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Volkswagen’s Profit Drop Linked to Surging EV Demand, CFO Says. Volkswagen’s Q1 2025 earnings fell 40.6%, dropping to €2.18 billion despite a 1.4% increase in deliveries. The surge in electric vehicle (EV) sales is contributing to lower profits, even though VW's deliveries increased overall. EV sales skyrocketed by 113% in Europe and 51% in the United States during Q1 2025. One in ten cars delivered by the Volkswagen Group in Q1 2025 was an electric vehicle, with EVs now making up over 20% of orders in Western Europe. Despite leading the electric segment in Europe with a 26% market share, EVs are much less profitable than combustion engine vehicles. Volkswagen’s operating margin decreased from 6% to just 3.7% due to the rising share of lower-margin electric vehicles. CFO Arno Antlitz admitted that VW must cut production costs and improve margins on EVs to maintain profitability. Antlitz projected that margin parity between internal combustion engine (ICE) and electric vehicles could be reached by 2026, delayed from a previous 2025 target. Upcoming models like the ID.2 supermini and a new crossover are expected to help VW improve the profitability of its electric lineup. Besides the EV shift, Volkswagen is still facing costs from Dieselgate litigation and stringent CO₂ regulations in the EU.
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