Volkswagen’s having a rough year. Actually, rough doesn’t quite cover it.
The German automaker just reported a €1.3 billion operating loss for the third quarter. That’s their first quarterly loss in five years. And when your CFO starts talking about “mixed results” and “efficiency measures,” you know things aren’t great.
Two things are killing them right now: Trump’s tariffs on European cars, and Porsche completely botching their electric vehicle strategy. Combined, these problems cost VW €7.5 billion this year. That’s not a typo – seven and a half billion euros gone.
Let’s break down what actually happened and why one of the world’s biggest car companies is suddenly bleeding cash.
The Tariff Problem Is Massive
President Trump’s been slapping tariffs on basically everything that comes from Europe and China. Cars are getting hit particularly hard.
Right now, Volkswagen pays a 15% tariff on cars they export from Europe to the US. That’s actually the “good” rate after an EU-US deal back in July. Before that deal, the tariff was 27.5%. And if you’re bringing cars in from Mexico, you’re still paying the full 27.5%.
Those tariffs alone are costing Volkswagen €5 billion this year. Five billion. Just in extra taxes for selling cars to Americans.
CFO Arno Antlitz broke it down: at least €4 billion is direct tariff costs. The rest comes from lost sales because they had to raise prices to cover those tariffs. When your Golf GTI suddenly costs $3,000 more because of import taxes, some customers just walk away.
US deliveries for VW dropped 16% in the first nine months of the year. Some of that’s the economy, but a lot of it is price increases forcing people toward cheaper alternatives.
Porsche Made Things So Much Worse
If it was just tariffs, VW could probably handle it. But Porsche – which VW owns 75% of – went and made everything worse by completely changing their EV strategy.
Porsche had big plans to go all-electric. They were supposed to have multiple electric sports cars on the market by now. Customers would love them, sales would boom, everything would be great.
Except… nobody wanted electric Porsches.
Turns out, people who buy expensive sports cars actually like the sound of a roaring engine. An electric Porsche doesn’t have that visceral feel. It’s fast, sure, but it doesn’t feel like a Porsche.
So sales tanked. Porsche panicked. And in September, they announced they’re scrapping the EV-first strategy and going back to hybrids and gasoline engines.
That complete reversal cost Volkswagen €4.7 billion in write-downs and charges. They had to write down the value of their Porsche shares. They had to book losses for all the EV development work that’s now worthless. It got ugly fast.
Porsche itself posted an operating loss in Q3. The “jewel in VW’s crown” became an anchor dragging down the whole company.
VW Was Already Struggling Before All This
Even before Trump went crazy with tariffs, Volkswagen had issues.
They agreed to cut 35,000 jobs by 2030 as part of a plan to save €15 billion annually. That’s a massive restructuring that was already underway before the tariffs hit.
Audi and Porsche have also been cutting thousands of jobs. Porsche literally told workers in July that their business model “no longer works in its current form.” That’s a scary thing to hear from your employer.
The shift to electric vehicles is costing way more than anyone expected. EV profit margins are much lower than traditional gas cars. Every EV VW sells makes less money than a comparable gas model.
