VW goes against the industry, says electric cars won’t hurt profit margins

Volkswagen is doing one of the most ambitious electric vehicle pushes of any legacy automaker, and yet it isn’t worried about the change affecting its margins.

While electric car prices are going down fast and becoming competitive with gasoline vehicles, it’s still hard for automakers to sell them profitably.

Earlier this year, Toyota, which has yet to release an all-electric car, said that “nobody is selling electric vehicles at a profitable margin.”

Nissan disagreed and claimed to be the “only one” to sell EVs with a profit.

Tesla is arguably a different beast since they only sell electric vehicles, but the company did turn a profit on a few occasions, and it does have a significant gross margin on its premium electric vehicles.

Now Volkswagen, which is heavily investing in mass production of electric vehicles, is trying to reassure investors that it will be able to turn a profit on its electric vehicle push.

Herbert Diess, CEO of the VW Group, said in an interview with daily la Repubblica’s Monday supplement A&F (via Reuters):

We do not expect a deterioration in margins. Our advantage is that all our brands have the same platform for electric products and the same batteries that we buy in China.

Of course, the CEO also noted that German automaker’s move to make electric cars mainly in Europe is going to help them avoid billions of euros in European pollution fines, which is also going to help their profits.

But in order to do that, they need to produce millions of EVs, which in turn is going to help them achieve profitability on those vehicles program through the economy of scale.

For example, Diess said that they expect to make and delivery 20,000 Audi e-tron SUVs this year.

Porsche is also increasing Taycan production, and VW is ramping up ID.3 production for the start of deliveries next year.

Electrek’s Take

I am glad more automakers like VW are coming out and publicly saying that they can sell EVs profitably.

In my opinion, it was always a weak copout for automakers to claim otherwise.

It’s easy to say that electric cars are hard to sell profitably if you are only making a handful to comply with regulations, but if you are heavily investing in mass production, then of course it is possible to make a profitable electric car program.

The few automakers who still don’t believe that and who are planning to make the bare minimum are going to have a rude awakening soon.