A Giant Leap: Could BMW Save the German Automobile Industry? - DER SPIEGEL
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A Giant Leap Could BMW Save the German Automobile Industry?

Germany's automobile industry has been sliding deeper and deeper into crisis in recent years. But this week, BMW is presenting its new, ultramodern series of vehicles. It is a huge bet on the future. And it might just work.
Foto:

Fabian Kirchbauer

By Thomas Schulz, Martin Hesse und Alexander Demling

It rises dramatically out of the steppe of the Hungarian puszta, a 1,000-meter-long structure with a factory floor of 4 million square meters, built in just two years. The robots inside have been programmed by Silicon Valley supercomputers and the first cars are already rolling off the assembly line. Driving themselves. They are powerful looking vehicles, still recognizable as BMWs, but sleeker, more imposing. They have almost no chrome on them, just strips of light. And there is no roaring of a diesel engine under the hood; instead, there are two electric motors controlled by four central computers and steered by data networks packed with AI algorithms.

DER SPIEGEL 36/2025

The article you are reading originally appeared in German in issue 36/2025 (August 29th, 2025) of DER SPIEGEL.

At station 009 on line 40, Szabina – one of the plant’s very first assembly workers – bolts the finished cockpit into place, the steering wheel appearing to float in mid-air. Behind it, there is nothing. No dials, no instruments, no controls. Just the windshield.

The futuristic vehicle is generating no small measure of nervosity inside BMW these days, and not just at the new factory in Debrecen. The company, with its 159,000 employees, seems to be vibrating with tension. Later this week, on September 5, the new vehicle – known as iX3 – will be presented to the world.

And even if a global company’s future should never hinge on a single model, BMW’s future does this time.

The Bavarian automobile executives have set the bar so high that the entire company is at risk if they fail to clear it. It is envisioned as a "project of the century,” one that will "redefine the future of the automobile.”

BMW CEO Oliver Zipse.

BMW CEO Oliver Zipse.

Foto: Florian Generotzky / DER SPIEGEL
"A shakeup is coming for our industry."

Oliver Zipse, CEO of BMW

It may sound like bloated marketing jargon. But the company’s CEO, sitting in his office at BMW headquarters in Munich, some 750 kilometers away from the new factory, says it's not. "It is meant completely seriously, in every aspect,” says Oliver Zipse, 61, who has been with BMW for 34 years and led the company for the last six.

And indeed, it isn’t about just a single new model, but about an entirely "Neue Klasse,” as it has been dubbed. Nothing less than the reboot of all 57 BMW models. The iX3 is just the first.

"In the tried-and-true logic of this industry, it is inconceivable to literally go 'all in,’” says Zipse. Too dangerous. "In this sector, you cannot afford to make a mistake.” But it seemed riskier to stand pat. "A shakeup is coming for our industry,” says Zipse.

The sudden burst of courage is, to put it mildly, rather surprising. For the German automobile industry, the last decade was something of a horror show. Carmakers were too slow to evolve, too arrogant, too infatuated with themselves – and they missed decisive technological leaps, allowing themselves to be steamrolled by global shifts in the market and nimble new competitors. They have, in short, gambled away the leading role they clung onto for decades.

For a long time, it looked as though BMW, Mercedes and co. would no longer be able to free themselves from this downward spiral. Who is building the most modern cars at the moment? China. Who led the way into the world of electromobility? The U.S. company Tesla. What about Europe? Not so much.

Still, BMW continues to sell 2.2 million cars per year. With almost 60 models. Tesla, meanwhile, sends out 1.8 million vehicles annually, essentially with just two models.

Mercedes recently declared China as its most important market, particularly for electromobility. In 2024, 6.4 million electric cars were sold in the country. Mercedes only manages to sell a few hundred of some electric models, and the statistics even produced a 0 last October for the EQE sedan. "Our industry is experiencing heavy rain, hail, storms and snow all at the same time,” says Mercedes CEO Ola Källenius.

Volkswagen is planning to cut 35,000 jobs in Germany by 2030. Porsche reported a 91 percent plunge in profits in the second quarter, with company head Oliver Blume announcing "painful cuts,” telling his employees: "Our business model, which has carried us for over four decades, no longer works in its current form.” BMW has also recently seen falling sales, revenues and profits.

It is all symbolic of the German economy in its entirety. Outmoded. Inflexible. The future is being built elsewhere. Germany’s gross domestic product is likely to stagnate or shrink for the third year in succession. Not even the boldest politician in the country dares to speak of a new dawn.

The situation seems so intractable that it raises the question as to whether German industry can ever get back to what it was for decades: higher, faster, further than elsewhere in the world.

BMW is trying to do exactly that. The company has invested far more than 10 billion euros in the project of reinventing itself.

In the other automobile headquarters, at Mercedes in Stuttgart and VW in Wolfsburg, company leaders are keeping a close eye on developments at BWM, eager to see what will happen when a company shuns the shuffling gait the industry has grown used to and opts for a giant leap instead. Källenius of Mercedes has already begun speaking of a "once-in-a-century transformation.”

As fall 2025 approaches, German carmakers find themselves facing a key moment. Will they take advantage of this decisive development, the "Neue Klasse,” as the trigger for a revival of the German automobile industry? Or will BMW fall on its face, gambling away perhaps its final opportunity?


Who Can See 10 Years into the Future?

The idea was born in the depths of the pandemic. In fall 2020, BMW headquarters across from Munich’s Olympic Stadium - called "the four cylinder" because of its shape - were virtually abandoned. The country was in lockdown, workers were required to work from home – "and there was a lot of time for thinking,” says Oliver Zipse. Thinking about the future of the automotive industry and of BMW. Some trends have been clear for quite a while. Software is growing more and more important in the construction of high-end cars. An increasing number of buyers, particularly in China, want digital cockpits that can be easily integrated with their smart phones. Electric motors are the propulsion of the future.

German carmakers aren’t particularly good at any of those things. Others have advanced much further and responded more quickly. In China, cars look like they come from 2030. In Germany, they have that 2010 feeling.

Something must change, that is clear to everyone: the executives, the division managers, the engineers and the designers. Traditionally, car models are developed for seven-year life cycles on average. And not much more thought is put into them after that. The motor might be made a teeny bit more efficient, the display is maybe shifted slightly to the right. There are never significant innovations that could startle conservative European consumers, who like the headlight knob to be exactly where it has always been.

It was a concept that worked well for many decades, and it allowed for the stable production of a broad palette of different models. But that makes it simple for new players with new ideas to look brighter, newer and better. Tesla, for example. Or Chinese manufacturers like BYD.

During the corona lockdown that fall, after countless, ofttimes sobering online meetings, BMW executives arrived at an unprecedented decision. They decided to basically skip an entire developmental cycle. To create a car not for 2025, but for 2030.

Thinking further into the future is not necessarily a good idea. In 2013, BWM introduced the i3, the first electric car conceived for the mass market. Then, too, developers in Munich had been tasked with thinking far ahead into the future. But it proved to be too far into the future for normal car buyers. The i3 remained a niche model.

One reason for its niche existence was that the early e-auto had also been developed in a niche: in the company’s future laboratory, which is separated from the company’s daily operations. "We want to do things differently with the 'Neue Klasse,’” says Mike Reichelt, head of the new project for BMW. A tall, sturdily built man with thinning hair, Reichelt is a mechanical engineer who has been with the company for 29 years.

BMW executive Mike Reichelt.

BMW executive Mike Reichelt.

Foto: BMW
“Having the chance to start over with a blank sheet of paper, you never really get that kind of an opportunity as an engineer."

Mike Reichelt, head of the "Neue Klasse" project at BMW

Ten years ago, Reichelt developed a new drivetrain architecture and was later responsible for the i4 and the new 2 Series. Zipse, according to the two men, approached him in 2020 and asked him if he was up for a complete redesign of the entire model portfolio. Zipse asked Reichelt if he needed to sleep on the decision. No, Reichelt responded. Nothing to think about.

Four-and-a-half years later, Reichelt is perspiring heavily in his dark suit, the summer heat shimmering above the asphalt of BMW’s test track in Provence, in the south of France. "Having the opportunity to start over with a blank sheet of paper, you never really get that kind of an opportunity as an engineer,” he says. In the background are five veiled "Neue Klasse” test cars, cables hanging out here and there, just three months before the world premiere. It’s a tight timeline. Maybe too tight.

A few days earlier, half a dozen BMW engineers had driven the cars from Munich to the test track here in Miramas, a total of 1,100 kilometers with just a single, brief stop for recharging. The iX3 is said to have a range of 800 kilometers, with a 100-kilometer range after just 2.5 minutes at the fast-charging station. Various driving functions, optimized by algorithms, help to extend the range. If you drive through the curving roads of Provence, the software-supported ride makes it feel as though you are riding on rails.

Reichelt had every single one of the new technologies approved by company executives in meetings held every six weeks: What does the steering wheel look like? How big must the range be? What about the display screen? If some members of the board weren’t sufficiently technically knowledgeable on a certain issue, they were given training in workshops. It was, as Reichelt says carefully, a "demanding process” with "extremely tough discussions.”

That, though, was the deal he made with Zipse, his one condition. He didn’t want the "Neue Klasse” to become a one-man project subject to the whims of company politics and the objections of powerful executives standing on the sidelines. Everyone was to be involved. No matter what happened in the end.

A test drive of the iX3 in Miramas.

A test drive of the iX3 in Miramas.

Foto:

Daniel Kraus

Industry experts like Stefan Bratzel, director of the independent research institute Center of Automotive Management, believes a new age is dawning. The company, he says, lost its courage with the failure of the i3. "Now, management is aiming for a quantum leap with the 'Neue Klasse.’” The dangers are clear: For a relatively small producer like BMW, it is "incredibly important that such multi-billion-euro investment isn’t for naught.”

Initially, BMW had planned for just two future models to be part of the "Neue Klasse”: a new 3 Series and the complementary X3 SUV, the company’s best-selling models. But engineers quickly realized that more technological advancements were necessary than originally thought: new batteries, new software, new electric motors, new operating systems.

Developers were electrified. Executives were concerned: "If we build the 'Neue Klasse’ with two models full of new technologies, what will happen with the rest of our products?” was the question being asked at the top, says Zipse. "Will they then be seen as the old BMWs?” The question, says Zipse, allowed for just a single answer. "We will introduce the technologies into our entire portfolio and essentially reinvent every model in a short amount of time.”

Other carmakers have since arrived at a similar conclusion, particularly BMW’s eternal competitor Mercedes. CEO Källenius is also promising a "new era” for his company. In March, he introduced the mid-sized sedan CLA as the first model of a new generation of automobiles. At the German premier in the southern German town of Rastatt, Källenius later spoke of how the car is, in a certain sense, "digitally refueled” with all the new software and raved about artificial intelligence and the novel infotainment system. Mercedes is also planning to expand the technology to many of its models as quickly as it can.

At the moment, though, analysts believe that BMW is slightly ahead of the game. The "Neue Klasse” is the "largest and most consequential investment” BMW has ever made, says Steven Reitman, from the consulting company Bernstein. And that, he adds, is the "correct and only path forward” to secure the future of Germany’s most important industry.

Because no matter who is ultimately faster or more innovative: Tens of thousands of jobs depend on German carmakers forging into the future. And not just in Germany.


Will E-Mobility Finally Get Moving?

BMW’s largest and most important engine factory is on the edge of the Danube Valley, right around the corner from the baroque oldtown of Steyr, in Austria. Around 30 million engines have been built here since 1982, but because it wasn’t certain for a time if production at the site would continue, Austrian Chancellor Christian Stocker has arrived here from Vienna on this rainy summer morning.

As is the case in most places, the factory in Steyr produces almost exclusively internal combustion engines. But starting in 2035, almost no new cars containing internal combustion engines will be allowed on the roads of the European Union. That would mark the end of both the factory and the 5,000 jobs it supports.

Battery production at a Mercedes factory in Kamenz.

Battery production at a Mercedes factory in Kamenz.

Foto: Sylvio Dittrich / imageBROKER / picture alliance

Which is why a new factory hall has been constructed in Steyr, right outside Gate 7, packed full of new machines, operated by new and retrained employees and supplied by new suppliers. In the future, electric motors will be produced for the new BMW class here in Hall 52, hundreds of thousands of them each year. They are to lose 40 percent less energy than the engines that have come before. The batteries, which will be produced in Irlbach Straßkirchen and will contain round cells just as Tesla batteries do, will be around 30 percent more efficient.

The price tag for making the Steyr factory "secure for the future,” as Klaus von Moltke calls it, was around a billion euros. Moltke is head of engine production at BMW. "A new chapter is beginning,” he says, before pushing the start button in Hall 52 together with the Austrian chancellor. When the machinery starts up, robot arms begin dancing to techno music, and the chancellor is impressed. "It brings confidence in times of global insecurity,” Stocker says. "Thank you, in the name of the republic.”

It was a long journey for BMW. The Munich-based company is the only German carmaker that had long refrained from committing to an electric future for automobiles and continually emphasized that diesel and gasoline vehicles also had a bright future. Almost as if the EU didn’t have a plan to phase out combustion engines.

At BMW, they refer to it as a "technology-open approach,” a phrase that comes up a lot when you speak with company executives. So frequently, in fact, that it seemed unclear for quite a long time whether BMW would ever seriously commit to electric cars or if it was just waiting for the fad to pass.

German car buyers were thinking roughly the same thing in recent years – which in part had to do with the zigzagging path laid out by policymakers in Berlin. First, the government said that electric cars were vital for the country’s shift to renewable energies. Then, the federal government suddenly cancelled state subsidies for the purchase of electric cars. Electricity costs are high and internal combustion cars were long seen as the more affordable option. Recently, though, the costs have largely merged.

The result, though, was that the huge e-mobility boom never materialized here in Germany. Nor did it in wide swathes of Europe and the U.S. The skeptical BMW executives with their "technology-open approach” appeared to have been right.

Which makes it all the more surprising that the first "Neue Klasse” model "was developed from the very beginning purely for electric mobility,” as BMW project leader Reichelt emphasizes. There will be no internal-combustion version. Why not? The electric motor is necessary for "full performance,” says Reichelt. Which means that the innovative leaps made using computers and software cannot be implemented with an internal combustion engine.

Some ensuing "Neue Klasse” models will also have the option of an internal combustion engine, including the 3 Series, which will be released as the next model in early 2026. The company strategy, however, assumes that demand for electric engines will climb.

Reichelt refers to the need to increase the "consideration rate,” the share of car buyers who are serious about potentially buying an e-auto. Plans call for half of all BMWs sold to be electric within just five years. The company sold 370,000 electric vehicles in 2024 – far more, ironically, than other premium carmakers that were so clear about their dedication to electric mobility.

"We know precisely why customers are not considering a purchase of an electric car, regardless of price,” says Reichelt. "It is always the same concerns: range and recharging speed.”

After a 70-kilometer drive through the hills of Provence in an iX3, the battery still holds 90 percent of its charge. Following another few laps, it’s time for the car to be hooked up to the fast-charging station at the test track, with its 800 volts of direct current. Initially, the battery loads almost a kilometer of range per second. In just 10 minutes, 350 kilometers have been added.

Those who live in a rented apartment in the city without their own charging station are still not likely to be tempted, says Zipse, the BMW CEO. But everyone else "will have a hard time finding excuses to not switch to electric.”

But there still is one additional concern. Price.

In the first half of the year, the global market for electric automobiles grew by almost 36 percent. The primary driver of this growth is China, which has become the largest automobile market in the world. Almost two-thirds of all electric vehicles sold in the first half of the year were sold there. "German carmakers are hardly profiting from this enormous dynamic,” wrote the business consulting firm PwC in a recent study. The numbers are depressing: In the first half of the year, German producers sold a third fewer cars than in the same period the year before, despite the market’s explosive growth.

Until just a decade ago, "every Chinese wanted to drive a foreign brand,” says Bill Russo, an automobile market expert who used to lead operations in China for the U.S. automaker Chrysler. "It was a way for them to show: I am rich. I can afford this.”

German cars are still more expensive, but they are no longer better. Buyers who are concerned about the price tag are turning away from German brands if they can get superior technology for much less money. The best example is the SU7 from the Chinese technology company Xiaomi – which also, importantly, makes smartphones – which costs just a quarter of what a Porsche Taycan goes for. The SU7, though, the first electric car produced by Xiaomi, looks almost exactly like the Porsche model. Unsurprisingly, Porsche’s revenues have plunged dramatically in China.

Xiaomi founder Lei Jun with the YU7 SUV in Beijing.

Xiaomi founder Lei Jun with the YU7 SUV in Beijing.

Foto: Wu Hao / EPA

Concerns about the quality of Chinese vehicles are also waning in Europe. In Norway, for example, which has long led the way in Europe when it comes to electric car purchases, Chinese manufacturers now have a 20 percent market share. Price-conscious consumers have demonstrated a readiness to switch to Chinese producers, says Björn Welzel, co-founder of the market research company Uranos. That has increasingly become the case in Germany as well. Which makes the market even more challenging for BMW and Mercedes.

"When it comes to the electronic platform, both the 'Neue Klasse’ and the Mercedes CLA are state of the art,” says Bratzel, the industry expert. The crucial question, though, will be the price at which German companies can offer all that innovation. "If Xiaomi puts out a comparable product at half the price, it will be challenging,” says Bratzel. And the Chinese smartphone giant is planning on bringing its cars to the European market in 2027.

A BMW iX3 will go for just under 70,000 euros. Company executives are proud of the fact that the completely newly developed automobile will hardly cost more than its predecessor model. But a mid-class SUV from the Chinese brand BYD can be had for 42,900 euros.


How Do You Design an Ultra-Modern Car?

At first glance, it looks as though time has come to a standstill here in the north of Munich. This is where the FIZ is located – even its name reeks of bureaucracy. It has all the atmosphere of a German university in the 1980s. Concrete. Glass. Linoleum. But the place is home to the 25,000 engineers, developers and other employees who work at BMW’s Research and Development Center.

Past the cafeteria – a hive of energy early in the mornings – through the back door and across the parking lot to a side wing. An unassuming sign can be found next to a solitary entrance. "Penthouse,” it reads. Having reached the top floor, the elevator doors open into a completely different world, a room as large as half a football field, surrounded by sofas. Right in the middle, on rotating platforms, are two cars, covered in white veils, glimmers of light shining through.

BMW chief designer Adrian van Hoydoonk. "As clean as possible."

BMW chief designer Adrian van Hoydoonk. "As clean as possible."

Foto: BMW
"It is time for a new cornerstone."

Adrian van Hooydonk, BMW's chief designer

Adrian van Hooydonk, a tall, slender man with graying hair, is standing in front of it all. For the last 16 years, he has been the head of BMW Group Design and its 700 employees. Their task, envisioning and creating new cars.

"This is where the board always sits when we present new designs,” says van Hooydonk, pointing to the sofas. He keeps the veils on the cars as he holds forth on other key moments of BMW’s past. In 1960, the carmaker was struggling badly and was almost sold to Daimler-Benz. Between the subcompact Isetta on the economy end of the market and the luxurious sedans on the other, the company lacked mass-market, mid-range models. BMW, DER SPIEGEL wrote at the time, only builds cars for "day laborers and general directors.”

The company had but a single bullet left. And used it. Chief Designer Wilhelm Hofmeister designed a sporty, compact notchback sedan, the BMW 1500. The series was named the "Neue Klasse.” And it was a hit, saving the company from bankruptcy. It became the foundation for seven generations of 3-Series BMWs.

On the 20-meter-wide screen covering the room’s entire back wall, van Hooydonk shows how one BMW flowed seamlessly into the next, from 1965 to 2023. That, though, he says, is now over. "It is time for a new cornerstone.”

In fall 2020, the designers received the same instructions as the engineers did: Make a bigger jump than usual, much bigger. A hyper-modern car should also have a hyper-modern look. But it is risky endeavor, far riskier than with technological advances. "Design is the most important reason why people buy BMWs,” says Reichelt, the project leader.

What if the cars look too futuristic for the tastes of the masses, like the space-ship-like Citroën DS several decades ago? Or the overdesigned and polarizing Tesla Cybertruck?

A Citroën DS at the Eiffel Tower

A Citroën DS at the Eiffel Tower

Foto: Citroen
The Tesla Cybertruck in Los Angeles. A mega-flop.

The Tesla Cybertruck in Los Angeles. A mega-flop.

Foto: Jim Ruymen / UPI / ddp

Van Hooydonk and his team of designers decided to gradually prepare car buyers. In 2021, they presented a new concept car that looked a lot like a typical design study that would never actually be built. The "Vision Neue Klasse” followed in 2023, an SUV and a sedan, both still concept cars. At least that’s what they seemed.

Van Hooydonk gives the signal, and the veil falls from the first car. The iX3 appears. At first glance, it is difficult to see how it differs at all from the purported design studies that came before. The visions of the "Neue Klasse” presented two years previously were actually the finalized cars, for the most part. Van Hooydonk smiles as the car rotates on its platform, showing itself from all sides.

"No unnecessary lines,” the designer says as his walks past the car, caressing its finish. "As clean as possible.” The door handles are recessed. Electric cars don’t need a grille for cooling, but the kidney grille is a BMW trademark, so there are strips of light outlining two vertical kidneys. There are deep indentations on the rear of the vehicle. "Aerodynamics take place at the back, not at the front,” says van Hooydonk. As with raindrops.

Now, the second veil falls, revealing the new, 3 Series sedan, not quite as low as the design study, more sinewy. But very similar.

The most striking change, though, can be found inside the vehicles: Behind the compact, almost angular steering wheel, there is no longer an instrument display panel, just a naked dashboard. "Very, very modern,” says van Hooydonk. The most important information for the driver – such as speed, navigation and automated driving – is projected directly above the dashboard, with spatial depth, across the entire width of the windshield. There is a single touchscreen in the middle.

Interior view of the iX3.

Interior view of the iX3.

Foto: BMW

BMW calls its new display concept "Panoramic Vision.” Reichelt, the "Neue Klasse” project leader, hopes it will set a new "industry standard.” Just like, once the iPhone was introduced, all mobile phones suddenly had touch screens. BMW as the forerunner of a new automobile era. It is a beautiful vision – perhaps too beautiful.

After all, it could backfire. It could be that nobody is interested in driving a car that looks so foreign and empty, as if they forgot to install a few parts back at the factory. Too much change all at once.

For a long time, premium carmakers operated according to a different philosophy – one that focused on keeping buttons and controls where they were to the degree possible, making just minimal changes from time to time. The air conditioning controls in a Mercedes look almost exactly as they did 25 years ago. It has long been a point of sale, particularly for conservative, European buyers: The car may be new, but everything is just as it has always been.

But the last decade saw a lot of change, with cars becoming far more digital in lockstep with the entire world. And those elements that used to offer comfort now look a bit outmoded. Particularly given that many other companies blazed the trail to the future. Anyone who has sat in a Tesla Model 3, with its minimalist, digital interior, and then in a BMW 3 Series, felt like they had been catapulted a decade into the past.

Tesla had all kinds of problems early on, including iffy quality, a lack of experience and not enough factories. But even if the car bodies may have rattled here and there, the American company was long the only one producing highly modern, digital electric cars. They also had the best batteries and were comparatively affordable.

Within a decade, Tesla became the most valuable car manufacturer in the world. In the last two years, the Tesla Model Y, introduced in 2020, was the bestselling car in the world. Tesla, it appeared, had left the traditional carmakers in its dust.

But in one of the more surprising plot twists in recent industrial history, one which will likely be examined by hordes of up-and-coming economists at universities around the world in the coming years, Tesla is in the process of losing its lead. The American carmaker hasn’t introduced a new model for half a decade and apparently doesn’t even have one under development. The most recent product launch was the horrifically ill-advised Cybertruck. The project aimed at producing an affordable, everyday vehicle was buried.

The Tesla Model Y production line at its factory in Brandenburg.

The Tesla Model Y production line at its factory in Brandenburg.

Foto: Patrick Pleul / picture alliance / dpa

There is little left of the company’s erstwhile technological superiority. And Tesla, hard as it might be to believe, is beginning to look a bit old-fashioned itself. Executives at Germany’s leading automotive companies can hardly believe their luck. Why would the Americans give the far slower German manufacturers the time to catch up after all those years of sticking their head in the sand? Sure, Tesla CEO Elon Musk got a bit sidetracked by his political escapades. But there are other executives at the company, and the lack of development has been a problem for years.

"It’s a mystery,” says a high-ranking German auto executive. "In our competition forecasts, we assigned far larger leaps to Tesla. But now, there’s nothing at all.”

BMW CEO Oliver Zipse, though, is not one to show much surprise at the fact that Tesla has seemingly stopped developing new vehicles. The tipping point when Tesla’s company structure reached its limits, he says, had been looming for awhile. "It was only a matter of time.”

Now, the only question is whether BMW has accurately read the tea leaves. Van Hooydonk’s team has already developed half a dozen new BMW models in the ultra-modern "Neue Klasse” style, and some can be seen in the design halls.

If people like the first two models, they’ll likely be enthusiastic about all of them. But what if they don’t like them?


A Car for the World

Hans-Peter Kemser has been wracking his brain for almost three decades in an effort to find the most efficient method possible for producing cars. He oversaw the assembly of BMW motorcycles in Berlin, of Series 3 convertibles in Regensburg, of Minis in Oxford. He has been head of the BMW factory in Leipzig for the last six years. But his masterpiece is in the Hungarian puszta, "the best air quality in Europe,” he says as he strides through the autobody production hall of the BMW factory in Debrecen. Inside, too, it "no longer stinks and there are no sparks.”

Debrecen is BMW’s first factory devoted exclusively to electric vehicles, and it is also the company’s most modern production facility. If you make your way along the metal walkways hanging a couple meters off the ground and past the myriad autobody construction stations, you’ll see a seemingly endless number of silently moving robot arms, almost 1,000 of them, all painted bright yellow. The growing car bodies move on the conveyor belt through a forest of such arms, being worked on from above, below and all sides. Everything goes faster than it used to – in part because the electric vehicles of the "Neue Klasse” require far fewer parts, fewer screws and plugs. "Almost 600-meters less cable than the previous model,” says Kemser.

The factory is still producing the last vehicles from the previous series, but it will be changed over to the iX3 in November, with up to 150,000 vehicles per year rolling off the line in a two-shift operation.

BMW factory manager Hans-Peter Kemser in Leipzig.

BMW factory manager Hans-Peter Kemser in Leipzig.

Foto: Christoph Busse / BMW
“Almost 600-meters less cable than the previous model."

Hans-Peter Kemser, BMW factory manager

BMW has invested more than a billion euros into the "Neue Klasse” factory, which was planned by the artificial intelligence giant Nvidia in Silicon Valley, ensuring that the facility could be rapidly built. The "Neue Klasse” was developed almost a year and a half faster than normal, and since new models also require modified production facilities, factories also had to be rapidly refitted.

Recruiting buses have been sent around the country to bring in trainees, experts and engineers. The city also built new roads to the factory. The pressure is mounting.

And what happens if car buyers around the world ultimately aren’t interested in increasingly computer guided, minimalist electric cars? Would Debrecen have to be refitted to go back to producing old-school diesels?

Kemser raises his eyebrows as though he finds the question absurd. He hurries off toward the production hall, hardly four minutes away – at least if you walk at Kemser’s stiff pace. He stops suddenly at an assembly station. Completed auto bodies move down the production line, met by a worker wielding a cordless screwdriver and holding a small, black box just a bit larger than a mobile phone. She mounts the box on the passenger side while two other workers attach cables. "One of the super brains,” Kemser says, as though it explains everything. And perhaps it does.

For many years, German car makers have been working on so-called zonal architecture – a digital nervous system that divides the car into various zones, each controlled by high-performance computers. That allows different vehicle functions to be individually adjusted. And the computers can be individually modernized and expanded with software updates. Which means that the car’s hardware and software can be developed in isolation from each other. The ultimate goal is a car that is less defined by mechanical or electronic systems and more by software programming – which can be adjusted far more quickly.

BMW's factory in Debrecen, Hungary.

BMW's factory in Debrecen, Hungary.

Foto: BMW

The "Neue Klasse” is the first series to have such architecture, including four high-performance computers, known in the BMW world somewhat pompously as "super brains.” The system enables "Neue Klasse” vehicles to be completely updated remotely: Consumers wanting to have the newest automated assistance system or modernized operating functions no longer have to wait for the next model to hit the salesroom floor. It is a capability that only Tesla has thus far had.

The BMW powertrain is now on equal footing with Tesla and the Chinese, says the American car expert Stevan Reitman from the consulting company Bernstein. And thanks to the company’s cooperation with Chinese and American tech giants like Alibaba, DeepSeek AI, Amazon and Google, BMW has now become a leader when it comes to software.

The paint shop at the BMW factory in Debrecen.

The paint shop at the BMW factory in Debrecen.

Foto: BMW

One of the new BMW computers, for example, is devoted to automated driving – also an area in which the Germans aren’t exactly market leaders. On the BMW test track in the Provence, the results of all that computing power are on full display. If the driving assistance system is engaged on the highway, for example – the driver has no hands on the wheel – a simple glance into the side mirror is enough for the car to change lanes on its own, pass another vehicle and return to its original lane. Even CEO Zipse is amazed at all that has become possible with AI and supercomputers.

There is plenty of envy at BMW’s competitors. "BMW is doing a great job with software,” says ha high-level Porsche executive. "We used to be able to do that too.” And that speaks to the core of the problem faced by German producers: The technological advancements have just kept on coming, faster and faster. Those companies that didn’t update their models each year suddenly found themselves chasing the pack.

The business model of German automobile manufacturers is at stake. BMW’s multi-billion-euro investments in advanced batteries, semiconductors and production facilities will only pay off if the cars can be sold everywhere – around the world. For decades, the so-called "world car” was the central concept for German car makers. Develop it once and sell it everywhere for years on end.

But the glory days of globalization – the era when European car builders put up factories around the world, from South Carolina in the U.S. to Sichuan in China – are coming to an end. U.S. President Donald Trump is putting up a tariff wall around the world's most lucrative automobile market after China. He doesn’t seem to care that BMW is a large employer in the United States and also the country’s largest car exporter. Every year, the company ships out hundreds of thousands of cars from its production facility in South Carolina to countries around the world. Nevertheless, BMW now has to pay a significant tax on all cars and parts it brings into the U.S. Trump’s new tariff regime could cost the company several million per year.

Meanwhile, the Chinese government in Beijing has been making it increasingly clear that it prefers Chinese consumers to buy Chinese cars. Many Western companies have begun pulling back: European-American automotive giant Stellantis has just recently seen its last cooperation with a state-owned Chinese carmaker go bankrupt while smaller brands like Skoda have largely abandoned the market.

But Chinese producers are also engaged in price wars among themselves. "There is a cutthroat competition underway in China,” says Felix Kuhnert, head of automotive consulting at PwC. "Once the weaker players drop out, prices are likely to rise again.”

And that could open the door for the Germans.

BMW isn’t currently planning on sending any "Neue Klasse” vehicles produced in Debrecen to China. Instead, China is getting its own model: built in Chinese factories with Chinese suppliers and Chinese software.

It is an attempt to somehow save the concept of the world car. BMW would rather make the effort to come up with specialty solutions than to sell no cars in China at all. Zipse calls it "regional individualization.” With the new, software-based cars, it isn’t even all that difficult. "We can develop local solutions extremely quickly and efficiently,” he says.

The situation is far from hopeless. The global trade war has thus far hit Germany’s competitors harder. The U.S. has essentially shut Chinese producers out of the market. Furthermore, Trump’s anti-electric stance appears to have made U.S. companies like Ford and GM essentially irrelevant in China.

If German car companies are able to reestablish themselves in the large, global markets as everyone else tears each other apart, they might be able to survive. They would be among the last remaining global car companies. Saving Germany’s export model. Germany reloaded.

Who knows? It might actually work.