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The Numbers Behind the Admission
In a briefing following VW Group's first-quarter 2026 results, CFO Arno Antlitz put a precise figure on the EV profitability gap for the first time. "We expect the margin to be fully comparable only with our future SSP platform," he said, referring to the Scalable Systems Platform that will underpin the next wave of Volkswagen Group electric cars.
The context is sobering. VW Group's net profit dropped 28 percent to €1.56 billion in Q1 2026, while revenues fell two percent to €75.7 billion — missing analyst forecasts. Total deliveries fell nearly seven percent year-on-year to two million vehicles, with China plunging 20 percent and North America sliding nine percent. The group is now forecasting an annual operating margin of just four to 5.5 percent for the full year — an improvement on last year's 2.8 percent, but still well below the levels shareholders have come to expect.
The 70–80 percent profitability figure is not a sign of failure, Antlitz stressed. Rather, it reflects the structural cost reality of building EVs on the current MEB platform — the architecture that underpins the ID.3, ID.4, ID.5 and ID.7 — compared with mature, amortised combustion-car tooling that VW has refined over decades.
Why EVs Still Cost More to Make
Battery costs remain the single biggest driver of the profitability gap. Although lithium-ion cell prices have fallen sharply since 2022, they still represent a disproportionately large share of an EV's bill of materials compared with an internal combustion engine and gearbox. On the MEB platform, which was designed in the mid-2010s, the integration of battery packs, thermal management and power electronics adds complexity and weight that newer, purpose-designed platforms can eliminate.
VW also faces a secondary squeeze: the need to price EVs competitively — sometimes below their true cost — to stimulate demand and meet European Union CO2 targets. The group anticipates €400–500 million in annual EU CO2 penalties through 2027 as it navigates the shift in its sales mix. That figure puts Volkswagen in a difficult position: sell more EVs, even at a margin sacrifice, or pay hefty fines for selling too many combustion cars.
External headwinds compound the internal ones. US tariffs imposed under the Trump administration are estimated to add €4 billion annually to group costs, and Chinese rivals — led by BYD — are increasingly eating into VW's traditional strongholds in Europe's EV segment.
The SSP: VW's Bet on Parity
The solution Volkswagen is counting on is the Scalable Systems Platform — SSP — a ground-up electric architecture that will replace the existing MEB, MEB+ and PPE platforms across the group's brands. According to VW's own projections, SSP will cut production costs by approximately 20 percent compared with MEB, through greater parts sharing, simpler manufacturing sequences and a tighter integration of hardware and software.
Crucially, SSP will incorporate a software architecture developed in partnership with Rivian — a deal that gives Volkswagen access to genuinely modern vehicle software without the years of painful development it would take to build it in-house. The result will be what VW calls a "fully software-defined vehicle," capable of over-the-air updates and new feature delivery that combustion cars can never match.
The first European SSP model is expected to be presented in 2027 and reach showrooms in 2028 — most likely an electric successor to the Golf or the T-Roc SUV. An electric Škoda Octavia built on the same platform should follow shortly after, the first time the iconic family estate makes the full switch to battery power. Both models are seen as pivotal: if they can be priced close to their combustion equivalents while maintaining healthy margins, it would prove the SSP thesis correct.
The platform delay is worth noting, however. SSP was originally announced for a 2025–2026 debut and has already been pushed back. Any further slippage would extend the window in which VW is effectively subsidising EV sales from combustion-car profits — a strategy that works only as long as the combustion business remains strong.
What This Means for Competitors
Volkswagen is not alone in wrestling with EV margins, but it is unusual in being this explicit about the numbers. Stellantis, Renault and Ford have all acknowledged multi-billion-euro losses on electric vehicles in recent years. The difference is that Volkswagen, with its combination of volume brands and a new platform roadmap, is arguably better placed than most to close the gap — provided the SSP delivers on its promises.
Chinese manufacturers, meanwhile, operate under entirely different cost structures. BYD, for instance, produces its own battery cells through vertical integration, giving it a structural cost advantage that European OEMs will struggle to replicate without major strategic shifts. The 70–80 percent margin figure that VW is disclosing for its current EVs may actually compare favourably with what some rivals are quietly absorbing.
The Road to 2030
Volkswagen's admission is, in a sense, a statement of confidence: the company is saying it understands exactly where it stands, has a credible plan to get to parity, and expects to deliver it by the end of the decade. Antlitz was clear that full margin comparability will not come before SSP — meaning the group is managing investor expectations rather than overpromising a quick fix.
For European buyers, the immediate takeaway is that the current ID-series models are already the product of enormous investment and represent genuine value. The 50,000 job cuts planned across German plants by 2030 and the ongoing cost-reduction programme are not just about surviving the transition — they are about funding the SSP and ensuring Volkswagen can compete on price once the platform finally arrives.
The story of VW's EV margins is, ultimately, a story about time: time to amortise development costs, time to drive down battery prices, and time to bring a new platform to market. The 70–80 percent figure is not where the company wants to be — but for the moment, it is honest about where it is.
Will Volkswagen EVs ever be as profitable as petrol cars?
VW's CFO Arno Antlitz says full profit margin parity between electric and combustion models will only be achieved with the next-generation SSP platform, which is expected to underpin new models from 2028 onwards. Until then, current MEB-based EVs such as the ID.4 and ID.7 will continue to generate around 70–80% of the margin delivered by equivalent petrol cars.
What is VW's SSP platform and why does it matter?
The Scalable Systems Platform (SSP) is Volkswagen Group's next-generation electric architecture, set to replace the MEB, MEB+ and PPE platforms. Developed partly in partnership with Rivian, SSP is designed to cut EV production costs by around 20% and will enable fully software-defined vehicles. The first SSP-based model is expected in 2027–2028, likely an electric Golf or its SUV counterpart.
How does the EV profitability gap affect car buyers?
In the short term, the gap means VW must carefully balance EV pricing — keeping it competitive enough to drive sales while avoiding losses that undermine the group's finances. For buyers, this can translate into discount programmes and incentives designed to stimulate demand. Once SSP arrives and costs fall, the expectation is that EV list prices will come down further, making electric cars genuinely mass-market without requiring subsidy.
Source: https://insideevs.com/news/795053/vw-profit-margins-ev-ice/