The German Giants' American Gambit: BMW and Mercedes Double Down on U.S. Manufacturing

The automotive industry’s shift toward electrification and localization is no longer optional—it’s existential. In a bid to secure their futures in the world’s second-largest auto market, BMW and Mercedes-Benz are doubling down on U.S. manufacturing, blending legacy craftsmanship with cutting-edge electric vehicle (EV) production. Their investments aren’t just about assembly lines; they’re about reshaping perceptions of what “Made in America” means for global brands.

The Electrification Playbook: BMW’s Spartanburg and Woodruff Ambitions

BMW’s Spartanburg, South Carolina, plant—its largest global facility—has undergone a $2 billion expansion, increasing assembly capacity by 50% to support a mix of EVs, hybrids, and internal combustion engine (ICE) vehicles. By 2030, the plant aims to assemble six fully electric models, with high-voltage batteries supplied by its new $700 million Woodruff, South Carolina, battery plant, set to begin production in late 2026. This dual-site strategy mirrors Tesla’s Gigafactories, aiming to vertically integrate supply chains and reduce reliance on overseas parts.

In 2024, Spartanburg exported 225,000 BMW X-series vehicles, valued at over $10 billion—making it the U.S.’s single largest automotive exporter by value. Yet BMW’s future hinges on electrification: plug-in hybrids already accounted for 14% of production in 2024, and the upcoming Neue Klasse platform (debuting in 2025) promises a 30% range improvement over current models.

Mercedes-Benz’s Charleston Pivot: Vans, EVs, and Leadership

Mercedes-Benz Vans’ Charleston, South Carolina, plant—the company’s second-largest market after Germany—is at the heart of its U.S. strategy. The facility, which produces the Sprinter and eSprinter (the latter a fully electric van), has seen sales surge by 253% in 2025 compared to 2024, driven by demand for commercial EVs.

The plant’s new CEO, Johannes Kellerman, has prioritized Next Level Performance, a program targeting a 10% reduction in production costs by 2027 through modular architectures like the VAN.EA (for EVs) and VAN.CA (for ICE vehicles). Despite a 52% decline in U.S. van sales in Q1 2025 due to phasing out legacy models, the eSprinter’s success signals a pivot to high-margin EVs.

The EV Market: A Battle for U.S. Dominance

While both brands are investing heavily in EVs, their progress contrasts sharply with Tesla’s stranglehold on the U.S. market. In Q1 2025, Tesla sold 128,100 EVs—nearly 10 times BMW’s 13,538 EVs and outpacing Mercedes’ unspecified EV sales. BMW’s i4 (ranked 9th in U.S. EV sales in Q1) and Mercedes’ EQ series face an uphill climb against Tesla’s scale and infrastructure.

The stakes are clear: without U.S. localization, German brands risk falling further behind. BMW’s $2 billion Spartanburg expansion and Mercedes’ “significantly above €600 million” 2025 global PP&E investments (with a U.S. focus) aim to replicate Tesla’s supply-chain resilience.

Risks and Realities

Despite their ambitions, challenges loom. Mercedes’ adjusted Return on Sales (RoS) is projected to drop to 10–12% in 2025, down from 14.6% in 2024, as supply-chain costs and EV R&D eat into margins. BMW’s workforce of 11,000 at Spartanburg and Mercedes’ 1,700 in Charleston must also adapt to automation—a tricky balance in unionized markets.

Conclusion: A Strategic Gamble with Long-Term Payoffs

BMW and Mercedes are placing bets on U.S. manufacturing as both a competitive shield and a growth lever. BMW’s Woodruff battery plant and Mercedes’ eSprinter expansion reflect a shared calculus: localize to electrify, or cede the market to Tesla and domestic rivals.

The numbers back this pivot:
- BMW’s Spartanburg plant employs 11,000 and has invested $14.8 billion since 1992, with 50% of U.S. sales sourced locally.
- Mercedes’ eSprinter sales jumped 253% in early 2025, signaling demand for commercial EVs.

For investors, the question isn’t whether these brands can compete in America—they already are—but whether they can accelerate EV adoption fast enough to match their capital expenditures. With Tesla’s stock soaring (up 54% in 2023) and German automakers’ valuations lagging, the answer will determine who wins the race to redefine “Made in America.”

In the end, the U.S. market’s verdict will decide whether these German giants can turn their manufacturing might into sustainable growth—or become footnotes in the EV revolution.