BMW aims to regain growth in China with all-electric series

BMW aims to return to growth in China with its all-electric Neue Klasse series, after a 15.5% drop in China sales in the first half of 2025.

The German automaker launched the Neue Klasse iX3 electric SUV ahead of the IAA car show in Munich, with the model set to debut in China by summer 2026.

Batteries in the new lineup will be 40% to 50% cheaper than current models, which could help improve profitability.

The company aims to reach margin parity between EVs and combustion engine cars by 2026 and targets raising its automotive EBIT margin from 5-7% in 2025 to 8% to 10% in the future.

BMW also plans to phase out older models by the end of the decade as it rolls out the Neue Klasse series.

US import tariffs will reduce its profit margin by 1.25 percentage points in 2025.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

Local production strategy addresses cost competitiveness in China’s price-sensitive EV market

BMW’s 40-50% battery cost reduction in the new Neue Klasse models directly tackles the pricing pressure from Chinese competitors who have been driving aggressive price wars in what’s called “neijuan,” a hyper-competitive environment reshaping the market 1 2.
The company’s previous success with local production supports this approach; when BMW shifted X3 SUV production to China in 2018, it resulted in a significant jump in sales and helped the company reach over 640,000 vehicles sold that year 3 4.
Achieving margin parity with combustion engines by 2026 for the iX3 represents a crucial milestone, as it would allow BMW to compete profitably against local brands that have captured nearly 69% of China’s passenger vehicle market share through cost advantages 2.

BMW faces a narrowing window as China’s auto market rapidly shifts toward domestic EV brands

While BMW’s China sales fell 15.5% in the first half of 2025, the overall Chinese auto market surged 12% through July 2025, indicating BMW is losing share in a growing market rather than facing industry-wide decline 1 2.
New Energy Vehicle shipments increased 38.5% in China during this period, with local manufacturer BYD capturing 29.2% market share, demonstrating how quickly domestic brands are dominating the EV transition 2.
The iX3’s summer 2026 launch timeline means BMW will be entering a market where Tesla’s share has already declined to 4.7% due to an aging product portfolio and increased local competition, suggesting foreign brands face mounting pressure 2.
BMW’s historical strength in China’s luxury segment, where it led the premium new energy vehicle market with 23,000 electric and hybrid vehicles sold in 2018, provides a foundation, but the competitive landscape has intensified significantly since then 3.