EV growth vs profits: does going electric pay?
Ten of the twelve carmakers we checked earned lower margins in 2025 than in 2024. The two exceptions tell the story: Ferrari, which sells no electric cars, and Polestar, which sells nothing else and still loses money.
No clear line between electric and profitable
If going electric paid, the companies selling the most electric cars would earn the most. They don't. Tesla, which sells only electric cars, kept 4.6 cents of operating profit from each dollar in 2025. Toyota, at 1.9% fully electric, earned 6.1% in its car business. Porsche, where one car in five was electric, made 1.1%. The highest margin by far belongs to Ferrari, and the deepest loss to Polestar.
Almost everyone earned less
Between 2024 and 2025, margins fell at Tesla, BYD, Volkswagen, BMW, Mercedes-Benz, Toyota, Volvo Cars, Stellantis, Renault and Porsche. Porsche's fell from 14.1% to 1.1%, Stellantis went into the red. Only Ferrari improved, and Polestar narrowed its loss. In the first nine months of 2026 Porsche and Stellantis won back part of the ground. Volkswagen’s automotive business slipped to a loss after write-downs on Porsche goodwill and Chinese assets, Volvo Cars swung to a loss in the third quarter, and BMW and Mercedes-Benz earned less again.
The cost of getting it wrong
Part of the fall came from tariffs and price competition. Part came from electric plans that companies themselves wrote down. Stellantis said its charges reflected “over-estimating the pace of the energy transition”.
What the companies say about EV profits
Not one of them publishes a margin for electric cars against combustion cars. What they do say is telling. Renault expects its growing share of electric cars to be “dilutive on margins” in 2026. Volvo Cars says U.S. tariffs and the end of EV incentives put “heavy pressure on the margins of imported electrified cars”. Toyota credits hybrids for its profit. Volkswagen says EU CO2 rules weighed on its 2025 earnings, the rules that push carmakers to sell more electric cars, and in October it said plainly that it “currently earn[s] less from electric vehicles than from combustion-engine vehicles”.
Tesla shows a hidden piece of the picture. It earns money selling regulatory credits to other carmakers that fall short of emission rules: $2.8bn in 2024 and $2.0bn in 2025. Without them, its automotive gross margin was about 15.4% in both years instead of 18.4% and 17.8%. In the third quarter of 2026 credit income fell to $113m.
So, does going electric pay?
Not yet, on the evidence the companies publish. The most profitable carmakers in 2025 were the ones selling luxury (Ferrari) or hybrids (Toyota), and the biggest write-downs came from electric plans that ran ahead of demand. But the picture is moving: BYD keeps more than a fifth of car revenue as gross profit at huge scale, and Tesla's margin before credits rose in 2026. The next test is the new generation of cheaper electric platforms, from BMW's Neue Klasse to Volkswagen's SSP, which none of these companies has yet put a margin target on in its reports.
Every company, explained from its own reports
Open any of these carmakers in Whatco: how it makes money, the numbers that matter and what it reported last quarter.
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- Tesla: 1, 2
- BYD: 1, 2, 3, 4, 5
- Volkswagen Group: 1, 2, 3, 4, 5
- Porsche AG: 1, 2, 3
- BMW Group: 1, 2, 3
- Mercedes-Benz Group: 1, 2, 3
- Toyota Motor: 1, 2, 3, 4, 5
- Volvo Cars: 1, 2, 3
- Stellantis: 1, 2, 3, 4
- Renault Group: 1, 2
- Polestar: 1, 2
- Ferrari: 1, 2, 3
