BMW and Mercedes-Benz have unveiled new electric sport utility vehicles, stepping up competition against Tesla’s Model Y, which has so far dominated the category. According to a Wall Street Journal report, the German carmakers’ new models are designed to travel farther and charge faster than most of today’s EVs. They also aim to place smartphone-inspired technology at the center of the driving experience, enabling seamless connection to cutting-edge artificial intelligence on the go while allowing manufacturers to deliver more software updates remotely.
Mercedes introduced its electric GLC in Munich’s former royal palace on Sunday, ahead of IAA Mobility, Europe’s most important car show. Just two days earlier, BMW CEO Oliver Zipse presented the company’s new iX3 at an event he described as a “once-in-a-lifetime moment” for his team. “When else do you get to reimagine a brand like BMW from the ground up?” Zipse asked the audience.
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Unlike Tesla, which has built much of its technology in-house, both BMW and Mercedes are partnering with Silicon Valley firms. Mercedes is working with chip designer Nvidia, while BMW is collaborating with Qualcomm, to advance autonomous driving capabilities. In addition, Mercedes’s GLC features a virtual assistant powered by AI from Google and OpenAI, capable of handling a range of tasks for drivers.
Tesla’s Model Y reshaped the auto industry when it debuted in 2012. The company ramped up production at its factories in Texas and Germany, enabling Tesla to become the world’s top-selling nameplate in 2023. Competitors such as Ford and Mustang attempted to launch rivals, but their vehicles failed to match the Model Y in range, affordability, or software sophistication, resulting in weaker sales. By contrast, BMW’s iX3 and Mercedes’s electric GLC represent some of the most ambitious attempts yet by legacy automakers to design vehicles around software rather than the traditional mechanical engineering that long defined their brands.
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This push comes at a challenging moment for Tesla, particularly in Europe. The company’s sales in the region have fallen by roughly one-third, a decline attributed both to Elon Musk’s right-wing political activism and the retooling of its Berlin factory for an upgraded Model Y. Still, the competition for affluent, tech-forward consumers remains intense.
The new iX3 and electric GLC boast impressive range figures—497 miles and 457 miles per charge respectively, based on European testing. That compares to 387 miles for the long-range Model Y, which received an upgrade earlier this year. Both German models also employ higher-voltage powertrains that, with the proper infrastructure, are expected to charge faster than Tesla’s SUV. Their “smart” technology, meanwhile, is expected to trickle down gradually into the rest of BMW’s and Mercedes’s vehicle lineups.
Beyond Europe, the rivalry is expanding to new markets. Tesla recently made its debut in India, showcasing the Model Y and Model 3 at its first showroom in Mumbai’s Bandra district. There, it will face direct competition from BMW, Mercedes-Benz, and other global automakers eager to capture the attention of India’s growing EV market.