BMW's China Slide Deepens Even as Policy Tailwinds and Battery Rollout Lift the Stock

BMW shares climbed 2.1% yesterday, riding a broader recovery in European auto stocks, but the advance owes more to a rethink of the sector's political backdrop than to any improvement in the company's own trading. Two forces drove the rally: easing interest-rate pressure and the prospect of softer EU vehicle rules. Neither does anything to fix BMW's collapsing sales in China.

Reuters reported that Germany and France have agreed on a joint position to dilute proposed EU emissions rules for new combustion-engine cars from 2035, and that Britain is to be treated as a trusted partner under "Made in EU" rules. That gives the auto sector genuine political tailwind. It is not, however, a company-specific win for BMW, and investors would do well to keep the two apart.

A policy lift, not an operational all-clear

Looser regulation can shift expectations for the whole industry. It cannot tell you whether BMW will reverse its sales slump. The latest company disclosures, in fact, point in conflicting directions.

On Thursday, BMW began series production of Gen6 high-voltage batteries in Shenyang. The cells are destined for future Neue Klasse models that the company will build in China for the local market. It marks the third site in BMW's global Gen6 production network. So while the stock was reacting to political signals, the company was quietly putting a concrete building block in place for its future Chinese model lineup.

That milestone sits alongside a weak sales picture. On Tuesday, BMW reported 551,072 deliveries worldwide for the third quarter of 2026, down 6.3% on the same period a year earlier. China is the crux of the story: deliveries there fell 24.8% to 114,355 vehicles. Battery-electric vehicles provided the counterweight, with global BEV deliveries up 7.2%.

Regional trends diverged. Deliveries grew in Europe and the US during the quarter, and in Europe one in every three vehicles handed to customers was fully electric — even as the global total slipped.

Analysts split on what comes next

The analyst community is not speaking with one voice. RBC Capital Markets cut its BMW price target to EUR 58 from EUR 60 on Wednesday and kept its "Sector Perform" rating, with analyst Tom Narayan pointing squarely at persistent headwinds in the Chinese sales market.

Deutsche Bank Research took the other side of the trade. Analyst Tim Rokossa reaffirmed a "Buy" rating and a EUR 71 target on Wednesday, even while flagging expected hits to earnings. Lower sales volumes, unfavorable exchange rates, higher raw-material costs and increased depreciation are all seen weighing on the result. A one-off supplier compensation of roughly EUR 350 million, by contrast, should lend support to profitability.

That compensation deserves to be judged on its own. It can cushion the bottom line without removing any of the pressures Rokossa lists.

November 4 is the next real test

BMW publishes its quarterly statement on November 4, the next scheduled occasion to gauge both the expected earnings drag and the supporting effect of the supplier payment. The stock's rise on a friendlier industry backdrop is no substitute for that check. For investors, the central question remains unchanged: how much earning power BMW can muster under the conditions the analysts have laid out.