Next to BMW’s headquarters in Munich, a museum and exhibition center proudly displays historic models like the 507 convertible that Elvis Presley once drove during his military service in Germany. The car, initially painted white, was later turned red after fans kept scribbling on it with lipstick. However, behind closed doors at the same campus, a different BMW vehicle is being kept out of sight — camouflaged and closely guarded — as it represents the company's next big leap.

This SUV, named the iX3, is the first of 40 new or revamped models that will feature advanced software, powerful computing systems, and bold design changes. BMW is accelerating its release, aiming to swiftly integrate this technology across its entire lineup within two years. The urgency is driven by a rapidly changing automotive landscape, where Chinese manufacturers are outpacing even Tesla. CEO Oliver Zipse described this as BMW’s largest investment ever in a single vehicle platform during its 109-year history.

The car industry is navigating through major disruptions, from U.S. tariffs under Donald Trump to China’s local automakers flooding the market with feature-rich and affordable EVs. Despite these challenges, BMW is pushing forward, reviving the historic “Neue Klasse” name that once saved the brand in the 1960s. Early reactions suggest these new models live up to the name, with analysts praising BMW’s forward-thinking approach.

Zipse, who took over as CEO in 2019, faced the challenge of Tesla pulling away from traditional automakers, as evidenced by BMW owners switching to Tesla’s Model 3. At that time, BMW’s only electric offering, the i3, lagged far behind in range, size, and charging capabilities. The iX3 is poised to change that narrative, boasting a range of up to 800 kilometers under European testing and ultra-fast 400 kW charging, far surpassing Tesla’s Model Y in both metrics.

However, Zipse emphasizes that technological prowess must also be paired with a viable business strategy. While EVs are a growing segment, combustion engine vehicles still dominate BMW’s sales. To optimize costs, BMW plans to integrate its new high-performance computing systems — offering twenty times more power than current models — across all vehicle types. These systems will manage everything from driver assistance to infotainment, developed through BMW’s global network of software hubs in countries like Portugal, South Africa, China, India, Romania, and the U.S., employing about 5,000 IT specialists.

Yet, BMW’s success will depend heavily on its performance in China, the world’s largest EV market, where local brands are capturing market share rapidly. BMW’s sales in China have declined significantly over the past two years, and local competitors are undercutting prices with impressive features. Zipse acknowledges that BMW must withdraw from unprofitable segments, but warns against disengaging from China, highlighting its scale, innovation, and importance to the global auto industry. BMW has made efforts to appeal to Chinese consumers by integrating local apps like WeChat and prioritizing China for new technology rollouts. For instance, the company’s AI-driven large language models will debut in China through a partnership with startup DeepSeek.

Meanwhile, Tesla’s dominance, particularly in Europe, is being questioned as Elon Musk’s public image becomes increasingly polarizing. Zipse refrained from direct criticism but suggested that BMW’s focus is on creating cars customers can proudly own without needing to justify their choices. He also pointed out how Tesla’s success was significantly supported by regulatory credits, a revenue stream now under threat due to policy rollbacks in the U.S. that are dismantling emissions regulations. In June, BMW invited journalists to test-drive the iX3 prototypes in France, showcasing the vehicle’s superior handling, ride comfort, and advanced driver assistance systems. Early feedback indicated that the iX3 delivers a driving experience surpassing even luxury brands like Rolls-Royce in certain aspects.

BMW’s production of the iX3 will start at its new Hungarian plant later this year, with expansion plans for facilities in China, Mexico, the U.S., and Munich. Transforming the Munich factory has been especially challenging, as new construction overlaps with ongoing production of current models. From 2027, the Munich plant will exclusively produce electric vehicles, marking the end of its combustion engine era after 75 years. With Zipse’s tenure nearing its end next year, his successor will take over the ambitious task of embedding Neue Klasse technology across BMW’s portfolio and pushing EV sales to account for half of the company’s global volume by 2030. Despite the looming challenges of tariffs and trade tensions, Zipse remains unfazed, insisting that product desirability will ultimately determine BMW’s success.