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BMW i3 Enters the Electric Scrum

Tickers in this article: TSLA

NEW YORK (MainStreet) -- The all-electric, pint-sized BMW i3 launched today in New York, London and Beijing to great fanfare and is positioned within the German automaker's fleet as the mega-city vehicle of the future. Reminiscent of the Isetta "bubble car" spliced with the "Jetsons"-esque vehicle from Kubrick's A.I., the sub-compact Bimmer begs a fundamental question: can the cool factor actually drive sales?

That's all the more relevant given that Daimler AG's Mercedes-Benz led Bayerische Motoren Werke AG's BMW in U.S. deliveries by 1,519 vehicles after the first six months of 2013. That's a change from the norm, given that BMW has held the luxury sales crown in the U.S. for the last two years with 281,460 BMW brand vehicles sold in 2012 compared to 274,134 Mercedes-Benz brand vehicles sold last year.

Six years of Munich R&D has gone into pushing forward the Project i sub-brand, which developed from the MINI E and will also steward the release of the i8, an EV supercar. To boot, the whole initiative encompasses a larger-scale sustainability platform, including a BMW venture capital initiative with $100 million invested each year toward green development.

Still, challenges abound in getting this murine pip-squeak of a car to catch on.

That's because despite the buzz these all-electric cars generate, challenges abound in terms of moving units: the Chevrolet Volt, Nissan Leaf and Tesla Model S have not mustered big sales, despite the attention and brouhaha.

In fact, electric vehicle sales worldwide doubled last year, but despite the fanfare for the 180,000 EVs out there, the proportion of EVs on the road is miniscule--amounting to nary 0.02% of passenger cars, according to International Energy Agency.

With this winter's New York Times hit-piece questioning the efficacy of the electric Tesla Model S--this after the National Highway Traffic Safety Administration directed umbrage at the Chevy Volt following a fire at the test facility--there is a lingering stigma regarding cars powered by lithium-ion batteries and doubt over whether they're worth their salt.

"Make no mistake, the internal combustion engine will still prevail, no question," BMW of North America CEO Ludwig Willisch told MainStreet at the New York i3 launch. "But for the next five years, the prediction is that the EV market will go up to 850,000 cars all together, so we're confident we can have a good share of the pie there."