and you say that there will be more pure electric products being localized in China. And then I wondered if you had an order intake number on the new iX that you could share with us? Thank you.

Maximilian Schoberl: Thank you, Dorothee. Oliver?

Oliver Zipse: Dorothee, Oliver from Munich. We communicated that there will be at the end of 2023, we will have 12 electric owning products in all three brands BMW, Rolls-Royce, and also MINI.

So, we are only at a starting point where we try to cover all segments. Now, our strategy is not to have individual cars, we cover all segments. Meaning if there is a specific marking going quicker to emission-free mobility, we will be able to respond in all segments at the same time and that's around the corner. So, we will -- next year, we will have the 7 Series high-profile product with all kinds of drivetrains. We will have the x1, we will have the 5 Series and so on.

So, we're only at the very starting point there. There will be best cars, of course, like the iX3 is produced in China, and exported from there all over the world. And the pure electric cars in the United States that will take a little bit more time, but there will be also electric-only cars at a later point in time.

Nicolas Peter: The only thing may I add to the incoming on a level of the iX to put it very simple production 2021 is sold out. So, we are really in -- not only in a good position, but we are optimistic for this kind.

We are specifically optimistic because this car plays a key role in our strategy moving forward. This is a segment which we dominated. This -- it's plus/minus the size of the X5. The X5 segment is a segment which BMW has dominated in the last more than 15 years. And the feedback we got on the iX make us very optimistic that we will continue the success story.

Maximilian Schoberl: Thank you very much Dorothee and now the last question please.

Operator: The last question is from Philippe Houchois, Jefferies. Your line is now open.

Philippe Houchois: Yes, thank you very much. I have two questions please.

One for Nicolas maybe. Lot of discussion this earnings season about a world of low inventory, better pricing. And I'm just trying to maybe get an answer from you on how we should look at it for the -- you control your environment better than most at this stage. And if we think about let's say if you're able to reduce your finished product inventories by let's say 10 days of sales. But how much would you think you would have to increase your work in progress or your buffers in terms of days of cost of goods sold to derisk the supply chain and what to repeat what we saw across the industry.

So can a view on the net impact that would be very helpful. And the other question I have is more for Dr. Zipse and more an industry question and your quality of President of the ACEA. We're about to have a decision in the coming months about Euro 7 and everything I read basically about Euro 7 tells me this is the kiss of death for ICE basically from a technical standpoint you may or may not agree. But I'm just wondering what -- is it too late to see a scenario where we basically we scrap Euro 7 in exchange the industry moves towards a faster acceleration of electrification particularly the build-out of charging infrastructure.

And if you could is there an estimate somewhere that the ACEA has come up with what it would cause the industry in Europe in terms of billions of euros to actually comply with Euro 7 as it is being structured right now? Thank you very much.

Maximilian Schoberl: Thank you, Philippe. We start with Nicolas and last words from Oliver.

Nicolas Peter: Philippe, we spent a lot of resources to improve in a very systematic way the quality of our sales and market forecast and for every single individual market and for every single individual segment. And thanks to this we are -- if you look if you compare end of Q1 inventory level to the previous years, we operate our business with approximately 80,000 cars less in inventory which is I think very significant, but we will not stop there.

As I said one of the most important projects from my perspective in our performance program is really to further analyze and understand how we can further improve the inventory level on one hand side, while, at the same time, being also from a supplier perspective and very reliable partner which is able to forecast as early as possible deviations from an initial plan it on the positive or on the negative side.

Maximilian Schoberl: Oliver?

Oliver Zipse: Yes, Philippe, that is a very important discussion, because it's currently in the regulation phase. And in due time, there will be a decision on Euro 7. We must be careful not to mix our CO2 targets and emission targets on the air pollutant side which is Euro 7. They are quite distinct things.

We are very strong, because there's a direct link between CO2 emissions and the climate, because that is a very strong thing. And that is why, we agreed in the European automotive industry to be even more progressive and to offer to be more progressive than a 37.5% reduction between 2021 and 2030. So I think we are heading somewhere towards 50%, not to be confused with the 55% in the overall climate gas discussion the base of that is 1990. We are much, much more progressive, because our base starts at the end of this year. And we are offering around about 50%.

So we are really progressive about that. The EU 7 is not about emissions, it's about the emission effect of air pollutants. So in the term of, do no harm. And some of these effects we even propose to be tougher in EU 7 than we are already in the very good EU 6d regulation. On the other hand they are emissions.

If you reduce them further there's almost no effect on air quality. And then it becomes a cost issue with no reason. And what we see currently to -- and I'm often asked a question why don't you skip EU 7 and go full electric? I think the charging infrastructure worldwide, in Europe, not even in Germany is in a state where we could make that prognosis. It's far away, from being able to do 100% of electric mobility, we are far away. Currently the number of electric cars, purely electric cars is increasing fourfold in comparison to charging infrastructure.

And it's increasing by the day. So we are far, far away. And I'm only talking about climate and air pollution effects. The worst-case is, you ban the combustion engines and you do not have the charging infrastructure, you will very quickly see extremely old and I say, dirty cars driving around here. You will have a Havana effect.

You will have the old cars not being replaced. And that's why I worn heavily, to emit EU 7. We are not offering to postpone that. We want to do EU 7, but with the right strategy to increase air quality and to have a right balance to have a cost ratio benefit. And then, I think we can improve the combustion engines further with EU 7 maybe in 2025, 2026 whatever.

But I would not play -- the CO2 reduction targets, I would not play them off with EU 7. They're quite different things.

Philippe Houchois: Okay. Thank you very much.

Maximilian Schoberl: Good.

Thank you very much. Oliver, Nicolas. And ladies and gentlemen thank you for joining us today and also for your questions. Please stay healthy. Bye-bye.

And service from Munich. Bye-bye.

Oliver Zipse: Bye-bye.