Nineteen leading automotive groups worldwide are facing a deep earnings crisis after the 2025 fiscal year because the anticipated ramp-up of electric vehicles, particularly in Europe and the US, fell significantly short of expectations. According to an EY analysis published in April 2026, the manufacturers’ total profit plummeted by 59 percent, from €143 billion to €59 billion. At the same time, write-downs on battery factories, development projects, and discontinued model plans totaled almost €60 billion. As a result, the average operating margin dropped from 6.7 percent to 2.8 percent, its lowest level in ten years. This financial black hole is hitting manufacturers with expensive electric vehicle strategies particularly hard, while tariffs, high production costs, and weak sales in China are further exacerbating the situation. (ecomento: 13.04.26)
Electric Cars: A Billion-Dollar Money Pit Hits Balance Sheets and Strategies
Particularly concerning is the fact that the revenue of the 19 companies remained almost stable despite the profit crisis, increasing by only 0.6 percent. This demonstrates the extent to which profitability has eroded. German manufacturers, however, fared worse than many of their rivals. Their revenue fell by 4.1 percent, and their new car sales also declined by two percent. Meanwhile, the three Chinese manufacturers in the ranking increased their revenue by 9.3 percent and their sales by 16 percent, but they too suffered a loss in profitability.
In terms of profitability, Asian manufacturers came out on top. Suzuki achieved a margin of 9.7 percent, Toyota 8.5 percent, Kia 8.0 percent, and BMW 7.6 percent. The industry average, however, was only 2.8 percent, even below the 3.9 percent recorded in the pandemic year of 2020. EY consultant Constantin M. Gall describes the situation as follows: “The automotive industry is in a deep crisis, one that is potentially existential for some companies.” According to the analysis, this financial black hole was not solely due to a lack of sales, but also to miscalculations regarding the pace of electrification and the costly course corrections undertaken by many corporations.
China, tariffs, and high costs exacerbate the crisis
The change in strategy is costing individual manufacturers billions because previous plans are now being revised. Ford expects charges of $19.5 billion, General Motors $7.6 billion, and Stellantis €22 billion. Honda also announced significant write-downs, and Porsche has estimated its realignment costs for 2025 at €3.1 billion. Gall comments: “The current billion-dollar write-downs mark less a change of course away from electromobility than a correction of completely unrealistic assumptions.” This makes it clear that many companies are not abandoning their electric vehicle offensive, but are financing it more slowly and cautiously.
Added to this is the pressure from China, which is hitting Western manufacturers particularly hard. German companies lost 11 percent of their sales there last year, Japanese manufacturers 7 percent, and US suppliers 2 percent. By 2025, only 29 percent of German car manufacturers’ passenger car sales were expected to be in China, down from over 39 percent in 2020. At the same time, many Chinese buyers in the growing electric vehicle segment prefer domestic brands because they develop their vehicles faster and offer them at lower prices. Additionally, US tariff policies, geopolitical tensions, rising energy prices, and a weak economy are weighing on the industry, which is why EY does not expect a noticeable recovery in demand in Europe in 2026 either.