What's going on?

BMW reported worse-than expected third-quarter results on Wednesday � and things mightn�t improve if drivers keep getting locked into their homes and out of their cars.

What does this mean?

First the good news: BMW�s car sales jumped by 31% to record highs in China this quarter, helping its autos business deliver profit in line with expectations. Now for the bad: the company�s global car sales are still down 12.5% for the first nine months of the year, and it warned that new waves of lockdown across Europe could derail future demand too.

BMW�s betting big on electric and hybrid vehicles to help it out of the slump: it�s put nearly $5 billion into research and development this year, even as it slashed costs elsewhere to deal with the pandemic-induced drop in demand. The carmaker will have five electric models on the market by the end of 2021, and has big plans to deliver almost five million electric cars over the next decade.

Why should I care?

For markets: Overtaken.�

BMW�s bleak news follows a string of pretty upbeat quarterly updates from rival carmakers: Daimler, Ferrari, Tesla, Volkswagen, and Fiat Chrysler all reported better-than-expected earnings. That was partly thanks to recovering demand from places like China and the US, as well as the higher subsidies countries are using to incentivize carmakers to go electric.

Zooming out: Send in the heavies.

BMW might�ve done well out of Chinese consumers, but new economic data suggests the country�s recovery isn�t as strong as it looks. Chinese manufacturers have had a lot of trouble collecting the money they�re owed this year, with downturn-hit clients putting off paying till they absolutely have to. In fact, it�s taken them a record-breaking 54 days on average to get paid in the first three quarters of 2020, compared to 45 days last year. So more orders or not, those businesses might need to start cutting back on production to save cash.