Betting on the "super brain," BMW is investing 10 billion euros to develop the Neue Klasse platform, challenging Chinese electric vehicle competitors

BMW is betting on software-driven electric vehicle technology to challenge the status of Chinese competitors and Tesla with its "super brain" system.

According to media reports on Wednesday, the German automaker has invested over €10 billion to develop its ambitious Neue Klasse platform, attempting to achieve technological breakthroughs amid fierce competition faced by traditional car manufacturers.

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

BMW's first iX3 sports utility vehicle based on the Neue Klasse platform will make its debut on Friday ahead of the Munich Motor Show. Over the next two years, BMW will also launch 40 new and upgraded models, marking a fundamental transformation in the way this German automaker designs, manufactures, and sells cars.

Software-defined vehicles become the new industry standard

The iX3 will be one of a series of "software-defined vehicles" showcased in Munich, where the central computing system will replace hardware as the most important feature. Traditional European, American, and Japanese automotive groups have long lagged behind Musk's Tesla and the new generation of Chinese manufacturers in software development.

BMW unveiled the concept of the Neue Klasse platform in 2021 and has invested over €10 billion in developing related technologies. CEO Oliver Zipse told investors in July this year:

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

The shift to software-driven vehicles will enable automakers to continue improving performance after the vehicles are sold and provide services that they hope will create new revenue streams.

Technological breakthroughs may lead to performance leaps

The Neue Klasse technology will provide more than 20 times the computing power of current vehicles 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 stated:

The new platform has the potential to bring a "huge leap" for BMW; you could say BMW is betting the entire company on the success of the Neue Klasse. The successful launch of this automotive platform could "change many futures of the automotive industry" and perceptions of Western automakers' competitiveness in software.

The new platform will also provide a foundation for 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 transition to electric vehicles, adopting a multi-energy strategy

Cost Control Still Faces Challenges

Martin Schuster, Vice President of Battery Cells and Modules at BMW, told the Financial Times that the company is able to save up to 50% on manufacturing costs for its next-generation cylindrical lithium-ion batteries. While this may still not be enough to reduce the cost of its electric vehicles to a level that is as profitable as gasoline cars, Schuster stated that the latest battery systems will allow the company to adopt new cell formats when deemed better.

Unlike competitors such as Volkswagen, BMW does not produce its own battery cells but conducts battery cell and chemical research while collaborating with Chinese companies like CATL to develop new batteries. Currently, BMW's electric vehicle sales continue to grow, with battery-powered cars accounting for about 18% of its global deliveries in the first half of this year, compared to 8% for Mercedes-Benz and 11% for Volkswagen