Volkswagen Breaks the Silence: Electric Cars Are Less Profitable Than Combustion Vehicles

Volkswagen has openly addressed one of the most delicate issues for the European automotive industry: the profitability of electric cars. According to reports from Automotive News, the German group has admitted that battery-powered models generate significantly lower profits compared to their gasoline or diesel counterparts.

Specifically, electric cars based on the MEB platform would produce between 70% and 80% of the margins obtained from gasoline or diesel models in the same segment – meaning they are 20% to 30% less profitable. The difference primarily arises from the high industrial costs related to batteries, electronic components, and software architectures, elements that continue to weigh heavily on manufacturers' accounts.

To bridge this economic gap, Volkswagen is focusing on the upcoming SSP (Scalable Systems Platform), which is set to become the common technical base for much of the group's electric range. The goal is to simplify production, reduce industrial costs, and improve operating margins through a more modern and standardized structure.

However, the SSP project continues to face delays. Initially planned for the second half of the decade, the debut of the new architecture is expected to be pushed toward the end of the same period. This means that Volkswagen will have to continue its electric transition using the current platforms within an increasingly complex economic and regulatory environment.

On top of production difficulties is the issue of emissions. According to CFO Arno Antlitz, European CO2 regulations could cost the group between 400 and 500 million euros per year from 2025 to 2027 in the form of potential fines. Volkswagen thus finds itself managing a delicate balance between sales volumes of electric vehicles and the risk of fines related to emissions from its traditional range.

To support the spread of EVs, the German manufacturer has accelerated the development of more affordable models. Among these is the upcoming Volkswagen ID. Polo, expected to start at a price close to 25,000 euros. The group considers this market segment crucial for increasing volumes and improving the economic balance of electric vehicles.

However, the international landscape remains complicated. In the United States, according to data reported by Auto Plus, Volkswagen's electric sales saw an 80% decline in the first quarter of 2026 compared to the same period the previous year. In China, the contraction is reported to have reached 64%, confirming the brand's difficulties in the two most important markets for electric mobility.

In the USA, Volkswagen's EV lineup remains mainly limited to ID.4 and ID. Buzz, while upcoming compact models developed for Europe do not seem destined for the North American market, where SUVs and pickups continue to dominate consumer preferences.

Nonetheless, Volkswagen is looking ahead technologically. The future SSP platform is expected to integrate the software architecture developed alongside Rivian, aiming to provide more advanced electronic systems and faster software updates compared to current solutions.

The challenges faced by the German group are not, however, an isolated case. Various automakers are encountering similar issues in their attempts to achieve comparable levels of profitability between electric and combustion models, while Asian competition leaves very little margin for error in commercial strategy.