Jun 26, 2026
Global automakers have been agonizing over the formidable threat of Chinese competitors, particularly in the EV sector. It continues to expand, though at a slower pace in some markets (especially the US) than in its heyday just a few years ago.
Despite a growing number of electric vehicle registrations worldwide in recent months, the gains have not been evenly distributed. European and North American brands are lagging behind Chinese startups that offer more enticing price points, advanced tech features and lower manufacturing costs.
Advertisement
BMW (BMWYY:OTC), for one, has issued a bombshell fiscal update as we head into the second half of 2026. The company slashed its annual profit margin forecast from the 4-6% it initially predicted to just 1-3%. Ongoing repercussions from the military action in Iran and, crucially, waning demand in China were provided as the primary reasons for the change.
Thanks for subscribing!
Read the best of Moneywise in 5 minutes or less.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
To cope, the carmaker is rolling out new cost-optimization measures, including cutting 5% of its workforce. Meanwhile, analysts at JPMorgan have called the cut “radical” and said it should serve as “a wake-up call” for the entire auto industry.
BMW’s shares hit a six-year low as a result of the news, surprising investors who thought the company was better positioned than other European luxury rivals due to its flexibility, resilience and historically strong profit margins.
BMW isn’t alone
This spring, executives at Toyota, Ford and Honda had to face the reality of China’s competitive edge. The CEO of Honda, Toshihiro Mibe, turned heads by saying his company had “no chance against” the level of automation that firms like Shenzhen-founded EV giant BYD have rapidly integrated into their operations.
In Germany, BMW and its peers, including Mercedes-Benz and Porsche, have watched profit margins fall from double-digits in 2021-2023 to between 1% (BMW) and 7.5% (Porsche) for 2026.
In the US, tariffs, the end of federal clean vehicle credits, inconsistent charging infrastructure and a lack of appealing low-cost models have slowed consumer adoption of non-fuel cars. At the same time, the tough economy has pushed new-car purchases down households’ priority lists.
Meanwhile in China, where the EV market is rife with domestic players and is especially cutthroat, rebate programs for the vehicles were also trimmed in 2026. That move dampened sales activity for the year after a late-2025 sales rush.
BMW shuttered one of its Chinese dealerships in March, reportedly due to poor sales. That followed the closure of more than 50 locations in the country in 2025.
Must Read
- The ultra-rich use these 5 real estate strategies to build wealth while they sleep — you can start with just $100
- Here’s the average income of Americans by age in 2026. Are you keeping up or falling behind?
- Insurance companies profit most from drivers who auto-renew without shopping around. Comparing 100+ quotes takes 2 minutes and costs nothing
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Major pivots have led to losses
BMW saw stronger interest in its EVs than ever in 2025 and had aimed for EVs and hybrids to make up 50% of its sales by 2030. For comparison, those vehicles accounted for 18% of sales in 2024, a year when executives said the market had reached a “tipping point” of EV growth surpassing that of fuel models.
Advertisement
The company, under CEO Milan Nedeljković, even spent $712 million to overhaul its first-ever factory in Munich to produce only electric vehicles starting in 2027.
But, many brands have had to completely rethink their EV plan in recent months, even abandoning some models completely and losing millions in the process as China manages to pump out comparable (or even superior) battery-operated autos faster and for less, all in the face of regional market lulls, including in China itself.
An earlier push to ban the sale of new gas cars in Europe by 2035 has now been scaled back due to its impracticality and the drastic consequences it would mean for homegrown firms and jobs. BMW and others have kept combustion engine vehicles central to its long-term strategy. Still, the much-hyped battery-electric iX5 is due this summer and the hydrogen fuel cell iX5 slated for 2028.
European customers are expected to lead demand for those models as BMW deals with a 10% year-over-year decline in Chinese sales volumes for passenger sedans overall in the first quarter, whether EV or not.
You May Also Like
- JP Morgan sees gold hitting $6,000/oz before 2027 — and a Gold IRA lets you hold the physical metal while deferring the tax bill. Get your free guide from Priority Gold
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
Becky Robertson is a senior staff reporter at Moneywise and a lifelong writer. Along with more than a decade covering news at outlets like blogTO and Quill & Quire, she's attended writing residencies around the world. With 33 countries visited, she finds travel to be among her greatest inspirations.
