Volkswagen celebrates a major milestone — its 1 millionth electric vehicle
This week, Volkswagen marked a significant milestone at its Zwickau plant in Germany — the production of its one-millionth electric vehicle , a fully electric ID.3 GTX . The Zwickau factory is a key hub in VW’s electrification strategy, currently manufacturing six different EV models across brands within the VW Group .
The company also reported strong EV demand , with electric vehicle sales in Europe doubling during the first quarter of 2025. This growth shows that consumers are increasingly embracing electric mobility.
However, this progress comes with major financial hurdles :
- EVs are more expensive to produce than traditional combustion-engine vehicles, mainly due to high battery costs and new manufacturing requirements.
- As a result, profit margins on electric cars are significantly lower .
- With one in every five vehicles sold by the VW Group now being electric , the overall profit margin has dropped to just 4% , raising concerns about long-term financial sustainability.
While Volkswagen remains committed to its electric future, this milestone underscores the growing tension between scaling EV production and maintaining profitability in a rapidly changing automotive market.
Despite the financial challenges of its electric vehicle push, Volkswagen remains optimistic about its EV future — especially with more affordable models on the horizon.
Set for a 2026 release , the ID.2 is expected to be a game-changer. With a target price of around €25,000 , it’s designed to be Volkswagen’s most accessible electric car yet. Alongside its SUV-style sibling and related models from Cupra (Raval) and Skoda (Epiq) , the ID.2 will use a new, cost-optimized front-wheel-drive version of the MEB platform . These models are set to be produced in Spain and could become some of the first Western-made EVs to reach profit margins comparable to traditional combustion-engine vehicles .
This shift could help VW offset current financial pressures, which have intensified as EV production costs continue to weigh on earnings.
In fact, Volkswagen recently reported that pre-tax earnings dropped 40% to €3.1 billion in the first quarter of 2025 — despite a modest 1.4% increase in total deliveries . The company’s CFO, Arno Antlitz , cited the growing share of electric vehicles in VW’s sales mix as a key factor behind the decline.
The Road Ahead:
- Cost-reduction through new platforms like the simplified MEB
- Stronger pricing power with mass-market EVs like the ID.2
- A renewed focus on profitability , not just volume
While the transition to electric mobility is clearly costly, Volkswagen believes these upcoming models will pave the way for a more sustainable and profitable EV future.
