BMW i3 Neue Klasse Rolls Off Munich Assembly Line, But a 45% U.S. EV Sales Collapse Looms Over the Launch

The camouflaged sedan sitting on BMW’s Munich assembly line today looks like any other pre-production test mule. But this particular car carries the weight of BMW’s entire electric future on its shoulders. The new BMW i3, built on the Neue Klasse platform’s 800-volt architecture, is the electric successor to the 3 Series, a nameplate that has defined the compact luxury sedan segment for over 50 years. Pre-production started today at BMW Group Plant Munich, with series production scheduled for the second half of 2026.

Here’s what matters:

• The Fact: BMW has assembled the first pre-series i3 units entirely at its Munich plant, marking the final preparation phase before mass production begins in H2 2026.
• The Delta: This is the first Neue Klasse vehicle built at a retrofitted existing BMW factory. The iX3 is produced at a brand-new plant in Debrecen, Hungary. Munich had to be converted while still building 1,000 combustion 3 Series and 4 Series cars per day.
• The Buyer Impact: U.S. buyers won’t see the i3 until early 2027 as a 2027 model year vehicle, and it will arrive in a market with no federal EV tax credit and an estimated starting price near $50,000.

BMW Spent 18 Months Rebuilding One-Third of Its Munich Factory

The i3 pre-production milestone means BMW’s Munich plant has completed the transition from assembling the first test units at the nearby Research and Innovation Centre to running them through every production step on-site. The new body shop, paint shop, assembly area, and logistics center are all operational. Over the past 18 months, BMW remodeled roughly one-third of the plant grounds while keeping combustion vehicle production running without interruption.

Peter Weber, Head of BMW Group Plant Munich, confirmed the scope of the achievement: “For the first time, we have built a BMW i3 entirely at our plant, using state-of-the-art manufacturing technology and digitally connected processes.”

The pre-series vehicles will stress-test logistics, manufacturing equipment, and workflows. Employee training is shifting from augmented reality simulations to hands-on work with real machinery. Every part now flows through the designated material supply chain and gets processed on the actual production line.

That simultaneous conversion is worth paying attention to. BMW didn’t shut down Munich to prepare for the Neue Klasse. It kept building combustion cars while constructing an entirely new production system around the existing one. That’s operationally impressive, but it also tells you something about BMW’s hedged approach to electrification. CEO Oliver Zipse has consistently maintained a “technology-open” strategy, and the Munich plant will continue producing gas-powered 3 Series and 4 Series models alongside the electric i3.

The i3 Shares iX3 Hardware but Targets Tesla Model 3 Buyers Directly

The new i3 is the second production vehicle on BMW’s dedicated Neue Klasse EV platform, following the iX3 SUV that began series production in late 2025 at the Debrecen, Hungary plant. Both vehicles share the same 800-volt electrical system, 108.7 kWh battery pack using Gen6 cylindrical cells, and BMW’s sixth-generation eDrive technology. The iX3 achieves a WLTP range of up to 805 km (500 miles), and given the i3’s lower, more aerodynamic sedan profile, range could be even better.

BMW hasn’t released official i3 specifications yet. But based on the iX3’s hardware and previous reports we covered, the lineup is expected to include rear-wheel-drive and all-wheel-drive variants, with the range-topping i3 M60 xDrive producing around 630 horsepower. A dedicated electric M3 with a quad-motor powertrain will follow later.

The i3 name itself has a complicated history. BMW used it for the quirky, carbon-fiber-bodied city car launched in 2013, then recycled it in 2022 for a China-only electric version of the current 3 Series. This new i3 is neither of those vehicles. It’s a ground-up electric sedan previewed by the 2023 Vision Neue Klasse concept, and as our spy shot analysis showed, it features a taller rear roofline, different door shapes, and a relocated charging port compared to the gas-powered 3 Series it will sell alongside.

BMW’s U.S. EV Sales Collapsed After the Tax Credit Expired

BMW’s i3 pre-production announcement arrives against a brutal backdrop for the company’s U.S. electric vehicle business. Full-year 2025 EV sales fell 16.7% to 42,484 units. The fourth quarter was a disaster: after the $7,500 federal EV tax credit expired on September 30, 2025, BMW’s Q4 BEV sales cratered 45.5% to just 7,557 vehicles.

Every single BMW EV model posted a sales decline in 2025. The i4 dropped 14.1%. The i5 fell 21.5%. The iX declined 18.2%. The i7 slid 15.3%. Meanwhile, plug-in hybrid sales jumped 30.7%, a clear signal that U.S. buyers still want some electrification but aren’t ready to pay full sticker price for a premium BEV without tax credit support.

The broader U.S. EV market tells a similar story. EV market share peaked at 10.5% in Q3 2025, then fell to 5.8% in Q4, according to Cox Automotive. That’s roughly where the market was in early 2022.

EVXL’s Take

BMW is building the right car at the wrong time for the American market. The i3 on the Neue Klasse platform is a genuine technological leap over the shared-platform EVs that have been bleeding sales all year. The 800-volt architecture, 30% range improvement, and 30% faster charging directly address the complaints that kept buyers away from the i4 and i5. We’ve tracked this platform’s development since pre-production began in Hungary in late 2024, and the iX3’s 626-mile real-world range test proved the underlying technology delivers.

But the math doesn’t work for U.S. buyers right now. An estimated $50,000 starting price puts the i3 roughly $13,000 above the Tesla Model 3, and there’s no $7,500 tax credit to close that gap. BMW’s Q4 2025 EV sales collapse wasn’t a product problem. It was a pricing problem amplified by policy. The i3 lands in that same environment.

The smart move by BMW is running combustion and electric 3 Series production in parallel at Munich. If EV demand stays soft in the U.S., BMW can lean on gas-powered volume. If demand recovers, the Neue Klasse hardware is competitive with anything on the market. That hedge is what separates BMW from European competitors like Volkswagen, which bet everything on electrification and is now paying the price.

Expect the i3 to sell well in Europe, where EV incentives remain stronger and BMW’s brand commands premium pricing more easily. In the U.S., don’t expect meaningful volume until BMW offers aggressive lease deals or the political winds shift on EV incentives. I’d predict the i3 will struggle to outsell the i4’s 2024 peak of 23,400 U.S. units in its first full year on sale.

What do you think? Can BMW’s Neue Klasse i3 compete with Tesla Model 3 without tax credit support? Share your thoughts in the comments below.

Editorial Note: AI tools were used to assist with research and archive retrieval for this article. All reporting, analysis, and editorial perspectives are by Haye Kesteloo.