German carmakers are mounting a strong counteroffensive against Chinese rivals, showcasing new electric vehicles and lower-cost models at this week's IAA Mobility Expo in Munich.

Why it matters: Europe's auto industry is facing the biggest crisis in decades.

• Industry stalwarts like BMW, Mercedes-Benz and Volkswagen are losing ground in China, and around the world, to companies like BYD and Xpeng.
• They're also getting clobbered by U.S. import tariffs while navigating regulatory pressure and weak demand at home.

Despite the challenges, legacy carmakers are demonstrating a sense of optimism that was missing two years ago at Europe's biennial auto and tech show.

• "We are going on the offensive," VW CEO Oliver Blume told reporters.
• Ola Källenius, chief executive of Mercedes, said Europe's auto industry "is investing like never before, with an eye to the future," the New York Times reported.

Here are some of the highlights from Munich:

BMW's new electric iX3 is the first model based on BMW's Neue Klasse (New Class) architecture — the carmaker's first modern, clean-sheet EV platform.

• The "zonal" electrical architecture is simplified, with four "superbrains" controlling everything from driving performance to entertainment. And it's designed for frequent over-the-air software updates.
• The iX3 also introduces Snapdragon Ride Pilot, a new automated driving system developed in collaboration with chip-maker Qualcomm.
• The iX3's 800-volt system means it will charge faster than most other cars — 230 miles of range in just 10 minutes — on par with only a few other high-end models like the Lucid Gravity or Porsche Macan.
• It also offers bidirectional charging, so your BMW can power your home in an emergency.
• BMW plans nearly 40 new models based on Neue Klasse technologies by 2027.
• With an expected 400 miles of driving range, the iX3 will go on sale in the U.S. next summer, starting at around $60,000.

Mercedes-Benz's electric GLC crossover is equally impressive, with an 800-volt electric system, 400 miles of driving range and an AI-powered cockpit.

• "We're not just introducing a new model — we're electrifying our top seller," Kallenius said in a release. "It will feature a bold new design language, cutting-edge technology, our MB.OS operating system and performance that sparks excitement."
• It features an optional 39-inch "hyperscreen" that spans the width of the dashboard and a new "multi-agent" voice assistant that gathers information from ChatGPT, Microsoft Bing AI and Google Gemini, depending on the task or query.

Volkswagen is emphasizing affordability with its plans for a family of four urban electric vehicles, all priced around $30,000 or less.

• They include a hatchback model called the VW Polo and a small SUV called the VW ID.Cross.

Yes, but: Chinese automakers still have big ambitions for growth in Europe, despite new tariffs designed to limit their gains on the continent.

• "Tariffs will not stop the Chinese," AlixPartners consultant partner Xing Zhou told Reuters. "As the USA is not accessible for political reasons, Europe is all that's left."
• BYD, Xpeng and Leapmotor are among the Chinese companies unveiling new models in Munich.

What's next: Concerned about his country's stalled economy, German Chancellor Friedrich Merz yesterday pledged support for the embattled auto sector, and said he planned to hold a summit with carmakers, suppliers and other stakeholders in the coming weeks.

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