Going electrical hasn’t precisely made the German auto conglomerate extra worthwhile
In Q1 of 2025, Volkswagen Group managed to promote nearly precisely the identical variety of autos because it did final yr. In truth, gross sales grew by simply 1.4 p.c yr over yr, permitting 2.13 million clients to take supply. Order demand grew by nearly 30 p.c, with high-value and redesigned fashions from Porsche, Audi, and (globally) Skoda driving gross sales. To date, not a foul quarter, proper? So, why has the VW Group posted a 37 p.c revenue dive in comparison with this time final yr? Apparently, electrical autos are responsible.
Porsche Taycan Turbo GT Porsche
Volkswagen Group’s after-tax earnings stumbled 40.6 p.c in comparison with final yr
Regardless of extra individuals taking supply of Porsche, Volkswagen, Audi, and different VW Group autos, the Group didn’t submit income commensurate with that progress. Earnings earlier than and after tax dropped proper round 40 p.c, and the VW Group says all of it comes right down to progress of electrical car gross sales. Deliveries of EVs greater than doubled, rising from 9 to 19 p.c, and new battery electrical car orders exploded, rocketing up by 64 p.c.
Arno Antlitz, Chief Monetary Officer and COO of Volkswagen Group, isn’t actually celebrating although. “This market success of our electrical vehicles places strain on our outcome,” he says, citing the decrease revenue margins on electrical autos. Within the VW Group’s case, that correlates to an working margin lower to three.7 p.c, down from 6 p.c in 2024. His assertion additionally illuminates, although vaguely, how the model is planning to maneuver from right here.
Volkswagen Group
His goal is “complementing [a] nice product vary with a aggressive value base.” That may be learn two methods: worth hikes, or changes and cost-cutting on the provider facet. We are likely to favor the latter, particularly contemplating Antlitz talks about tariffs in the identical paragraph. “Given the present unstable world financial state of affairs, it’s much more essential to give attention to the levers inside our management.”
The Volkswagen Group has no scarcity of different challenges forward, too
Whereas it might be straightforward for the model to level the blame at electrical autos, there are many different causes the automaker’s income fell during the last three hundred and sixty five days. Gross sales are slowing in China, and general manufacturing was decrease than final yr. Sub-brand Porsche even reduce revenue outlooks, principally as a result of uncertainty surrounding tariffs. Lastly, the enormous German firm has decreased its workforce by round 1.2 p.c since December. Once you begin piecing the puzzle collectively, margins could be simply one of many VW Group’s thousand cuts.
Last ideas
Decrease margins per unit are seemingly the majority of the explanation VW Group bought extra autos however made so much much less cash yr over yr. We’re skeptical {that a} worth hike throughout manufacturers is the recipe for fulfillment, nevertheless it could be what it takes. After all, if the model nonetheless hasn’t discovered learn how to make good cash on EVs, one has to surprise why they’ve simply debuted three almost production-ready new EVs for China — with almost 30 fashions coming to market within the subsequent two years. From the place we’re standing, it seems to be like this could be the primary of many comparable stories in revenue drop-offs.
