Volkswagen is going through a zone of major turbulence: it is posting an operating loss of 1.3 billion euros ($1.5 billion USD) in the third quarter of 2025, attributable mostly to Porsche's strategic U-turn on electrification and the impact of U.S. tariffs on its exports.
The German auto giant estimates that those tariffs and their side effects could cost it up to 5 billion euros ($5.8 billion USD) in 2025, a true shockwave for one of the world's largest automakers.
Porsche changes course on electric vehicles
In September, Porsche – 75.4-percent owned by Volkswagen – announced a strategic reversal regarding electric vehicles, preferring to bet on hybrids and combustion engines in the short term to win back its traditional customer base. This forced shift led to charges of 4.7 billion euros, dragging down the group's results.
The negative results come as Oliver Blume, CEO of Volkswagen and Porsche, prepares to step down from the leadership of the latter brand in 2026. He will be replaced by Michael Leiters, former head of McLaren.
U.S. tariffs adding to the pain
Tariffs imposed by the U.S. on European imports are weighing heavily on Volkswagen, which reports at least 4 billion euros in direct costs and additional losses due to eroded margins.
To limit the damage, the group is considering moving part of its production to the United States, particularly via its Audi brand. A decision regarding a new U.S. plant is expected before the end of the year.
Silver lining as demand is solid in Europe
Despite these challenges, VW CFO Arno Antlitz highlights robust demand in Europe, which partially compensates for weakness in China. However, Volkswagen's electric vehicles, which are more expensive to manufacture, continue to erode margins.
The company nonetheless registered a smaller-than-expected loss: analysts had anticipated a deficit of 1.7 billion euros, compared to the 1.3 billion actually observed. Volkswagen's stock initially climbed 2 percent before falling 1.1 percent at the end of the session, a sign of mixed market confidence.
Forecasts maintained, but concerns over electronic chips
Despite this difficult quarter, Volkswagen is maintaining its financial forecasts for 2025. However, the automaker stresses that this stability depends on a sufficient supply of semiconductors. A new risk is looming as a trade conflict surrounding the Dutch manufacturer Nexperia threatens the global supply of automotive chips.
Antlitz stated that the group is managing the situation "day after day and week after week" to avoid any production interruption.
A pivotal period for Volkswagen
Between U.S. tariff pressures, a more costly-than-expected electric transition, and internal tensions at Porsche, Volkswagen finds itself at a delicate crossroads.
Despite everything, the automaker continues to believe in its ability to adjust its business model and strengthen its presence in the North American market through local investments.