BMW Splits Combustion and Electric Production Across Bavaria in €2 Billion Overhaul
Published on 09/30/2026 at 16:01 | Editorial boerse-global.de
BMW is betting that separating its powertrain lines geographically will give it the breathing room to absorb demand swings that have already dented profits in China. The Munich-based automaker is steering roughly €2 billion into modernizing its Bavarian manufacturing base, dividing the work so that its flagship Munich plant handles the fully electric i3 while Dingolfing takes on combustion and hybrid variants.
The arrangement marks a deliberate physical separation of drivetrain types. Munich will be converted step by step to build electric vehicles exclusively, while Dingolfing's allocation of petrol and hybrid models keeps its roughly 18,000-strong workforce occupied. The company frames the realignment as a hedge against fluctuating demand and a way to bring down production costs across the core of its model range.
Battery Plant Kicks Off October 1
A second pillar of the spending program comes online shortly. Series production at BMW's new battery facility in Irlbach-Straßkirchen begins on October 1, supplying sixth-generation storage units. That site accounts for about €1 billion of the total outlay, with the remaining €1 billion directed at the vehicle plants in Munich and Dingolfing.
The lower Bavarian battery hub will create more than 1,600 jobs in its first phase of expansion. Locating cell supply close to assembly is intended to shorten delivery routes and lessen reliance on international supply chains — a priority that has gained urgency as trade tensions reshape the industry's logistics map.
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Nedeljkovi? Pitches Price Deals Over Tariffs
On the trade front, chief executive Milan Nedeljkovi? staked out a distinct position. Speaking to the FAZ on September 22, he advocated voluntary price agreements as an alternative to punitive tariffs, arguing that this approach better counters the threat posed by low-cost Chinese vehicle imports. His reasoning rests on the deep entanglement of global supply chains and international production sites, which makes trade barriers a double-edged instrument for established manufacturers.
Product planning is shifting at the same time. According to a Reuters report citing Bernstein, BMW intends to trim its model lineup while expanding local manufacturing. One striking cut lands in the heart of the mid-size segment: the next-generation 3 Series will no longer be offered with diesel engines. For the eighth iteration of the range, buyers will choose between the fully electric i3 and petrol, petrol-hybrid, and plug-in hybrid powertrains.
Autumn 2026 updates round out the pipeline, bringing fresh equipment for several M Performance models along with new versions of the 7 Series and X5.
Margin Targets Frame the Recovery Story
The factory investments underpin management's medium-term financial blueprint. At a two-day event in Munich, the board set a margin target of 3 to 5 percent for the automotive segment through 2028. From the start of the 2030s, the company aims to restore operating returns in vehicle manufacturing to the 8 to 10 percent band.
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Bernstein Research analyst Stephen Reitman reiterated an "Outperform" rating on the stock with an €82 price target, characterizing the strategic revamp as the opening chapter of a gradual earnings recovery following earlier setbacks.
Shares Steady After Touching a 52-Week Low
Investors greeted the news with a measure of calm. BMW stock rose 2.3 percent to €56.24 in Xetra trading, a day after touching a fresh 52-week low of €52.50. Even with the bounce, the shares remain down 40 percent since the start of the year.
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