BMW Chief Backs Pricing Deals Over Tariffs on Chinese Cars
BMW is calling for a different approach to the growing competitive challenge from Chinese automakers in Europe: negotiated pricing commitments instead of higher tariffs.
BMW CEO Milan Nedeljkovic said he supports voluntary pricing agreements and political dialogue to address the influx of low-cost Chinese vehicles into the European market. In an interview with German newspaper FAZ, Nedeljkovic warned that some Chinese cars are being offered at prices that are difficult to explain from a conventional business perspective.
The comments come as European automakers face intensifying competition from Chinese manufacturers in electric vehicles, while policymakers debate whether additional trade measures are necessary.
For BMW, the issue is particularly complicated because the company itself manufactures electric vehicles in China for export to Europe, meaning tariffs can also raise costs for BMW's own China-made models.
Why BMW Prefers Pricing Agreements Over Tariffs
The European Union currently applies definitive countervailing duties of 7.8% to 35.3% on battery-electric vehicles imported from China, depending on the manufacturer. The European Commission says the measures are intended to address the effects of subsidisation identified during its investigation.
But the EU has also created a mechanism that allows manufacturers to propose price undertakings.
Under such an arrangement, an exporter can commit to selling vehicles above an agreed minimum import price and potentially receive an exemption from the countervailing duties, subject to the Commission's conditions. In February 2026, the European Commission accepted such an undertaking from Volkswagen Anhui for the China-made CUPRA Tavascan.
That precedent helps explain why BMW's preferred solution is not simply theoretical.
Nedeljkovic is effectively arguing that negotiated minimum pricing could address concerns about unusually low import prices while avoiding a broader escalation of tariffs and trade tensions.
The approach would also be relevant to BMW because the company exports its China-produced electric Mini models into Europe.
Chinese EV Competition Is Becoming a Strategic Challenge
The pressure on European automakers goes beyond tariffs.
Chinese manufacturers have become increasingly competitive in electric vehicles, combining large-scale battery production, aggressive pricing, rapid product development and strong domestic supply chains.
BMW has acknowledged the intensity of the Chinese market. At its May 2026 annual general meeting, then-chairman Oliver Zipse said China's automotive market was normalising while local manufacturers were increasingly gaining market share. BMW said it delivered around 625,000 vehicles in China in 2025 and was responding by increasing local sourcing, developing China-specific products and working with local technology partners.
The challenge is especially significant because China remains one of BMW's most important markets and technology hubs.
This creates a two-sided competitive problem: BMW must defend its position against Chinese brands in Europe while simultaneously competing against those same companies inside China.
BMW's China Strategy Is Changing
BMW's response has increasingly focused on localising development and production rather than relying solely on products designed primarily for European customers.
The company has described its strategy as "In China. For China. With China." It is developing vehicles specifically for Chinese consumers and expanding local technology cooperation.
That strategy matters because Chinese consumers have become accustomed to rapid software development and highly connected vehicles. Traditional premium-brand strengths such as engineering, design and brand recognition are no longer the only factors influencing purchasing decisions.
BMW is therefore investing in software partnerships and local development while attempting to maintain its premium positioning.
The company's China-made Mini exports create another layer of complexity. If Europe raises tariffs on Chinese-made EVs, BMW can face higher costs on vehicles that it produces in China specifically for global markets.
Tariffs Can Help One Side While Hurting Another
The debate illustrates a difficult trade-off for European automakers.
Tariffs can make imported Chinese vehicles more expensive, potentially reducing some of their price advantage. But tariffs can also increase costs for European manufacturers with production facilities in China.
BMW has previously criticised EU tariffs for precisely this reason. At its May annual meeting, the company argued that tariffs can ultimately be reflected in consumer prices and said protectionist measures could weaken Europe's globally integrated automotive industry.
The company therefore has an incentive to favour mechanisms that target pricing behaviour without imposing broad additional costs on China-linked supply chains.
For investors, this is an important distinction. A minimum-price agreement could change competitive dynamics without necessarily producing the same cost impact as another tariff increase.
BMW Is Already Dealing With Margin Pressure
The tariff debate comes at a challenging time for BMW.
The company warned earlier in 2026 that higher tariffs would weigh on profitability. Its 2026 forecast anticipated that additional tariff headwinds would reduce the Automotive segment's EBIT margin by approximately 1.25 percentage points, with mitigation measures already incorporated into the outlook.
BMW's first-quarter 2026 results also showed pressure from lower sales volumes, intense competition and currency effects. Group revenue was €31.0 billion, down 8.1% from the year-earlier period.
That makes the European-China pricing debate more than a policy issue. It directly affects the company's potential pricing power, production economics and margins.
Why This Matters for BMW Investors
BMW investors need to watch two separate but connected issues.
The first is China. If Chinese brands continue taking market share, BMW could face pressure on volumes and pricing in one of its key markets.
The second is Europe. If Chinese EV imports continue growing rapidly, European premium brands may need to compete more aggressively on price, technology and product features.
A negotiated minimum-price framework could reduce some of the immediate pressure from very low-priced imports, but it would not eliminate the underlying competitive challenge.
Chinese manufacturers would still compete on technology, battery economics, software, manufacturing scale and increasingly on brand recognition.
That means trade policy can influence the playing field, but it cannot substitute for competitiveness.
What Investors Should Watch Next
Several developments could become important for BMW and the broader European auto sector:
Whether the EU expands or modifies its current Chinese EV trade measures
Whether more Chinese automakers receive approval for minimum-price undertakings
BMW's China deliveries and market share
Pricing trends in European EVs
BMW's automotive EBIT margin
Sales of China-made Mini EVs in Europe
The pace of new EV launches by Chinese manufacturers
BMW's progress in local software and technology partnerships
The European Commission's experience with the CUPRA Tavascan shows that price undertakings are already an available policy mechanism, although each proposal must be assessed individually under EU rules.
The Bigger Issue for European Automakers
BMW's position highlights a broader problem facing Europe's established carmakers.
The industry is trying to protect its manufacturing base while remaining dependent on global supply chains and Chinese demand. At the same time, Chinese competitors are expanding internationally and increasingly competing on price and technology.
For BMW, a negotiated pricing framework could potentially reduce one source of disruption without creating another layer of trade friction. But the longer-term test will be whether European manufacturers can improve cost competitiveness, software capabilities and EV product appeal while protecting premium pricing.
BMW's latest stance therefore is not simply about whether tariffs are good or bad. It reflects the increasingly complicated economics of producing and selling cars across Europe and China.
For investors, the key indicators remain BMW's margins, China performance, EV competitiveness and the final shape of European trade policy.
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This article is for informational and educational purposes only and should not be considered investment advice.