Amid an electric-car price war in China – and government subsidies on Chinese EVs in Europe that it says are not "economically healthy" – the German car maker says its new iX3 will help it stay competitive in the world's largest auto market.
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BMW has cautioned that China's strategy of subsidising the prices of electric cars in overseas markets – as alleged by the European Union – is not an "economically healthy" strategy that will survive in the long term.
It comes as Chinese brands look to supercharge exports of their cars amid a cut-throat price war in their home market, which has drawn criticism from top-level officials in Beijing.
The German car giant has used its factory in China's east to manufacture the current-generation iX3 electric SUV for worldwide markets, but the new model revealed earlier this month will switch initially to a new plant in Hungary for markets such as Europe and Australia.
It will be critical for avoiding tariffs now applied to Chinese-made electric cars in Europe, after a European Union (EU) investigation ruled the Asian nation's government was unfairly subsidising its car brands to make their EVs cheaper in the region.
"Subsidies are, for sure, one element ... in giving the opportunity to reduce prices," Milan Nedeljkovic, BMW board member for production, told Australian reporters in Munich earlier this month.
"But it's not an economically healthy base, and something which, long-term, is not a successful strategy."
Outside of Chinese brands' entry into export markets – with vehicles from names such as BYD Denza and MG IM, offering similar technology to BMW at half the price – Nedeljkovic said the German giant expects the new iX3 to keep it competitive in China.
"What we see is a very intense price competition on the Chinese market, where I think the whole automotive industry is suffering from. It's just a very competitive environment.
"We are still succeeding to convince our customers that with a BMW, they're getting a different product than they would get from other OEMs, and that's why we are still somehow stable in our sales.
"With the Neue Klasse, we see a significant boost forward for EVs, with the range, with the connectivity, with the whole setup of the car, we are very well prepared also for the Chinese market."
BMW sales in China were down 15.5 per cent in the first half of 2025, to 317,862 cars – compared to a 14 per cent slump for Mercedes-Benz, to about 293,200 cars.
"The long-term effect of this competitiveness which we see there right now, we will assess," the BMW executive said.
"I mean, at a certain point ... every market worldwide has stabilised, and come to a reasonable level of demand, offer and pricing, and that's what I expect for China as well."
Nedeljkovic's remarks follow comments by the boss of Hyundai Australia, Don Romano, to local media questioning how Chinese cars can so severely undercut their rivals on price.
"The real issue when you talk about competitiveness is probably when you look at Chinese EVs, and the question I'd have is how long can they sustain that low price, when we're all using the same materials and the same equipment?" Romano said in July.
"When you look at the same systems that are used to build these cars, the same equipment and the same materials, eventually it comes to an equilibrium, where we're all having it on the same cost factor that we're going to have to all live with.
"And then the pricing really just comes down to what it takes to distribute the cars and market the cars."
Pressed on if he believes brands are selling their vehicles at a loss, Romano said: "I don't know how they do it, other than I read the same things you do about government intervention and support. All I do know is that long-term, this all equals out."
The BMW executive said there are "four or five relevant factors" that account for the cost difference between producing cars in China and Europe.
"One, of course, is the cost level of salaries, and people in fact, but more significant is even the price of energy – so how much do we pay for energy, and what's the secured price level for long-term investment in salaries?
"Secondly, it is access to raw materials and refined raw materials. It's not about the mining, it's about refining, and China has significant capacities in refining raw materials.
"So to bring these raw materials then to Europe is rather ineffective, instead of getting it manufactured in China and having the finished cell. There are some advantages which China has, and you can see it in the competitiveness of China when it comes to electric mobility, in the pricing."
He said plans for European factories by the likes of BYD and Chery show brands need to build cars in the markets where they sell them.
"There are investments in Europe also from Chinese companies and others, which show that if you want to be successful in a market, you must be in the market.
"It's not about import-export. It's about being part of the ecosystem of a region. That's why we have our footprint worldwide, and that's why all the other global players have a diverse manufacturing system to cover the main regions."
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Alex Misoyannis has been writing about cars since 2017, when he started his own website, Redline. He contributed for Drive in 2018, before joining CarAdvice in 2019, becoming a regular contributing journalist within the news team in 2020. Cars have played a central role throughout Alex’s life, from flicking through car magazines at a young age, to growing up around performance vehicles in a car-loving family. Highly Commended - Young Writer of the Year 2024 (Under 30) Rising Star Journalist, 2024 Winner Scoop of The Year - 2024 Winner
