BMW's Electric Order Book Is Overflowing — Its Bottom Line Is Not

BMW's iX3 hits 100,000 European orders and US deliveries start early, but a 1-3% auto EBIT margin guidance drags shares down 35% this year.

BMW has entered the autumn with an unusual split-screen story: demand for its newest electric vehicles is running so hot that the company is pulling deliveries forward and running factories around the clock, yet the profit engine underneath is sputtering badly enough to drag the shares down by more than a third this year.

The clearest evidence of that demand sits in Europe, where the iX3 has amassed 100,000 orders in the twelve months since launch. To keep pace, the Munich carmaker flipped its Hungarian plant in Debrecen to three-shift operation starting in September, putting the lines to work around the clock. Just eight months separated the start of series production from full three-shift capacity — a ramp-up the company describes as the fastest in its history.

North America is feeling the same pull. US deliveries of the iX3 50 xDrive began on 16 September, beating the originally targeted date of 25 September, with media reports pointing to strong American demand as the trigger. The model carries a US entry price of 61,500 USD. For BMW, the States remain one of its most important sales theaters in the push for share in the higher-priced EV bracket.

A profit picture that refuses to cooperate

None of that momentum has reached the earnings line. More than a month ago, BMW cut its guidance for the 2026 financial year, with automotive profitability bearing the brunt: management now expects a full-year EBIT margin of just 1 to 3 percent in the core car business. The first-half figures laid the trend bare — the automotive operating margin slipped to 2.3 percent in the second quarter, while group pretax profit fell 29.4 percent to EUR 4,045 million in the six months through June.

The stock has tracked that deterioration. The paper closed Monday at EUR 60.40, a loss of 35 percent since the start of the year. In earlier trading it was quoted at EUR 60.06, down 36 percent year-to-date.

Behind the margin squeeze lies a Chinese market that has turned brutally competitive. Analyst Nedeljkovi? warns that new-car volumes there could drop below 20 million units while capacity sits ready for nearly 30 million vehicles — a surplus of roughly ten million cars. That overhang feeds directly into pricing, and even though BMW builds locally with market-specific configurations and management still expects to make money in the country, the pressure on margins is plain. Should that excess capacity be pushed harder onto global markets, the price war could spill into Europe and other key regions, eroding the premium price points BMW depends on.

Where the bulls find their footing

Not everyone reads the glass as half empty. Bernstein Research reaffirmed its Outperform rating with an EUR 82 price target. Analyst Stephen Reitman contends that premium manufacturers enjoy meaningfully better protection against Chinese competition than volume players, since luxury buyers tend to be more loyal. Mass-market brands, by contrast, face the prospect of serious share losses.

BMW is also opening revenue streams beyond the showroom. In Saudi Arabia, the company is contributing engineering work to the newly unveiled EV brand Ceer, which licenses technology from the Munich i4, among other things — a way to offset research spending through outside partnerships.

Closer to home, the group is reshaping its workforce. Cuts are hitting administration, development and planning at the Munich site, though compulsory redundancies are ruled out under an existing agreement with the works council. CEO Oliver Zipse has said there is no overstaffing in manufacturing. German plants are running at solid utilization, while sites such as Spartanburg in the US and the South African factory are operating at their capacity limits. The administrative trimming is meant to slim internal processes as the company prepares for the ramp-up of the Neue Klasse, with 40 models slated to reach the market by the end of 2027.

There has been a boardroom change to accompany the internal shift as well. On 1 September, Dorothea von Boxberg took over as board member for human resources and real estate and as labor director, succeeding Ilka Horstmeier. Von Boxberg previously served as CEO of Brussels Airlines and, before that, as chief executive and finance chief of Lufthansa Cargo.

The risks that could stall a rebound

Two threats stand out for anyone weighing the shares. The first is a permanent gap between the profitability of the new EVs and the returns BMW has long earned on combustion models — the transition soaks up enormous capital without any guarantee of near-term parity. The second is trade politics: if recovery in Asia fails to materialize or geopolitical tensions escalate, the savings programs now being set in motion could be swept aside by market forces.

That caution is visible among some observers. UBS rates the stock only Neutral.

Technically, the picture hinges on a clear threshold. As long as the shares hold above their yearly low of EUR 56, the option of a bottoming formation stays alive. But if the operating margin keeps sliding in the coming quarterly reports, or Asian sales weaken more sharply than forecast, the medium-term downtrend could resume. The coming days and the next set of milestones should sharpen the picture — and show just how realistic the targeted returns for the Neue Klasse era really are.