Volkswagen Group Says EVs Yield Lower Margins Than Gas Models Amid Profit Pressure

Volkswagen Group said its electric-vehicle (EV) sales are growing, but the cars still produce lower earnings than its gasoline models, adding pressure to the automaker’s thin profit margins. CFO and COO Arno Antlitz said in a statement accompanying the nine-month results that the market success of EVs is “putting additional pressure on our earnings, because we currently earn less from electric vehicles than from combustion-engine vehicles.”

The German group highlighted that EVs made up 40 percent of its European order book through the first nine months and that models such as the ID. Polo, ID. Cross, Cupra Raval and Skoda Epiq are central to its electrification push. However, each EV sale replaces a higher-margin gasoline vehicle, reducing overall profitability and leaving factories built for combustion engines underutilized.

Antlitz noted that operating return on sales after nine months stood at 3.8 percent – “less than €4 of operating profit for every €100 of sales revenue” – and warned that this level is unsustainable. The company has outlined a €31 billion cost program aimed at simplifying the model range, streamlining organization, lowering vehicle and overhead costs, improving factory efficiency and accelerating technology development.

Potential measures include retiring up to half of the current models, simplifying parts inventories and, if necessary, phasing out the SEAT brand. The restructuring plan also targets around 100 000 job cuts worldwide and leaves the future production allocations for four German plants uncertain beyond 2031-2034.

“We cannot afford to lose any time. We must act quickly and decisively,” Antlitz added.

The group faces additional headwinds from a shrinking Chinese market, aggressive pricing by Chinese competitors in Europe and U.S. tariffs, all of which complicate efforts to improve margins while meeting EU CO₂-emission targets.