Betting on the "super brain," BMW is investing tens of billions of euros to develop the Neue Klasse platform, challenging Chinese electric vehicle rivals.

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BMW is betting on software-driven electric vehicle technology, using the "super brain" system to challenge its Chinese competitors and Tesla's position.

According to media reports on Wednesday, the German automaker has invested more than 10 billion euros in developing its ambitious Neue Klasse platform, aiming to achieve a technological breakthrough amid intense competition faced by traditional car companies.

The new platform will offer more than 20 times the current computing power and be equipped with four "super brain" systems, significantly improving in-car communication, infotainment displays, autonomous driving, and other vehicle functions. Analysts believe that BMW is essentially "betting the whole company" on the success of Neue Klasse.

BMW's first Neue Klasse-based model, the iX3 sport utility vehicle, will make its debut on Friday ahead of the Munich Motor Show. Within the next two years, BMW will launch 40 new and upgraded models, marking a fundamental transformation in the German automaker's approach to car design, manufacturing, and sales.

Software-defined vehicles become the new industry standard

The BMW iX3 will be one of the "software-defined vehicles" showcased in Munich, where central computer systems will replace hardware as the most important feature. Traditionally, European, American, and Japanese car groups have long lagged behind Elon Musk's Tesla and the new generation of Chinese manufacturers in software development.

BMW announced the Neue Klasse platform concept in 2021 and has already invested more than 10 billion euros in related technologies. CEO Oliver Zipse told investors this July:

With Neue Klasse, we have made tremendous progress in all relevant areas of technology. The new BMW iX3 will become the industry benchmark.

The shift to software-driven vehicles will allow automakers to continue improving vehicle performance after sales and offer services they hope will generate new revenue streams.

Technological breakthrough may bring performance leap

Neue Klasse technology will provide more than 20 times the current computing capability and reduce the complexity of automotive electronic systems. In addition to a longer electric range of up to 800 kilometers and faster charging speeds—drivers can add over 350 kilometers of range in just 10 minutes—the Neue Klasse fleet will be powered by four "super brains."

Bernstein analyst Stephen Reitman said:

The new platform has the potential to bring a "huge leap" for BMW. You could say BMW is betting the whole company on the success of Neue Klasse. The successful launch of this auto platform could "change much of the future of the automotive industry" and perceptions of Western automakers' competitiveness in software.

The new platform will also underpin BMW's future internal combustion engine and hybrid models. The German automaker, which also owns the Rolls-Royce and Mini brands, has long taken a cautious approach to the global shift toward electric vehicles, adopting a diversified energy strategy.

Cost control remains a challenge

Martin Schuster, BMW's vice president of battery cell and cell module, told the Financial Times that the company would be able to save up to 50% of the manufacturing cost for its next-generation cylindrical lithium-ion batteries. While this may still not be enough to make its electric vehicles as profitable as gasoline cars, Schuster said the latest battery systems would allow the company to adopt new cell formats when deemed better.

Unlike rivals like Volkswagen, BMW does not produce its own battery cells but engages in cell and chemical research while collaborating with Chinese companies like CATL to develop new batteries. BMW's electric vehicle sales are steadily rising, with battery-electric vehicles accounting for about 18% of its global deliveries in the first half of this year, compared to 8% for Mercedes and 11% for Volkswagen.

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