At BMW’s headquarters in Munich, history and future sit side by side. In the company museum, visitors marvel at classics like Elvis Presley’s 507 convertible, famously repainted red after fans covered it in lipstick. Just across the way, behind closed doors, engineers are working on a very different kind of icon — a camouflaged SUV that BMW believes will define its next era: the iX3.

This electric SUV is the launch vehicle for Neue Klasse, BMW’s most ambitious project in more than a century. CEO Oliver Zipse calls it “the biggest single investment into one architecture we’ve ever done,” and for good reason. Neue Klasse isn’t just a model line, but a complete overhaul of BMW’s technology, design, and production strategy.

The iX3 sets the tone. With up to 800 km of range and 400 kW fast charging, it aims to leapfrog Tesla’s Model Y and take on fast-rising Chinese challengers. Reviewers who tested prototypes in southern France praised its driving dynamics, calling it smoother than BMW’s current EVs and even rivaling Rolls-Royce for refinement in traffic. Importantly, BMW engineers have worked hard to ensure the iX3 still feels like an “Ultimate Driving Machine,” speeding up the responsiveness of brakes, steering, and regenerative systems.

Beneath the hood — or rather, behind the screens — lies an equally significant shift. Neue Klasse vehicles will be powered by four central “superbrains,” computers with 20 times the power of BMW’s existing setup. These will unify infotainment, driver assistance, and core vehicle functions, making the cars more connected and easier to update over time. To support this, BMW has built a global software network, employing 5,000 specialists across six countries.

The rollout comes at a pivotal time. Tesla, once the benchmark, faces regulatory uncertainty in the U.S. and brand fatigue in Europe. Meanwhile, Chinese automakers like BYD and Xiaomi are flooding the market with affordable EVs, leaving global giants scrambling to keep up. BMW, still reliant on combustion sales for much of its profit, sees Neue Klasse as the bridge to a fully electric future. By 2027, its Munich factory will exclusively produce EVs, closing a 75-year chapter of gasoline-powered history.

Challenges remain. BMW’s sales in China have been slipping, and local competitors offer strong products at lower prices. Zipse insists decoupling from China isn’t an option, calling it a hub of innovation and scale. To stay relevant, BMW has tailored features for the market, from integrating WeChat to debuting AI-powered assistants in partnership with local startups.

For Zipse, who steps down as CEO next year, Neue Klasse is a defining gamble — one that could secure BMW’s place in the electric age or expose it to the same pressures eroding rivals. “What’s much more important is the question: are the products attractive?” he says. With the iX3 leading the charge, BMW is betting the answer will be yes.