50,000 orders, production sold out, a second shift added ahead of schedule—and the stock is still down. BMW has a problem with investor confidence, not with its product.
The factory is running at full capacity, but the stock seems oblivious
When BMW $BMW.DE unveiled the iX3—the first model on the all-new Neue Klasse platform —at the Munich Motor Show in September 2025, no one expected what was to come. Even before the car had reached its first customers, it was sold out for the entire year of 2026. Orders from Europe alone exceeded 50,000 units, the plant in Debrecen added a second shift earlier than planned, and in Germany, the iX3 outsold the combustion-engine X3.
And yet: BMW shares are hovering around €68. The P/E ratio remains at 6. The valuation resembles a company in an existential crisis more than an automaker that has just successfully launched the most important technological platform of the past decade.
This isn’t necessarily a market error. It’s a consequence of the real problems BMW has faced over the past two years. But the numbers deserve an honest look—without excessive optimism or excessive pessimism.
What Actually Happened to the Results
2024 was a challenging year for BMW. Net profit fell by 36.9% to €7.68 billion, and the automotive segment’s operating margin plummeted to 6.3%—well below the strategic target of 8–10%. Total revenue fell by 8.45% to roughly €154 billion.
China is primarily to blame. BMW sold 625,000 vehicles there in 2025—a 12.5% year-over-year decline. For 2026, the company expects a further decline to below 500,000 units, which would be the worst results in China in the last decade. Meanwhile, domestic brands such as NIO, Xiaomi, and Huawei-backed Aito are aggressively gaining ground even in the premium segments—and customers increasingly prefer technological features over the prestige of a European brand. In January 2026, BMW therefore resorted to lowering the recommended prices for more than 30 models on the Chinese market.
Added to this was the trade war. Tariffs in the U.S. and EU reduced the automotive division’s EBIT margin by roughly 1.5 percentage points in 2025. Furthermore, the U.S. Department of Commerce deferred a portion of the tariff refunds to 2026, causing the automotive division’s free cash flow to drop to €3.24 billion—down from the originally planned €5 billion. BMW expects these refunds to return this year and has therefore set its free cash flow outlook for 2026 at more than €4.5 billion.
And yet—despite all these pressures—BMW’s net profit remained above €7 billion for the second year in a row. This is not a company falling apart.
"With the successful launch of the Neue Klasse in 2025, we have demonstrated that we are leading the BMW brand into the future with new technological systems and a fresh design language."
Oliver Zipse, then CEO of the BMW Group
Neue Klasse: More Than Just a New Platform
The new iX3 isn’t just another electric car with a round logo. It’s the first car built on an architecture in which BMW has invested over 10 billion euros —and which is set to define what the rest of the model lineup will look like.
The technical specs speak for themselves: 800V architecture, a range of up to 800 km ( , WLTP) in the top-of-the-line version, and 300–400 kW charging. Compared to the previous generation of eDrive, this represents a 10% reduction in weight, a 40% decrease in energy losses, and a 20% reduction in production costs. The new platform also features AI-based driver assistance systems that process data 20 times faster than the previous generation.
Demand exceeded all expectations: more than 50,000 orders in the first six months, with most customers ordering the car without a test drive—based purely on the premiere and technical data. The plant in Debrecen, designed to handle 150,000 vehicles per year, added a second shift earlier than planned.
Following the iX3, the i3 sedan (electric 3 Series) will arrive by the end of 2026, followed by the iX4 and the electric X5. BMW plans to build a total of over 40 models on the Neue Klasse platform by 2027.
EV Battle with Mercedes: BMW Leads, but Margins Lag
In one key metric, BMW clearly outperforms its German rival. While Mercedes-Benz $MBG.DE sold only 185,059 electric vehicles in 2024 (a 23% year-over-year decline), BMW delivered 368,523 electric vehicles —a 12% increase. Electric vehicles account for 16.7% of BMW’s total sales.
But when it comes to profitability, it’s exactly the opposite. Mercedes achieves an operating margin of around 10.7%, while BMW hovers at 6.3%. Stuttgart benefits from selling at higher prices—the S-Class and GLC models have significantly higher margins than comparable BMW products.
Here lies one of the strongest arguments for a potential improvement in BMW’s results: the margin gap is real and can be closed. The Neue Klasse platform should reduce the cost of producing electric cars —and this must gradually be reflected in the margins.
"The new Neue Klasse platform will bring significant improvements in production efficiency, which must be reflected in margins. The only question is when."
Horst Schneider, HSBC analyst
A valuation that seems unrealistic
Let’s look at the numbers objectively.
BMW P/E ratio: approximately 6-7x at the current price of around EUR 70
Sector average P/E: 18-28x depending on methodology
Dividend yield: over 6% per year
Analyst consensus: average price target of 91–92 EUR, range of 69–108 EUR, “Moderate Buy” rating
Discounted free cash flow and various valuation methods indicate a fair value in the range of EUR 110–145, with more aggressive estimates going higher. But these are models—and models are only as good as their assumptions.
The market appears to be pricing in a combination of factors: continued erosion in China, weak adoption of the Neue Klasse, and persistent tariff pressure. Given this combination, the analysts’ pessimistic target—around €69—would make sense.
However, if at least some of those assumptions turn out to be overly negative—and initial data from the iX3 suggest that the Neue Klasse has performed better than expected—then there is significant room for the stock to be revalued.
Where are the real risks
The Chinese market isn’t dead, but it’s a bit different from the European one. Domestic manufacturers there aren’t just winning on price today— they’re investing in software integration, AI, and hybrids in a way that BMW can’t keep up with in real time. If this trend continues, BMW will remain a smaller player in the world’s largest market than it has been.
The trade war is unpredictable. BMW has part of its production in the U.S. (the Spartanburg plant), but global logistics remain vulnerable. Every round of escalation adds uncertainty to the calculations, which deters investors.
And then there is the pace of change in electromobility in general. The Neue Klasse is a bet that BMW will navigate this decade of the electric revolution with technological credibility. The iX3 suggests that so far, it’s working out. But by 2027, when the platform covers the entire model range, a lot could change.