BMW and Mercedes Launch Ambitious Electric Vehicle Initiatives to Compete with Tesla and Chinese Rivals

Two automotive giants, BMW and Mercedes-Benz, have embarked on their most substantial foray into the electric vehicle (EV) market, aiming to counter the escalating competition from Chinese automakers and catch up with the U.S. powerhouse, Tesla. This significant development unfolded recently during the IAA Mobility motor show held in Munich, Germany, where both companies unveiled their electric concept cars and outlined new platforms for their future EV offerings.

European automakers, often perceived as trailing behind Chinese companies like BYD, backed by Warren Buffett, and Tesla, led by Elon Musk, have faced mounting pressure to demonstrate their readiness to become dominant players in the electric era.

Mercedes-Benz showcased its groundbreaking “Concept CLA Class,” an electric vehicle designed on a novel architecture that will serve as the foundation for forthcoming battery-powered cars from the renowned German automaker. The concept car boasts an impressive range of 750 kilometres (466 miles) and the remarkable ability to cover a range of 400 kilometres with just 15 minutes of charging.

Mercedes-Benz CEO Ola Kallenius hailed the car as a “revolutionary development” for the company, emphasizing its extraordinary efficiency, range, and rapid charging capabilities. He remarked, “With those efficiency numbers, that kind of range, that kind of fast charging, I am not aware of any vehicle in that class that can match that.”

BMW, a formidable rival to Mercedes-Benz, revealed its “Vision Neue Klasse,” another electric concept car that underscores the company’s commitment to electric mobility. “Neue Klasse” represents a fresh architectural approach for BMW’s EVs, with the first vehicles built on this platform set to enter production in 2025.

“In only two years’ time, these cars will hit the road and with that, overall, we lead BMW to a new era of innovation and sustainability. That’s the purpose of our show here at the IAA,” stated BMW CEO Oliver Zipse, highlighting the transformative impact of their new EV offerings. Zipse further disclosed BMW’s plan to double its EV sales in the current year, with an ambitious target of having 15% of global sales consisting of battery EVs by the end of 2023.

Both Mercedes and BMW’s dedicated EV platforms represent a departure from their prior approach, which involved adapting combustion engine or hybrid models to incorporate batteries. This shift signifies their most significant step towards a new platform tailored for the electric vehicle era.

Industry analysts have acknowledged Mercedes and BMW’s advancements as significant strides but have noted that they might still trail Tesla in certain aspects. Daniel Roeska, senior research analyst at Bernstein Research, expressed, “The new platforms at Mercedes and BMW showcase, for the first time, what the European OEMs [original equipment manufacturers] will be capable of. These cars are likely still a year away, but their specifications show that European OEMs will be able to create compelling products.”

In contrast to BMW and Mercedes-Benz’s strategies, Volkswagen has adopted a multifaceted approach, aiming to cater to diverse segments of the market by releasing electric vehicles at various price points. Volkswagen recently announced plans to launch eleven new all-electric models by 2027, underscoring its commitment to EVs. In 2026, the company intends to introduce the ID. 2all, an affordable electric vehicle priced at less than 25,000 euros ($26,942).

The growing prominence of technology in the EV market has been noted, with premium EVs increasingly adopting smartphone-like features and functionalities. Tesla, in particular, has set the standard in this regard by seamlessly integrating hardware and software within its vehicles, offering a holistic user experience.

European automakers, including BMW and Mercedes, have emphasized their technological prowess at events like the IAA conference to demonstrate their ability to compete with Tesla and emerging Chinese EV manufacturers. BMW’s Vision Neue Klasse EV, for example, features a heads-up display that projects information onto the driver’s windshield, enhancing the digital aspect of the driving experience.

Nonetheless, while European automakers are making significant strides in the EV sector, analysts suggest that they may still have some ground to cover to catch up with Tesla and Chinese competitors fully. Counterpoint Research noted that Tesla commanded 20% of the global EV market in the second quarter of 2023, followed by 15% for BYD, highlighting the fierce competition in the industry.

As the EV market continues to evolve and intensify, BMW, Mercedes-Benz, and other European automakers are poised to play pivotal roles in shaping the future of electric mobility, striving to strike a balance between innovation, technological prowess, and market competitiveness.