The German premium carmaker on Tuesday radiated a gloomy view of the second half, seemingly unmoored from the ongoing euphoria spread by its peers and spooking investors even as Europe’s auto stocks outperform much of the market.

The auto industry is raking in the profits this year, thanks to a number of benign macro effects. Yes, there’s the sharp recovery in car demand, but automakers have also had to spend less in marketing to lure would-be buyers into the showroom. And then there’s a consumer shift toward lucrative, higher-margin models. Reduced credit losses, too, and improved prices for leased cars sold back into the market have also helped the bottom line.

Despite all that, BMW is not upbeat about the future.

Shares dived after the company gave lackluster guidance, implying this year’s returns might potentially see the taillights of weaker, mass-market peers like Stellantis. Meanwhile, on Tuesday, the Franco-American group that emerged from PSA’s takeover of Fiat Chrylser hiked its 2021 outlook, like many others, and could conceivably be more profitable than BMW if the latter is to be taken at its word.

“I’m telling you everything”

BMW’s implied second-half collapse consequently baffled analysts, who asked management point-blank what clouds on the horizon they could spot that ostensibly escaped the fate of its competitors—or what they might be hiding.

“I was expecting your question,” finance chief Nicolas Peter, who struggled to explain why seasonal effects and prevailing market conditions affecting the broader industry will somehow disproportionately hurt BMW. “There’s probably nothing you do not see, and of course I’m telling you everything.” 

He cited the typical rise in overhead toward the end of the year: higher input prices and the ongoing shortage of semiconductors that could limit production, especially now that a renewed outbreak of COVID in Malaysia hit chip supply.

“Will these risks materialize? Let’s see; we’re doing everything to avoid that, and we will see much clearer in a couple of weeks,” he explained.

Did a prioritization toward filling customer orders for higher-margin vehicles because of the ongoing chip crunch effectively pull demand forward into the first half?, analysts wanted to know.  

“No, not at all, there is luckily an ongoing high demand in particular for our high-end models,” Peter told them.

So could it then be the rising raw material costs for key inputs like steel and precious metals? BMW warned on Tuesday such shocks could wipe up to €1 billion ($1.19 billion) off its profits this year.  

“We’re closer to €500 million that would however primarily affect the second half,” the BMW finance chief said.

Finally Peter pointed to an effect not flagged thus far on its quarterly statements—a rising share of margin-sapping xEVs, the industry term collectively combining battery electric vehicles and plug-in hybrids. This could increase by three-quarters.

“What you will see [is] a ramp-up of xEVs in the second half month by month, and this of course unfortunately has some negative impact on our margin,” he said.

BMW gave a surprisingly dour bottom line forecast. Its best-case guidance is for operating margin at its core automotive division to achieve 7% to 9%—worse, for example, than the 10% margin Stellantis as a group expects. For a premium carmaker that can command higher prices and typically enjoy stronger growth over volume brands as income inequality grows, this was not the kind of performance the market expects.

Taking a cue from BMW, investors opted for caution as well, and simply sold off the stock.

Shares were down 5% in late afternoon trading.