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There was a time a few years ago when Elon Musk was challenging other car companies to bring “compelling electric cars” to market. Well, as the old expression goes, “Be careful what you wish for; you just might get it.” At the time Elon was making that plea, Oliver Zipse was taking over as the CEO of BMW. Now, after six years with Zipse’s hand on the tiller at BMW headquarters in Munich, the company is poised to start production of its Neue Kasse vehicles, which may one day comprise as many as 40 new or updated models.
Not all Neue Klasse vehicles will be battery-electric cars. Some will be plug-in hybrids and some may be conventional hybrids or even cars with traditional internal combustion engines, but the focus going forward at BMW is building compelling electric cars that make no compromises. They will reflect the company’s long time motto: The ultimate driving machine.
BMW has put the focus for its Neue Klasse vehicles on world class technology — slick software, high-performance computers, and radically different design cues. “We’re 109 years old, and it’s by far the biggest single investment into one architecture we’ve ever done,” Zipse told Bloomberg in a recent interview.
While other automakers are running for cover in times of tumultuous tariff wars and supply chain disruptions, BMW is moving boldly into the future. “The product convinces,” Stephen Reitman, an auto analyst at Bernstein, wrote in a report recapping the company’s recent capital markets day. “Our characterization of BMW as the Wayne Gretzky of the auto industry, skating to where the puck is going to be, not to where it’s been, has not changed.”
BMW iX3 First Into Production
The first offering in the Neue Klasse lineup will be the iX3, a midsize electric SUV produced in Debrecen, Hungary. “This will be the benchmark of the industry,” Zipse said. “Neue Klasse will show that BMW “can build superior electric cars, and the rest of the market will have to answer.”
The company claims it will have a range of up to 800 kilometers (497 miles) using the European WLTP testing standard. Because the car will be able to accept up to 400 kW of charging power, drivers will be able to add enough range to drive from New York to Washington, DC in just 10 minutes. The Tesla Model Y long range tops out at 622 kilometers (387 miles) of WLTP range and offers a maximum charge rate of 250 kW.
To lower the costs of sourcing components such as the four computers that will power new infotainment and automated-driving features, as well as more basic functions like climate control, BMW will deploy this new digital nervous system in vehicles across all drivetrains. These “superbrains” will provide 20 times the computing power of BMW’s previous system.
BMW developed the software for those features, Bloomberg said, with the help of six hubs it set up around the world through small ventures and small acquisitions in Portugal, South Africa, China, India, Romania, and the US. Together, those sites employ roughly 5,000 software and IT workers.
Still The Ultimate Driving Machine
During the development of the Neue Klasse vehicles, BMW has been adamant about making its electric cars have the same responsiveness and feel for the road its products have always been known for. Because electric cars tend to weigh more than their gasoline-powered siblings, the company has placed extra emphasis on developing new computing systems that speed up braking, regeneration, and steering control systems.
“While we wouldn’t usually get frothed-up about a disguised prototype of yet another electric crossover, this one moves the dial,” Top Gear’s Paul Horrell wrote recently. In particular, he appreciated how the iX3 he test drove was “better even than chauffeur-oriented Rolls-Royces” at stopping smoothly in traffic.
The upgrades to BMW’s driver-assist systems are noticeable, Bloomberg said. “Where the current iX has difficulty navigating sharp turns and signals the driver to take over the wheel on short notice, the iX3 is more capable and alerts drivers earlier. When driving on wet and curvy roads, the iX3’s traction controls kick in almost without notice and only at high speeds.”
Series production of the SUV is slated to start at BMW’s newest plant in Hungary late this year, and the company is adding Neue Klasse models at its factories in China, Mexico, and the US as well. Neue Klasse production will run parallel to the production of existing models at first. By the end of 2027, the main factory in Munich will be the first to manufacture electric vehicles exclusively.
The Zipse era is also winding down, with his contract as chairman of the management board ending around this time next year. His successor will inherit the ambitious plan to deploy new technology across all new BMW models, and to have electric Neue Klasse vehicles account for half of sales by the end of the decade.
BMW, Tariffs, & Politics
US tariffs on cars and components will pose a challenge, but Zipse suggested on July 31st that BMW will be just fine. “This tariff discussion is way exaggerated. What’s much more important is the question, are the products attractive?”
Bloomberg asked Zipse if Elon Musk’s antics in recent months have helped create an opportunity for BMW, but he refused to be drawn into the political fray, saying only that BMW puts all its focus on offering products that customers “enjoy and are proud to drive without having to justify their choice. You must be aware that everything you do is being watched closely and affects your company’s brand and reputation,” he said.
He did suggest, however, that Tesla has dominated the electric car market in the US primarily because of regulations that require a percentage of each manufacturers’ sales to be zero emissions vehicles. Companies that have struggled to comply on their own have spent billions of dollars buying regulatory credits from overachieving manufacturers. Tesla has been the biggest beneficiary of those payments, leading some to speculate the company may be more focused on playing the regulatory credit game than selling automobiles.
But that gravy train may be coming to an end. The failed US administration is moving heaven and earth to dismantle the California regulations that include such penalties and wants to eliminate penalties for non-compliance with federal fuel economy rules by basically revoking any and all fuel economy rules.
“What we’ve more or less witnessed is the transfer of funding from an allegedly ‘old’ industry to a so-called ‘new’ industry,” Zipse said. “There’s this narrative that a company’s success is all about competence and the capability of CEOs. But it’s far more complex than that.”
The irony here is that Tesla has had nearly a decade to transition from a startup to a full-fledged car company, but failed to leverage its first mover advantage. BMW has taken advantage of that delay to reposition itself at the forefront of the industry. When the Model 3 first came out, BMW was shocked to learn many people were trading in their 3 Series sedans for a Tesla. Now it wants to reverse that dynamic. With its Neue Klasse vehicles due in the marketplace soon, it would be delighted to see Model 3 owners trading in their cars for a BMW.
Elon begged people to build compelling electric cars. BMW is poised to do exactly that.
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