China is becoming a strategic focus for German carmakers including BMW, Mercedes-Benz and Volkswagen. These companies have spared no effort in expanding production and R&D capabilities, while strengthening collaboration with Chinese tech companies, universities and supply chain partners. This not only reflects their long-term confidence in the Chinese market, but also promotes mutual benefits between the two countries’ automotive sectors. Industry experts said that this collaboration is rooted in complementary strengths: Germany’s prowess in precision manufacturing dovetails with China’s advantages in intelligent design and electrification, and this synergy is driving the global automotive industry’s transformation forward. Even in the face of geopolitical and trade challenges, the Sino-German automotive collaboration remains robust, as evidenced by events such as the IAA Mobility 2025 in Munich, where automakers from both nations demonstrated their unwavering commitment to cooperation and mutual benefit.
BMW has taken a proactive stance in deepening its roots in China. In February at the BMW Group 2026 Media Family Banquet, Jochen Goller, Member of the Board of Management of BMW, reaffirmed the resilience and robustness of the Chinese market, The company's confidence was backed by actions in R&D, production and partnerships. BMW has established its largest R&D network outside Germany in China, featuring four innovation hubs and three software companies, which enables the group to quickly capture and precisely respond to Chinese customers’ needs. For instance, BMW-ArcherMind (Nanjing) focuses on intelligent vehicle software and possesses full-stack development capabilities for intelligent connected vehicles. In 2025, BMW also launched its self-developed AI agent platform, Gaia, in China. By empowering employees and reshaping business processes, Gaia not only ensures superior product quality, but also continuously enhances operational efficiency and customer experience. In terms of production, the BMW Shenyang production base in Liaoning province has seen cumulative investment exceeding CNY116 billion since 2010, setting a benchmark for intelligent manufacturing. In 2025, the base’s Lydia Site at the Tiexi plant launched trial production of the BMW iX3 Long Wheelbase, the first mass-production model of BMW’s Neue Klasse series.
Meanwhile, preparations for the mass production of the BMW sixth-generation battery project are progressing, supporting production for domestically produced Neue Klasse models. BMW is also advancing collaboration with Chinese partners. It is pushing forward the mass production of large cylindrical cells with suppliers such as CATL and Eve Energy, integrating AI Large Language Models into its vehicles through cooperation with Alibaba, and developing intelligent driving solutions tailored for Chinese road conditions in partnership with Momenta.
Volkswagen Group has also stepped up its localization efforts in China, with a focus on R&D and innovation. In November, Volkswagen Group China Technology Co put its new test workshops into operation in Hefei, Anhui province. It makes China the first country outside Germany where Volkswagen can conduct end-to-end new vehicle platform development, from early development to validation, compliance approval and production readiness. Covering around 100,000 square meters and housing more than 100 laboratories, the new Hefei workshops support software-hardware integration, battery and power train testing, and full-vehicle validation, including road-condition simulations and real-world verification on an urban test track. Volkswagen stated that this expanded capacity will cut overall vehicle development time by 30%, accelerate the rollout of the China Electronic Architecture, and enable faster delivery of smart cockpit functions, advanced driver assistance systems, and over-the-air upgrades for China-focused models. Ralf Brandstaetter, the Volkswagen Board Member responsible for China, said: “China is the world’s most competitive automotive market, and our customers here expect rapid innovation and flawless quality. By expanding our footprint in Hefei, we are strengthening our ability to respond quickly to local needs and to shape technologies directly where they will be used.” Volkswagen Group, which is undergoing an aggressive transformation in China, plans to launch over 20 new energy models in 2026. By 2027, its brands will introduce more than 30 electrified models in China, and by 2030, this number is expected to reach approximately 50, including about 30 purely electric vehicles.
Mercedes-Benz has also maintained its commitment to long-term investment in China. At the China Development Forum in March 2025, Ola Kaellenius, Chairman of the Board of Management of Mercedes-Benz, said: “We remain committed to long-term investment in China, which is a main pillar of our global strategy and a key driver of our electric and digital transformation.” Over the past five years, the automaker has invested CNY10.5 billion in China to accelerate the localization of advanced technologies and products at “Chinese speed”. Kaellenius noted that Mercedes-Benz will continue to increase localization efforts, investing more than CNY14 billion with Chinese partners to enrich its localized product portfolio. This year, the brand plans to introduce over 15 new and face-lifted products to the Chinese market, covering entry-level, mainstream and high-end luxury segments, along with various powertrains, the China Daily reports.
