The electric war: BMW accelerates sales, Mercedes loses ground to the Chinese offensive from BYD

German automaker Mercedes-Benz Group AG has fallen further behind rival BMW AG in electric vehicle sales, so Mercedes must increasingly rely on a slew of upcoming models to revive interest in its plug-in lineup, Bloomberg writes.

Mercedes announced on Monday that it sold 168,800 all-electric cars last year, down 9 percent from 2024. In contrast, BMW electric vehicle sales rose 3.6 percent to 442,072. The different trajectories highlight the challenge for Mercedes chief Ola Kallenius as he tries to prove his company can keep up with rivals in the move to electric vehicles.

2026 will be a tough test for Kallenius' strategy to push Mercedes into the upper end of the market as Chinese automakers expand and consumer appetite remains uneven across Asia and Europe.

Although the year 2025 brought some good moments, including a record sales year for the G-Class off-road model, Mercedes faces American tariffs and increased competition from Chinese manufacturers entering the luxury segment, notes Agerpres.

Big problems for German car manufacturers in the Chinese market

China remains a problem market for the German auto industry. Mercedes, BMW and Volkswagen AG have ceded market share in the world's biggest auto market to homegrown brands, led by BYD Co., which are undercutting foreign rivals' prices while rolling out increasingly sophisticated plug-in models.

Meanwhile, demand for luxury vehicles has been tempered by a prolonged downturn in China's housing market.

Volkswagen Group's deliveries in China fell 8% last year. Audi's owner underperformed with electric vehicle sales in China, which fell 44 percent. However, the company's global electric vehicle shipments rose by nearly a third thanks to rapid growth in Europe and the US. To improve sales in China, Volkswagen is preparing a new set of electric vehicles for the local market together with Xpeng Inc.

Intensifying competition in China has forced automakers to rely more on incentives to protect volumes, even as Beijing has tried to limit aggressive price cuts that have hurt margins across the industry.

For Mercedes, the challenge is striking a balance between pricing discipline – central to the CEO's luxury strategy – and the need to defend its share in a market that has become both more crowded and more price-sensitive.

BMW, whose sales in China are set to drop 12.5% ​​in 2025, is betting that its latest electric vehicles will help it reverse the trend. The company unveiled the iX3 SUV last year, the first in its Neue Klasse line for which the manufacturer spent more than 10 billion euros on development.

Overall, Mercedes' global sales fell 9 percent to 1.8 million in 2025, one of the company's worst annual performances in recent years. Deliveries in China fell 19 percent, while sales in the main segment, which includes mid-size models like the E-Class, fell 10 percent globally to 1.05 million units.

However, there are also good signs for Mercedes' electric car portfolio. Mercedes' new CLA electric sedan was named European Car of the Year at the Brussels International Motor Show, and orders for the CLA and the upcoming GLC EV are full until the second half of 2026.