Despite initial resistance, Volkswagen automobile owners are turning down electric vehicle options in significant numbers!
Volkswagen (VW) and its subsidiary Audi are facing a strategic shift in their approach to vehicle production, moving towards a more balanced strategy that includes both electric vehicles (EVs) and internal combustion engines (ICE). This adjustment comes in response to economic pressures and competitive challenges in their aggressive pursuit of electrification.
The financial results for Q1 2025 reveal a drop in operating margin for VW, from 6.0% in Q1 2024 to 3.7%, largely due to higher fixed costs, restructuring charges, CO₂ fines, U.S. tariffs, and a price/mix effect caused by selling more lower-margin EVs. Despite this, VW is actively expanding affordable EV production and improving synergy across brands [1].
In the face of these challenges, the integration of more EVs has created some cost challenges for VW and requires additional time to achieve the targeted profitability levels. The legacy ICE business, however, remains important due to its higher margins and its role in serving markets or segments not yet fully electrified [1][2].
Audi, as part of VW Group, is also involved in this electrification drive but has not abandoned ICE entirely. Other automakers, like Porsche (another VW Group brand), still see significant sales volumes in plug-in hybrids and combustion-engine models alongside BEVs, reflecting market demand and transitional product strategies [4].
The "shift back" to ICE at VW and Audi is not a reversal of their electrification strategy but a pragmatic response to near-term economic and competitive realities. The companies continue to pursue EV leadership long-term but maintain ICE vehicles as a complementary strategy to manage risks and financial performance during the transition phase [1][4].
Meanwhile, the debate about the mobility of the future is far from over. Some users have expressed discontent with the technology of electric cars, while others call for a change of thinking at VW and other manufacturers. One such user has questioned who is making a profit from electric mobility and can't understand why electric cars are consistently pursued [3].
In a surprising move, the Audi subsidiary of VW has scrapped its plans to phase out combustion engines by 2033. The new combustion engine with automatic transmission in VW vehicles is expected to halve fuel consumption, offering a practical solution to the ongoing debate [5].
However, it's unclear what the "ruling lobby in Germany" refers to in the context of decisions regarding the use of combustion engines [3]. As the future of mobility continues to evolve, it's clear that both EVs and ICE vehicles will play a role in shaping the automotive landscape.
[1] https://www.autonews.com/electric-vehicles/volkswagen-group-adjusts-electric-strategy-amid-margin-pressures [2] https://www.reuters.com/business/autos-transportation/volkswagen-to-delay-shift-away-from-combustion-engines-2022-06-29/ [3] https://www.handelsblatt.com/unternehmen/automotive/volkswagen-kritisiert-die-e-strategie-der-eigenen-marke-a-108554206.html [4] https://www.bloombergquint.com/autos/volkswagen-audi-shift-back-to-internal-combustion-engines-amid-ev-transition-challenges [5] https://www.motor1.com/news/466497/audi-scraps-2033-combustion-engine-phase-out-plan/
- The financial strain experienced by Volkswagen (VW) and its subsidiary Audi has led them to reconsider their approach in the automotive industry, maintaining a balanced strategy that includes both electric vehicles (EVs) and internal combustion engines (ICE).
- Despite the challenges in achieving profitability with EVs, the transportation sector, including VW and Audi, continues to invest in this technology, seeing it as crucial for their long-term success in the general-news area of finance.
- In a move that questions the focus on EVs, Audi, a part of the VW Group, has scrapped its plan to phase out combustion engines by 2033, aiming instead to develop a more efficient ICE vehicle that offers reduced fuel consumption.
