Fall of an Empire: BBA’s Profit Shock (Down 56%) Reveals Brutal Truth of the EV War in China

The German automotive empire, long considered invincible, is showing deep cracks. The first-half 2025 financial results for “BBA” (Mercedes-Benz, BMW, Audi) were not just disappointing; they were a full-blown shockwave. Mercedes-Benz saw its net profit collapse by a staggering 56%, wiping out nearly €3.4 billion compared to the same period last year.

Officially, the German giants are pointing fingers at external pressures, primarily the 25% US import tariffs and the high costs of business transformation. From a European perspective, this narrative seems plausible. However, as an analyst on the ground in China, I can tell you this is only half the story.

The real, uncomfortable truth is this: BBA’s collapse is being driven by a catastrophic failure to compete in China’s electric vehicle (EV) market. This isn’t just a bad quarter; it’s a paradigm shift, forcing them into “strategic humiliations” that signal a new era of automotive competition for everyone, including major players like Hyundai and Ford.

The German Dream Becomes a Chinese Nightmare

The numbers paint a grim picture of BBA’s performance in the first half of 2025.

• Mercedes-Benz: The hardest hit, with a 56% nosedive in net profit.
• BMW Group: Suffered a 29% decline in after-tax net profit, landing at €4 billion.
• Audi: Experienced a 45.1% drop in operating profit and a 37.5% fall in after-tax profit.

While tariffs are a convenient scapegoat, the true source of the bleeding is China. For decades, China was BBA’s cash cow. Now, it’s their biggest liability. In H1 2025, China was the single market with the largest sales decline for the German trio:

• BMW: 318,000 units sold in China (-15.5%)
• Mercedes-Benz: 293,000 units sold in China (-14%)
• Audi: 288,000 units sold in China (-10.3%)

This massive retreat from their most important market is the direct cause of their global profit warning. And the reason for this retreat is painfully clear: they are losing the EV war, badly.

The EV Battlefield: A German Debacle

BBA’s failure in China is fundamentally an electric failure. While they were perfecting combustion engines, the market pivoted to smart, connected EVs, and they were left behind.

• Mercedes-Benz: Their locally-produced EV models in China sell a mere few hundred units per month. Globally, their BEV sales fell by 14%.
• Audi: While global EV deliveries grew, sales in the crucial Chinese market plummeted by 23%.
• BMW: While appearing to do better with a 15.7% rise in global BEV sales, this masks their struggle to gain traction against local champions within China.

As BBA falters, new domestic powerhouses like AITO (backed by Huawei) and Li Auto are rapidly conquering the premium segment above ¥300,000 CNY—BBA’s traditional heartland. The old pillars of mechanical perfection and brand heritage are crumbling against the new values of software, connectivity, and user experience.

Conclusion: A Desperate Pivot and a Warning for Legacy Auto

Backed into a corner, BBA is now making a move that would have been unthinkable just a few years ago: partnering with the very Chinese tech companies that power their rivals. All three have chosen Momenta for autonomous driving solutions. For in-car software, BMW is turning to Huawei and Alibaba, Mercedes to Meizu, and Audi is even integrating Huawei’s Qiankun system.

This is a tacit admission of defeat. They are acknowledging that they cannot match the speed and innovation of China’s tech ecosystem on their own. This isn’t just a partnership; it’s a lifeline.

The BBA profit shock is a cautionary tale for every legacy automaker. The rules of the game have changed. Brand prestige is no longer a shield against technological disruption. As this EV war goes global, the ability to adapt, partner, and truly localize technology will determine who builds the next automotive empire and who becomes a relic of the past.

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Deeper Dive: Recommended Reading for Deeper Insight

For those who wish to understand the seismic shifts in the global auto industry, I recommend the following book.

[The Great Race: The Global Quest for the Car of the Future by Levi Tillemann]

• Why I recommend it: This book provides essential global context on the technological and geopolitical forces reshaping the auto industry. It helps explain why the battlefield has shifted to China and why legacy giants like BBA are facing an existential crisis, making it a perfect companion piece to today’s analysis.
• 👉 [Buy Book Link]

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