Key Takeaways

• Volkswagen’s EVs will not achieve profit margins comparable to combustion vehicles until the introduction of the new SSP platform, expected by 2030.
• The company anticipates an operating margin of 4% to 5.5% by 2026, an improvement from 2.8% in 2025.
• Efforts to cut production costs by 20% through SSP may help VW meet CO2 targets while boosting profitability.

Volkswagen (VW) has disclosed that its electric vehicles (EVs) are currently not as profitable as traditional combustion engine vehicles. According to CFO Arno Antlitz, comparable profit margins for VW’s EVs will not materialize until the rollout of the Scalable Systems Platform (SSP), which is delayed until the end of the decade. The SSP aims to enhance production efficiency and reduce costs by up to 20% compared to existing platforms.

In recent years, the automotive industry has seen a significant push toward electrification, with companies investing heavily in battery production and EV manufacturing. While many expected faster price parity between EVs and gas vehicles, this transition has proven more complex than anticipated. Despite this, Volkswagen remains committed to electrification, recognizing that its current profit margins from EVs are insufficient.

During VW’s first-quarter earnings call, Antlitz emphasized the critical role of the SSP in achieving profitable EVs. He noted that the current MEB platform, which supports the ID lineup, alongside the PPE platform for premium models, remains incapable of generating margins comparable to gas vehicles. VW is making incremental improvements in EV profitability through modified platforms incorporating less costly lithium iron phosphate batteries.

Oliver Blume, the CEO of VW Group, has ambitious plans for the company’s margins, targeting an overall margin between 8% and 10% by 2030. This target is underpinned by a strategy focused on strict cost controls and strategic investments. As part of its financial forecast, VW expects to raise its annual margin to between 4% and 5.5% in 2026, up from 2.8% in 2025, indicating positive trends in its operational performance.

Despite these forecasts, VW has faced challenges, including a 10% drop in North American sales and an 8% decline in the Chinese market in 2025. The pressure on margins is evident, prompting many Western automakers to prioritize high-margin EVs like trucks and SUVs. This strategy underscores the industry’s reliance on combustion vehicles as a revenue source while aiming for a more efficient and profitable electric future.

As the automotive landscape evolves, companies like Volkswagen are exploring innovative approaches to increase efficiency, including software advancements and subscription-based revenue models. The journey toward sustainable, economical EVs continues, and industry players remain focused on navigating this transformative phase.

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