The Toronto Stock Exchange’s parent company has already completed a major deal this year: its acquisition of ETF education company VettaFi.

According to TMX Group CEO John McKenzie, the deal helps expand its exchange-traded fund business globally.

“The exchange-traded fund is essentially one of the most important innovations in investing in the marketplace history — at least in the last 20 [to] 30 years,” McKenzie told CNBC’s “ETF Edge” this week. “What we were really looking to do is … get deeper into providing more support to our clients.”

Even though ETF activity has cooled off from its 2022 records, action in 2023 was still above previous years, according to iShares data.

McKenzie plans to utilize the VettaFi acquisition to facilitate more ETF creation.

“ETF providers can create new products and great solutions so that they can reach a broader investing audience,” McKenzie said. “That’s the one two punch of what we’re doing with that investment.”

TMX’s ETF Screener lists 1,264 ETFs and ETF-related funds on the Toronto Stock Exchange as of Friday.

With VettaFi in the exchange’s tool belt, McKenzie hopes to create new ETFs focusing on Canada’s economic strengths and how they can reach international investors.

“We want to be more global than local,” added McKenzie. “This is a great asset to help us build not just in the U.S., not just in Canada, but around the world.”

Since the acquisition was completed on Jan. 2, TMX shares are up 11%.

Disclaimer

Oil prices rose after Britain and the United States carried out military strikes against targets in Houthi-controlled areas of Yemen, as tensions in the Red Sea mount further.

Global benchmark Brent was trading around 4% higher at 6 a.m. ET Friday, $80.55 a barrel, while the U.S. West Texas Intermediate futures climbed 4.22% to $75.07 per barrel.

“These targeted strikes are a clear message that the United States and our partners will not tolerate attacks on our personnel or allow hostile actors to imperil freedom of navigation in one of the world’s most critical commercial routes,” U.S. President Joe Biden said in a statement Thursday evening.

While the U.S. has carried out strikes on Iranian proxies in Syria and Iraq since the outbreak of the Gaza war, this would be the first known strike against the Iran-backed Houthis in Yemen.

The Houthis have been attacking vessels in the Red Sea, targeting global shipping vessels including those from the U.S. and Israel, in retaliation for the war in Gaza that has so far killed nearly 23,000 people in the Palestinian enclave.

Major shipping companies stopped traversing the Suez Canal and Red Sea routes in early December, choosing to reroute via southern Africa instead. That’s resulted in longer and more expensive journeys which pushed up ocean freight rates.

In a televised speech on Thursday, the leader of Yemen’s Houthis, Abdul-Malik al-Houthi, vowed that any American attack on the group will not go without response.

“We will confront the American aggression. Any American aggression will never remain without a response,” he said, cautioning that the response will be greater than “at the level of the recent operation” that the group is carrying out at sea.

In announcing the strikes on Thursday, Biden vowed he “will not hesitate to direct further measures to protect our people and the free flow of international commerce as necessary.”

Saudi Arabia’s Public Investment Fund (PIF) was the top spender among global sovereign wealth funds last year, accounting for about a quarter of the $124 billion splashed by state-owned investors, according to a preliminary report by research consultancy Global SWF.

The Saudi fund boosted its deal activities from a total $20.7 billion in 2022 to $31.6 billion in 2023, the research said, even as most other counterparts tapered down their spending. Overall, global sovereign wealth funds deployed 20% fewer funds compared to 2022, despite most major stock markets seeing a rally last year.

“This may signal an overly cautious approach, as there is no shortage of capital to put to work among these institutions,” the report, which tracks activities across the world’s sovereign funds, noted. 

“The clear winner was Saudi’s PIF, which has become a heavy-hitter both at home and overseas,” the analysts wrote. The PIF, controlled by Saudi Crown Prince Mohammed bin Salman, has total estimated assets of $776 billion. The Saudi fund has pursued frequent deals and joint ventures in its pursuit toward Vision 2030 — a plan originally launched back in 2016 which aims to increase economic diversification away from oil. Notable overseas investments in 2023, alongside golf and soccer, included Nintendo in Japan and Vale Basic Materials in Brazil. 

Asides from PIF, four other funds from the GCC (Gulf Corporation Council) made it into the top 10 — Mubadala, the Qatar Investment Authority, ADQ and the Abu Dhabi Investment Authority.

The PIF even surpassed Singapore’s GIC, which had led spending by wealth funds for the past six years. The Singaporean fund slashed its investment activity by 37%, in terms of volume, despite receiving one of its largest inflows from the central bank.

The report also noted the attention given to emerging markets among several sovereign investors. 

“In 2023 we can observe a renewed interest in emerging markets, including Saudi, Türkiye, and the UAE (with the help of domestic SWFs), and India, Brazil, China, and Indonesia,” it stated. 

Global economies will see more sovereign wealth funds coming online in 2024, such as Hong Kong’s HKIC, Philippines’ Maharlika and Pakistan’s PSWF.

“The formation of Dubai’s new SWF, DIF, will send shock waves and will surely attract personnel from other SWFs,” the research said.

A project to build a facility described as “the world’s largest offshore wind farm” took a big step forward this month by producing its first power.

Located in the North Sea, over 130 kilometers off England’s northeast coast, the Dogger Bank Wind Farm still has some way to go before it’s fully operational, but the installation and powering up of its first turbine is a major feat in itself.

That’s because GE Vernova’s Haliade-X turbines stand 260 meters tall — that’s higher than San Francisco’s Golden Gate Bridge — and have blades measuring 107 meters.

Turbine installation at Dogger Bank has required a huge amount of planning and preparation, with the Voltaire — a specialist vessel designed and built by the family-owned Jan De Nul Group — playing a key role.

With a lifting capacity of 3,200 metric tons, the Voltaire — named after the 18th-century French philosopher — will have installed a total of 277 Haliade-X turbines when its work is complete.

Described by Dogger Bank as the “largest offshore jack-up installation vessel ever built,” in many ways, it’s the pinnacle of an extensive supply chain involving numerous businesses and stakeholders.

The logistics are complex and multi-layered, with water depth a particular issue.

The sea in the Dogger Bank Offshore Development Zone is up to 63 meters deep, meaning the Voltaire’s ability to work in deeper waters is crucial. 

This is where its four legs come into play.

According to Jan De Nul, the legs of the Voltaire — which was built at the COSCO Shipping Shipyard in China — enable it to lift itself above the water’s surface.

With each leg measuring roughly 130 meters in length, they highlight the scale of equipment required to install huge offshore wind turbines like GE’s Haliade-X.

In an online Q&A before installations at Dogger Bank began, Jan De Nul’s Rutger Standaert spoke of their importance. “Thanks to those legs, the Voltaire can effectively operate at a water depth of 80 meters,” Standaert, who is manager of vessel construction at the business, said.

He noted that the Voltaire’s capabilities would enable installations further out to sea, allowing it to play a key role in the emerging floating offshore wind sector.

“Off the Scottish coast, for example, expensive floating windfarms are often the only way to tap into offshore wind,” he said. “The water is too deep for fixed windfarms, but the Voltaire can offer new opportunities.”

Thinking big

Once completed, the Dogger Bank Wind Farm will have a total capacity of 3.6 gigawatts (GW) and be able to power as many as six million homes per year, according to its developers.

Work on the project is taking place over three phases: Dogger Bank A, B, and C. A fourth phase of the wind farm known as Dogger Bank D has also been proposed, and would increase its capacity even further.

Søren Lassen is head of offshore wind research at Wood Mackenzie, a research and consultancy group. He described Dogger Bank as “a huge project, especially if you combine the three phases.”

“It is a project that requires a lot of preparation,” he told CNBC. “There’s the logistics in terms of having the vessels to do the installation … and then of course, you also have the logistics in terms of getting the components to the marshaling port.”

Both of these aspects were being made “a lot more complicated” by the use of next-generation turbines and a next-generation installation vessel, Lassen said.

“You have … a lot of innovation that goes into this. And not only do you need a new vessel or new components, you also need new factories to build those components.”

As such, a slew of upgrades and adjustments were needed to “reverberate throughout the entire value chain” for operations to run smoothly, he added.

Bigger turbines, bigger challenges?

Thanks to their sheer size, larger turbine designs have created a specific set of needs for the offshore wind sector and sites like the Dogger Bank Wind Farm.

“From cranes to vessels, we use a number of specially designed pieces of equipment to transport the Haliade-X turbines that will be used in this project,” a spokesperson for GE Offshore Wind said in a statement sent to CNBC.

Wood Mackenzie’s Lassen stressed the importance of having dedicated transportation vessels, noting that the towers of turbines need to be broken into three or four sections in order to fit on board.  

Massive blades represent the biggest challenge, he said, as they have to be laid flat. “And that just means that you need a very, very long transportation vessel, [and] that you need to stack them up accordingly.”

Meanwhile, delays or bottlenecks can have far-reaching — and expensive — consequences.

Lassen cited the example of blades not being delivered on time, which leads to vessels having to “go away and then come back half a year later to do the installation. This is very costly, of course.”

And delays also lead to lost revenue.

“These projects are going out [and] generating a lot of power from the day that they’re being installed, pretty much,” Lassen added.

“So any delays [and] you’re also losing a lot of revenue, especially right now when the power prices are really, really high.”

The bigger picture

Offshore wind farms are set to play a significant role in reducing emissions and hitting net zero goals in the years ahead — but a supply chain that’s well-run and reliable will be key to the industry’s success.

This is set to cost serious money. According to Wood Mackenzie, a base case of 30 GW of installations per year by 2030 — excluding China — will require investment of around $27 billion by 2026 to build out supply chains.

“The supply chain needs to invest,” Lassen said, adding that it also needed capital, certainty and concrete, firm orders. However, cost pressures mean there is currently uncertainty over projects planned for 2025, 2026 and 2027.

“Any delays to these projects takes away volume from the supply chain, and the supply chain needs that volume to convert it into revenue to build new factories,” Lassen explained.

It is crucial that projects planned for the next few years go ahead, he added. “That helps the underlying supply chain ramp up so they can build the capacity [for] ’27, ’28, ’29 and well into the 2030s as well.”

The International Energy Agency on Thursday said that oil markets are likely to remain on edge as the Israel-Hamas war persists, with investors closely monitoring the potential for output disruption in the Middle East.

The world’s leading energy watchdog said in its latest monthly oil market report, that while the conflict had not yet had a direct impact on physical supply, energy market participants would “remain on tenterhooks” as the crisis unfolds.

“The Middle East conflict is fraught with uncertainty and events are fast developing,” the IEA said in its report.

“Against a backdrop of tightly balanced oil markets anticipated by the IEA for some time, the international community will remain laser focused on risks to the region’s oil flows,” the energy agency added.

Noting a “sharp escalation in geopolitical risk,” the IEA said it would continue to closely monitor oil markets and “stands ready to act if necessary to ensure markets remain adequately supplied.”

In the event of an abrupt oil supply shortage, the IEA’s response includes member countries releasing emergency stocks and/or implementing demand restraint measures.

Israel is not a major oil producer and no major oil infrastructure runs close to the Gaza Strip.

The IEA notes, however, that the Middle East accounts for more than one third of global seaborne oil trade, and the Israel-Hamas conflict has ratcheted up fears the fighting may affect regional energy production.

The IEA report comes as the Israel-Hamas conflict enters its sixth day and follows a devastating and coordinated assault from Palestinian militant group Hamas on southern Israel over the weekend. Israel has since pulverized Gaza with airstrikes and is expected to launch a ground offensive against Hamas in the region in the coming days.

Israel has also ordered the “complete siege” of the Gaza Strip, seeking to stop the supply of electricity, food, water and fuel to the already blockaded population of roughly 2.3 million people.

As a result of the ongoing Israeli-Hamas war, at least 1,200 Israelis have been killed, with more than 2,700 injured, according to Israel’s military. Meanwhile, the Palestinian Ministry of Health says 1,203 people in Gaza have been killed, with 5,763 injured.

When oil markets opened following the surprise attack by Hamas on Israel on Oct. 7, the IEA said traders priced in a $3 to $4 risk premium. However, prices have since stabilized.

Crude futures traded higher on Thursday.

International benchmark Brent crude futures with December expiry traded 0.8% higher at $86.5 per barrel at around 9 a.m. London time, while front-month November U.S. West Texas Intermediate crude futures rose 0.6% to trade at $83.99 per barrel.

A project described as the “world’s largest offshore wind farm” took a major step forward over the weekend after producing its first power.

Located off the coast of northeast England in the North Sea, the Dogger Bank Wind Farm is being developed in three phases — A, B and C — and will have a total capacity of 3.6 gigawatts once fully up and running. A fourth phase, known as Dogger Bank D, has been proposed.

“The project’s first turbine at Dogger Bank A started turning and producing electricity at 8.37pm BST on Saturday 7 October,” the Dogger Bank Wind Farm Project said in an announcement Monday.

“Power from the first offshore wind turbine is now being transmitted to the UK’s national grid via Dogger Bank’s high-voltage direct current … transmission system, marking the first-time use of HVDC technology on a UK wind farm,” it added.

The scale of the project is considerable, with those behind it saying it will be able to power as many as 6 million homes per year. Dogger Bank is using GE Vernova’s huge Haliade-X turbines, which boast blades measuring 107 meters, or about 351 feet.

Dogger Bank is a joint venture partnership involving SSE Renewables, Equinor and Vårgrønn, which hold stakes of 40%, 40% and 20% respectively.

In a statement, SSE Chief Executive Alistair Phillips-Davies said Dogger Bank would “provide a significant boost to UK energy security, affordability and leadership in tackling climate change.”

“This is exactly how we should be responding to the energy crisis,” he added.

Equinor is a Norwegian business better known for its production of oil and gas, but it also is involved in wind energy projects like Dogger Bank and Hywind Tampen.

“A renewable mega-project like Dogger Bank constitutes an industrial wind hub in the heart of the North Sea, playing a major role in the UK’s ambitions for offshore wind and supporting its net zero ambitions,” Equinor CEO Anders Opedal said.

U.K. Prime Minister Rishi Sunak welcomed the news. Sunak — who has faced sharp criticism from some quarters after a shift in climate policy — described offshore wind as being “critical to generating renewable, efficient energy that can power British homes from British seas.”

The United Kingdom is home to a mature offshore wind sector, with the U.S. government’s International Trade Administration highlighting traits such as good wind speed, a long coastline and a “relatively shallow seabed,” among other things.

Major offshore wind farms in waters off the U.K. include Hornsea 2, a fully operational, 165-turbine facility that boasts a capacity of more than 1.3 GW. Danish energy firm Orsted has previously called it “the world’s largest installed windfarm.”

While those involved in Dogger Bank have repeatedly called it “the world’s largest offshore wind farm,” Monday’s statement also referred to it as the “world’s largest offshore wind farm under construction,” an apparent nod to the fact that significant work is still required before it’s complete.

Across the Atlantic, the U.S. has some way to go to catch up with countries like the U.K., with a range of factors creating a challenging environment for the sector’s development there.

America’s first offshore wind farm, the 30 megawatt Block Island Wind Farm, started commercial operations only in late 2016, although the U.S. is planning to ramp up its offshore wind capacity in the coming years.

In November 2021, ground was broken on Vineyard Wind 1, which has been dubbed the United States’ “first commercial scale offshore wind farm.”

Crude oil prices could see a spike on Monday but the overall impact of the attack on Israel by Palestinian militants Hamas will likely be limited, energy experts told CNBC.

That’s provided the conflict does not escalate further, they said.

“We may see a knee-jerk surge in crude prices when markets open on Monday,” Vandana Hari, CEO of Vanda Insights, told CNBC via email.

“There will be some risk premium factored in as a default, until the market is satisfied that the event is not setting off a chain reaction and Mideast oil and gas supplies won’t be affected,” said Hari.

Militants from Hamas — designated by the U.S., European Union and the U.K. as a terrorist organization — infiltrated Israel by land, sea and air on Saturday, during a major Jewish holiday. The incursion came hours after the Islamist militants fired thousands of rockets into Israel from Gaza. 

Civilians including women, children and the elderly have been abducted, and others killed in their homes, Israeli Prime Minister Benjamin Netanyahu said.

Israel has begun the offensive phase, and will “continue with neither limitations nor respite until the objectives are achieved,” Netanyahu said.

He vowed to “exact an immense price from the enemy, within the Gaza Strip as well.” Late Saturday, Israel cut off the supply of electricity, fuel and goods to the narrow strip where 2.3 million Palestinians live.

At the time of publication, there were at least 250 Israelis killed and more than 1,860 injured, including 320 in serious condition, NBC News reported. The Palestinian Healthy Ministry recorded 256 deaths and 1,790 injuries in Gaza.

Both Israel and Palestine are not major oil players, but the conflict sits in a wider key oil producing region, analysts told CNBC, warning that it has the potential to conflagrate further.

Hari noted that while the conflict does not directly impact oil production or supply, it is still “on the doorstep of an important oil-producing and exporting region.”

Israel boasts two oil refineries with a combined capacity of almost 300,000 barrels per day. According to the U.S. Energy Information Administration (EIA), the country has “virtually no crude oil and condensate production.” The Palestinian territories produce no oil, data from EIA shows.

Hari’s sentiments were echoed by other market watchers.

“The impact on the oil price will be limited unless we see the ‘war’ between the two sides expand quickly to a regional war where the U.S. and Iran and other supporters of the parties get directly involved,” Middle East managing director of energy consultancy Facts Global Energy, Iman Nasseri, told CNBC.

Similarly, French businessman and hedge fund manager Pierre Andurand said that since the Levant is not a large oil producing region, the war is unlikely to impact oil supply in the short term. 

“One should not expect a large oil price spike in the coming days. But it could eventually have an impact on supply and prices,” he said in a post on X, the social media platform that was formerly Twitter.

Andurand said global oil inventories are low, and production cuts by OPEC kingpin Saudi Arabia, as well as Russia, will lead to more inventory draws over the next few months.

“The market will eventually have to beg for more Saudi supply, which I believe, will not happen sub $110 Brent.” 

Crude oil prices recently hit their highest level in more than a year before pulling back.

Still, Hari warned that the ongoing Israeli-Palestinian conflict “has the potential to widen into regional hostilities.”

On Sunday, Lebanon’s Hezbollah militant group confirmed it launched attacks on three sites in the Shebaa Farms — a strip of land that sits at the intersection of the Lebanese-Syrian border and the Golan Heights, which is occupied by Israel.

The Israeli Defense Force confirmed it has returned fire and “struck Hezbollah terrorist infrastructure.”

Russia’s government on Friday said it had withdrawn a ban on diesel exports delivered to sea ports via pipelines, removing a large chunk of restrictions it put in place last month.

The Kremlin said in a statement that it had “lifted restrictions on the export of diesel fuel delivered to seaports by pipeline, provided that the manufacturer supplies at least 50% of the diesel fuel produced to the domestic market,” according to a Google translation.

The announcement comes shortly after Russia imposed an indefinite ban on the export of diesel and gasoline to most countries, sending shockwaves through global markets. The restrictions for gasoline exports currently remain in place.

Moscow initially implemented the measures on Sept. 21 to stabilize fuel prices in the domestic market, with Kremlin spokesperson Dmitry Peskov last month saying that the restrictions would remain in place for as long as necessary to ensure market stability, according to Reuters.

The ban prompted a jump in diesel prices, as Russia is one of the world’s largest suppliers of diesel and a major exporter of crude oil.

As part of the Friday announcement, Russia’s government also said it had imposed what it described as a “protective duty” of 50,000 roubles ($495.6) per ton for resellers of petroleum products. The duty is designed to prevent possible “gray exports” — companies that operate through unauthorized channels.

“Thus, the Government is suppressing attempts by resellers to purchase fuel in advance for subsequent export after the current restrictions are lifted. This also prevents them from exporting class fuel under the guise of other products,” the Kremlin added.

UAE oil giant ADNOC — run by the president of the COP28 climate conference — is expected to spend more than $1 billion every month this decade on fossil fuels, according to new analysis by international NGO Global Witness.

This is nearly seven times higher than its commitment to decarbonization projects over the same timeframe, the research says.

ADNOC, which recently became the first among its peers to bring forward its net-zero ambition to 2045, disputes Global Witness’ analysis and says the assumptions made are inaccurate.

It comes ahead of the COP28 climate summit, with Dubai set to host the U.N.’s annual conference from Nov. 30 through to Dec. 12. Viewed as one of the most significant climate conferences since 2015’s landmark Paris Agreement, COP28 will see global leaders gather to discuss how to progress in the fight against the climate crisis.

The person overseeing the talks, Sultan al-Jaber, is chief executive of ADNOC (the Abu Dhabi National Oil Company) — one of the world’s largest oil and gas firms. His position as both COP28 president and ADNOC CEO caused dismay among civil society groups and U.S. and EU lawmakers, although several government ministers have since defended his appointment.

Global Witness’ analysis, provided exclusively to CNBC, found that ADNOC is planning to spend an average of $1.14 billion a month on oil and gas production alone between now and 2030 — the same year in which the U.N. says the world must cut emissions by 45% to avoid global catastrophe.

It means that ADNOC is forecast to spend nearly seven times more on fossil fuels through to 2030 than it does on “low-carbon solution” projects.

By 2050, the year in which the U.N. says the entire world economy must achieve net-zero emissions, ADNOC is projected to have invested $387 billion in oil and gas. The burning of fossil fuels is the chief driver of the climate emergency.

A spokesperson at ADNOC told CNBC via email: “The analysis of, and assumptions made, regarding ADNOC’s capital expenditure program beyond the company’s current five-year business plan (2023 to 2027) are speculative and therefore incorrect.”

The Abu Dhabi energy group announced in January this year that it would allocate $15 billion for investment in “low-carbon solutions” by 2030, including investments in clean power, carbon capture and storage and electrification projects.

Global Witness arrived at its projections by analyzing ADNOC’s forecasted oil and gas capital expenditure, exploratory capital expenditure and operational expenditure for the period from 2023 to 2050. The data was sourced from Rystad Energy’s UCube database.

Rystad’s data is not available to the public, but is widely used and referenced by major oil and gas companies and international bodies.

“Fossil fuels companies like to burnish their green credentials, yet they rarely say the quiet part out loud: that they continue to throw eyewatering amounts at the same old polluting oil and gas that is accelerating the climate crisis,” said Patrick Galey, senior investigator at Global Witness.

“How [al-Jaber] can expect to lecture other nations on the need to decarbonise and be taken seriously is anyone’s guess, while he continues to provide vastly more funding to oil and gas than to renewable alternatives,” he added.

“He is a fossil fuel boss, plain and simple, saying one thing while his company does the other,” Galey said.

The United Nations Framework Convention on Climate Change did not immediately respond to a request for comment on the analysis conducted by Global Witness. The Conference of the Parties (COP) is the supreme decision-making body of the UNFCCC.

Al-Jaber was the founding CEO of Abu Dhabi state-owned renewable energy firm Masdar, which works in more than 40 countries worldwide and has invested in or committed to invest in renewable energy projects with a total value of over $30 billion.

Speaking earlier this year, al-Jaber said the main priority for the COP28 summit will be to keep alive the fight to limit global heating to 1.5 degrees Celsius.

The Paris Agreement aims to limit the increase in the global average temperature to “well below” 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit global heating to 1.5 degrees Celsius. Beyond the critical temperature threshold of 1.5 degrees Celsius, it becomes more likely that small changes can trigger dramatic shifts in Earth’s entire life support system.

The International Energy Agency says no new oil, gas or coal development is compatible with the goal of curbing global heating to 1.5 degrees Celsius.

In response to a request for comment from CNBC, an ADNOC spokesperson said that energy demand is increasing as the world’s population is expanding. “All of the current energy transition scenarios, including by the IEA, show that some level of oil and gas will be needed into the future,” the spokesperson said.

“As such, it is important that, in addition to accelerating investments in renewables and lower carbon energy solutions, we consider the least carbon intensive sources of oil and gas and further reduce their intensity to enable a fair, equitable, orderly, and responsible energy transition. This is the approach ADNOC is taking,” they added.

The spokesperson said its 2022 upstream emissions data confirmed the energy group as one of the least carbon-intensive producers worldwide. The company will seek to further reduce its carbon intensity by 25% and target near zero methane emissions by 2030, they added.

“As we reduce our emissions, we are also ramping up investments in renewables and zero carbon energies like hydrogen for our customers,” the spokesperson said.

A separate report published in April last year by Global Witness and Oil Change International found that 20 of the world’s biggest oil and gas companies were projected to spend $932 billion by the end of the decade to develop new oil and gas fields.

At that time, Russian state company Gazprom was estimated to spend the most on fossil fuel development and exploration projects through to 2030 ($139 billion), followed by U.S. oil majors ExxonMobil ($84 billion) and Chevron ($67 billion).

German automaker BMW on Saturday launched a hotly anticipated electric concept car, saying the so-called “Vision Neue Klasse” represents the dawn of a new era for the company.

BMW’s latest design showcases a platform that will underpin the brand’s next generation of electric vehicles. The first electric vehicles based on the Neue Klasse — or new class — architecture are set to enter production in 2025.

The new line-up of electric vehicles includes BMW’s sixth generation of battery cells, which the company says will improve both the charging speed and range of the Neue Klasse platform by up to 30%. As a result of these measures, BMW said the overall vehicle efficiency would increase by up to 25%.

“With the BMW Vision Neue Klasse, we put every innovative force that BMW has on the electric side, on the digital side and, of course, that car will also be prepared for the industry of circularity,” BMW CEO Oliver Zipse told CNBC’s Arabile Gumede.

“In only two years’ time, these cars will hit the road, and with that, overall, we lead BMW to a new era of innovation and sustainability. That’s the purpose of our show at the IAA,” Zipse said.

The Vision Neue Klasse is set to make its public debut in the coming days at the IAA motor show in Munich, which also serves as the headquarters of BMW. The IAA show is one of the world’s largest mobility trade fairs.

“We believe that electromobility will be the largest growth segment in the world for the automotive industry and we want to be a leading force here,” Zipse said.

The BMW chief executive projected that battery electric vehicles will represent 15% of the carmaker’s worldwide sales by the end of 2023 and that “we will increase that further next year and the year after next.”

Frank Weber, member of the Board of Management of BMW responsible for development, said the Neue Klasse range represents a “major technological leap” for the carmaker.

In early August, BMW said that it expected ongoing challenges from supply chain issues and stubbornly high inflation to persist over the coming months. It nevertheless lifted the annual outlook for its margin on earnings before interest and taxes in the automotive segment.

Shares of BMW are up around 13% year-to-date.

Asked about the presence of Chinese electric vehicle giants at the Munich motor show and whether he was worried about Chinese exports into Europe impacting BMW’s business, Zipse replied, “No, we are not afraid at all.”

“That is a sign of attractiveness when global players like the Chinese, which is the largest car market in the world, come here to Munich and showcase what they want. It is far more than auto, this is a tech show, this is an innovation show,” Zipse said.

“And I think to have everyone here, the Americans, the Europeans and now also the Chinese, is super exciting. You hear it in my words already, I’m more excited, and I’m not afraid at all, and it is good that we have a show which attracts a lot of competition. That’s super.”