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BMW AG is spending €650 million ($712 million) to retool its flagship factory in Munich into the company’s first site that will only make fully electric vehicles, part of a push to challenge leaders Tesla Inc. and BYD Co.
The overhaul involves four buildings including a new assembly line and will be completed by the end of 2027, BMW said Wednesday. The plant, where BMW has been producing cars since 1922, currently makes combustion-engine models, plug-in hybrids and full EVs such as the i4.
BMW is in a race with Mercedes-Benz Group AG and leader Tesla to defend market share as the industry shifts to electric vehicles, with Europe and China leading the push. BMW, Mercedes and Volkswagen’s Audi long dominated sales of premium combustion-engine cars in China, but have been caught on the back foot by the country’s rapid shift to EVs.
The German carmaker will start building its next-generation “Neue Klasse” EVs that promise latest digital features, longer ranges and faster charging in 2026 in Munich. BMW will also produce the models in Hungary, China and Mexico. To make room for the changes at the Munich site, BMW has shifted engine manufacturing to the UK and Austria.
The investment is a boon for Germany’s embattled economy, which has been suffering from rising energy prices, high labor costs and anemic growth. Auto production in Europe’s biggest economy rose last year but remains stuck below pre-pandemic levels. BMW’s Munich factory employs around 7,000 people.
BMW this week said it’s still seeing robust demand for its EVs and reiterated its expectation to sell more than half a million fully electric cars in 2024. While the company’s overall deliveries increased 6.5% last year, EV sales jumped 75%.
With all its electric cars currently turning in a profit, BMW anticipates that EV margins will further increase as newer models come out.
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