World automakers are losing profits one by one. Is the transition to electric vehicles to blame for everything?

Illustrative photo. Photo: Nasha Niva

VW — falling profits and mass layoffs

For 2025, the profit of Europe's largest car manufacturer Volkswagen fell by 44%. By 2030, the car giant plans to cut 50,000 jobs in Germany.

Last year, VW closed a plant in Germany for the first time in 88 years. It turned out to be the plant in Dresden, which had been producing electric vehicles since 2017.

The concern names three reasons for the profit drop:

— the introduction of import duties by the United States;
— fierce competition from Chinese manufacturers;
— high restructuring costs associated with the transition to electric vehicle production.

And while duties are a new reason, high costs due to the forced transition to electric vehicles are not a new problem. Investments in this direction are enormous, but demand for electric vehicles is growing slower than expected.

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Illustrative photo. Photo: Nasha Niva

In particular, Porsche suffered greatly due to the transition to electric traction, as brand fans did not highly appreciate the replacement of traditional engines with electric ones. Porsche's profit for the year decreased by almost 93%.

The management recognized the previously chosen strategy for electrifying the Porsche lineup as erroneous and consequently decided to bring back internal combustion engine and hybrid versions to the popular Macan crossover.

Stellantis and Ford incur losses

The Stellantis concern, which includes 14 brands such as Peugeot, Citroën, Fiat, Opel, Jeep, Dodge, Maserati, and Alfa Romeo, ended 2025 with losses totaling 22.3 billion euros.

Among the main reasons, they also name the choice of an erroneous development strategy for the auto giant with a focus on electric vehicles.

To remedy the situation, the manufacturer began reintroducing gasoline and diesel engines for sale.

For example, last summer Stellantis brought back the 5.7-liter Hemi V8 gasoline engine to the American market. And at the end of the year, it resumed installing diesels on at least seven European models.

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Illustrative photo. Photo: Nasha Niva

In addition to reintroducing some traditional engines, the company also canceled the release of the electric Ram truck model even before it went on sale.

Ford Motor Company ended 2025 with net losses of $8.2 billion — the worst result since the 2008 financial crisis.

The American automaker named the electric vehicle production line as the main source of losses. Last year, the company lost $4.8 billion on electric cars and announced a review of its development strategy.

Honda — worst result in 70 years

Another manufacturer that went into the red was Japanese Honda. According to preliminary reports for 2025, the main reason for the losses is named as the costs of restructuring the electric vehicle business, which reached $15.7 billion.

According to forecasts, losses for last year could amount to $2.6-4.3 billion. 2025 will be the first period in 70 years for Honda with a negative financial result.

The other two reasons Honda mentioned are the same as for VW: duties from the US and a drop in sales in China due to competition from local automakers.

In a release, Honda announced that the losses are related to the cancellation of the development and market launch of three electric vehicle models that were planned for production in the US.

«Honda concluded that launching production and sales of these three models under current conditions, where demand for electric vehicles is significantly declining, would likely lead to further losses in the long term,» the company stated.

In total, as reported by the Financial Times, at least 12 global automakers are already scaling back their electric vehicle production plans amidst sustained demand for internal combustion engines and the winding down of support policies in the US.

The American Reason

Notably, demand for electric vehicles in the US market is quite low, as Donald Trump, upon returning to power, abolished previous laws according to which at least 50% of new cars sold were to be electric by 2030.

«We officially saved the US automotive industry from destruction by canceling the EV mandate once and for all,» Trump stated then.

In addition, from October 2025, a $7500 tax deduction for the purchase of electric vehicles was canceled in the US.

By the end of 2025, only about 10% of new car sales in the US were electric vehicles. And in the first two months of 2026, their share fell to approximately 6%.

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Illustrative photo. Photo: Getty Images

Why is China succeeding then?

Chinese automakers, at the same time, are making progress in the electric vehicle market. But it is important to understand that, unlike old-school manufacturers, they don't need to retool — they create a new product from scratch.

In addition, there is huge state support in China. Another important factor is that up to 80% of the components needed for battery production are extracted in China itself, making it less dependent on others.

Toyota — a different path and different results

The situation at Toyota is different. The company did not bet on electric vehicles but developed the hybrid direction, demand for which has grown strongly in both the US and European markets.

As a result, Toyota set a new sales record in 2025, selling 11.3 million cars.

At the same time, for the first time in four years, Toyota recorded sales growth in China (+0.2%), while other old-school automakers reported sales declines there one after another.

Toyota's sales structure by powertrain type in 2025 looked like this:

— vehicles with internal combustion engines — over 56%;
— hybrids — 42%;
— electric vehicles — 1.9%.

Why did Toyota choose a different path? The fact is that the head of the company, Akio Toyoda, is a consistent critic of the forced total electrification of transport.

Akio Toyoda believes that a balance should be maintained by focusing on hybrid cars and simultaneously developing fully electric cars and cars with traditional engines. In addition, Toyota is developing the hydrogen direction.

Notably, as early as 2021, the president of the Toyota Motor concern predicted a collapse for the global automotive industry if the market transitioned to electric vehicles too quickly.

And in 2024, he said that electric vehicles would account for no more than 30% of the global automotive market.

Павялічыць

Illustrative photo. Photo: Nasha Niva

Time will tell how correct Toyota's CEO's strategy and predictions will be in the long term. But at least for now, Toyota's cautious approach to electric vehicles has proven successful.

And many automakers who suffered losses from betting on a rapid transition to electric vehicles are now also shifting more towards hybrids, whose prospects Akio Toyoda has long spoken about.

Toyota, in turn, has been successfully working in the hybrid direction for almost 30 years. The first Prius was launched in 1997. And the second generation Prius, produced from 2003, became a very popular car worldwide, including among taxi drivers, which proved its high reliability and simultaneous fuel efficiency with more favorable emission figures.

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