Economics

BMW is betting on German local production as others are reducing their German manufacturing footprint. The company has invested about two billion euros in vehicle production at Munich and Dingolfing and battery manufacturing at the new Irlbach-Straßkirchen plant.

European Business Magazine:

The surprise is the timing. BMW is making this bet on Germany while it cuts 8,000 jobs and its rivals shrink their German factories.

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The same company is also shrinking. BMW will offer voluntary redundancy to about 40,000 of its 85,000 permanent German employees from this month, aiming to cut 8,000 jobs by the end of 2027. Production line workers are spared. The cuts fall on office and administrative staff.

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It thinks it has too many layers of management and takes too long to develop cars.

BMW management outlined the approach and reasoning behind its operating model changes in and alongside its Q2 earnings call.

BMW says the i3 production launch has further reduced Plant Munich manufacturing costs by 10%.

Financial Times:

While German car production fell 10 per cent in 2025 from pre-pandemic levels, BMW saw a 6 per cent increase, helped by its decision to bring production of the Mini Countryman, the X1 and some 5 Series models in-house from partners in the Netherlands and Austria.

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The group’s current position owes much to decisions taken years ago, including producing a higher share of its vehicles sold in China and the US locally. As a consequence, German factories are less affected by falling sales in Asia and the impact of Donald Trump’s tariffs.

BMW also embraced electric cars earlier than its German rivals, launching the first i3 in 2013. The model was a commercial flop but taught BMW important lessons about the risks of dedicated EV production.

This is an example of localized manufacturing and domestic investment reinforcing one another: FT indicates that local production in China and the U.S. reduces German plants’ exposure to weaker Chinese demand and U.S. tariffs, while modernization and in-sourcing support home-country competitiveness and utilization.

Philipp Raasch provides some historical context on Huawei, which reportedly is in talks to partner with Maserati as a platform provider for upcoming models, and highlights the risk to European automakers of increased supplier dependence:

Huawei depended on technology from the US. And that dependence is exactly what nearly ruined it.

The shock forced Huawei to develop everything important itself.

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In other words, European carmakers are making themselves more and more dependent on technology from China.

And that's where I see the parallel to Huawei. Because its story shows how dangerous that kind of dependence can be.

If the Maserati deal works out, it definitely won't stop at Maserati. Then Europe ends up where SAIC's chairman refused to go in 2021: the soul comes from China. And all Europe gets to build is the body.

Huawei’s crisis was triggered by geopolitics, but the underlying vulnerability is the same: dependence on critical technology controlled by someone else.

NHTSA:

In accordance with the President’s “Unleashing American Energy” Executive Order and the Secretary’s “Fixing the CAFE Program” Memorandum, NHTSA is publishing a final rule, The Safer Affordable Fuel-Efficient (SAFE) Vehicle Rule III for Model Years 2022 to 2031 Passenger Cars and Light Trucks. The rule resets the maximum feasible fuel economy standards in accordance with the Energy Policy and Conservation Act of 1975, the Energy Independence and Security Act of 2007, and other applicable law. The final rulemaking brings the CAFE program into compliance with relevant statutory requirements.

NHTSA is also eliminating the inter-manufacturer credit trading system starting in MY 2028, and amending the light-duty vehicle fleet classification system to allocate vehicles into passenger and non-passenger automobile fleets appropriately, based on their attributes and capabilities, starting in MY 2030. NHTSA projects that the amended standards will correspond to the industry fleetwide average requirement of roughly 34.9 miles per gallon (mpg) in MY 2031.

Automotive News reports that McLaren is planning to expand its lineup with an SUV, hybrid coupe, and GT:

McLaren Automotive is evolving beyond its traditional two-door sports cars with a major expansion that will broaden its appeal while staying true to its performance roots.

“This brand can be so many more things than it’s been historically,“ CEO Nick Collins told Automotive News in August.

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The expanded product portfolio will be accompanied by a global dealership redesign and new corporate identity as McLaren strives to expand its customer base and build brand engagement.

Reuters, which reported the company will invest £500 million ($675 million) in its UK manufacturing and engineering operations:

McLaren Chief Operating Officer Michael Straughan said the automaker needed growth to lower its material costs and lift its profits, and the way to get there was through expanding its product portfolio starting with the SUV.

McLaren has been loss-making for years, but Straughan said the company's margins could match the top performers in a segment that includes Ferrari, which has the highest profit margins in the auto industry.

Porsche’s and, more recently, Ferrari’s lineup expansions reflected the same reality McLaren is facing: there’s an economic (and sometimes a survival) ceiling as a sports-car company. The challenge—not insignificant—is to expand without losing brand and product identity.