In an automotive market that is rethinking the speed of electrification, BMW has renewed its backing of its EV strategy during the release of its full 2024 group report. However, with a significant drop in revenue compared to 2023—the last year has clearly been a tough one.

The BMW Group’s 2024 profits before tax were €10.971 billion, a fall of 35.8% over 2023. This was driven by a fall in automotive revenues of 5.6% to €124.917 billion. Eliminations (transactions between subsidiaries) also rose 49.9% to €24.333 billion.

Although BMW’s sales of electric vehicles have been flying in Europe, and even overtook Tesla’s in July 2024, shipments have not fared so well in China. The company’s combined sales of BMW and MINI cars in China fell 13.4% to 714,500 units, despite the overall Chinese market for passenger cars increasing by 23.1%. This has been attributed to much stiffer competition from domestic Chinese domestic brands.

Overall, BMW Group saw a 4% fall in automotive deliveries, with the biggest drop in its MINI brand of 17%, while Rolls-Royce shipments were down 5% and BMW’s down 2%. The company has stated that it is expecting further negative impacts in 2025 from the growing implementation of tariffs. Those levied so far have been included in its forecast of an earnings margin from 5 to 7% in 2025.

Despite the challenging 2024 and 2025 outlook, BMW Chairman Oliver Zipse was optimistic about the group’s future in his presentation of the 2024 report. A lot of this revolves around the company’s Neue Klasse strategy, a radical rethink of the brand’s designs, platforms and drivetrain focus revolving around sustainability, a key focus for BMW. The name harks back to the BMW Neue Klasse of the 1960s, which revived the company’s fortunes.

Most automakers agree that battery electric vehicles (BEVs) are the future. However, the pace of change has come into question amid the economic difficulties of the last few years. BMW has navigated these challenges more effectively than some automakers. While the company now has BEV offerings across most of its range, it has continued to produce most of these on platforms shared with vehicles powered by internal combustion, enabling an easier match between supply and demand.

Neue Klasse refocuses on BEVs primarily, but BMW still isn’t putting all its eggs in the electric basket. The company plans to develop internal combustion engine vehicles and hybrids for some markets, depending on customer demand. BMW is keeping its options open and is still promising a hydrogen fuel cell vehicle in 2028. The company has been road testing a hydrogen-powered version of its X5 SUV since 2023.

BMW committed to the Neue Klasse in 2020 during the pandemic, a bold move for such uncertain times. It’s certainly putting money into the strategy. In 2024, BMW invested €9 billion in research and development and €11.8 billion in capital expenditure. Not all of this has gone into electrification, with some going into digital transformation and production facility development.

The first Neue Klasse car will be arriving this year, in the same category as the popular X5 and iX SUVs (which BMW calls Sports Activity Vehicles). Initially, this will be built in modernized plant in Debrecen, Hungary. The SAV will be followed quickly by a sedan in the BMW 3-series segment, built in Munich, and then four more new models within two years of the start of production. Neue Klasse cars will also be manufactured in Shenyang, China, and a brand-new plant in San Luis Potosí from 2027.

Although 2024 was a challenging year for BMW, and the turbulent tariff-led start to 2025 has sent shocks through automotive supply chains, the company is still looking towards a positive future with its Neue Klasse BEVs taking an increasingly important role.

This story was originally featured on Fortune.com

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