BMW's $1.7 Billion US Pivot: How Local Production Insulates Against Trump Tariffs Amid Profit Warning

BMW's new CEO Milan Nedeljkovi? takes over amid 25% US tariffs, falling stock, and margin pressure. Local production in South Carolina offers a hedge as Neue Klasse EV platform launches.

A new chief executive stepped into the top job at BMW on Thursday, just as the US president escalated trade tensions with a 25% tariff on European vehicles. The Munich-based automaker's stock closed at €74.78 on Friday, down more than 22% since the start of the year and well below its 200-day moving average of €85.94. Part of that slide was mechanical: the shares traded ex-dividend on Thursday, with a €4.40 payout per share due to hit investor accounts on 19 May.

The company's new CEO, Milan Nedeljkovi?, inherits a business under severe margin pressure. BMW now expects a 2026 EBIT margin in its automotive segment of just 4% to 6% — a far cry from its usual target range of 8% to 10%. The tariff threat from Washington is a major drag, but the group holds a structural advantage that its German rivals lack.

Nedeljkovi?, previously head of production, takes the wheel at a moment when local assembly in the United States has become a decisive competitive weapon. Trump has made clear that vehicles built in American plants will be exempt from the new import levies. BMW, already the largest automotive exporter from the US by value — with an estimated $9 billion in exports this year, according to the Commerce Department — sources nearly half of its US sales from its Spartanburg, South Carolina facility.

That plant is about to get a powerful upgrade. BMW is pouring $1 billion into electrifying Spartanburg, with production of pure battery-electric vehicles due to begin by the end of 2026. An additional $700 million is earmarked for a new battery assembly plant in nearby Woodruff. The locally built EVs will sidestep any import tariffs entirely, giving the company a built-in hedge against the White House's protectionist turn.

The operational headwinds go beyond trade policy. Germany's auto industry association VDA has warned that 225,000 jobs could disappear by 2035, with suppliers bearing the brunt of the painful shift to electrification. BMW's answer is a commitment to technology openness, which the VDA says could preserve tens of thousands of domestic roles.

The group's medium-term recovery hinges on its "Neue Klasse" electric-vehicle architecture. Series production of the new BMW i3 is scheduled to begin in August at the company's core Munich plant, where €650 million has been spent on retooling. From 2027, that facility will produce nothing but EVs, following the earlier ramp-up of the BMW iX3 in Debrecen, Hungary. The Neue Klasse platform must deliver the margins that the current model line-up cannot.

For shareholders, the dividend payout next week offers a tangible near-term boost. But the focus will quickly return to the bottom line. With a first chart resistance level around €95, the stock has a long way to climb before it regains investor confidence. Nedeljkovi?'s ability to leverage BMW's US production footprint — and stabilise profitability — will determine whether the shares can finally break their downward trend.