Volkswagen AGM: EV Gains, 30 New Models Clash With Tariff Hit and Deep Cost Cuts

Key Points

• Volkswagen said its EV momentum is improving, with all-electric deliveries up about one-third globally and more than two-thirds in Europe, while five of Europe’s 10 best-selling EVs came from the group. Management also highlighted a major product push with roughly 30 new models across brands and markets.
• Despite the growth, 2025 profitability was pressured by one-off costs and U.S. tariffs, which management said had a nearly 9 billion euro impact overall and about a 5 billion euro annual hit in North America. Operating profit fell to about 8.9 billion euros, though automotive net cash flow still beat targets.
• The company is pursuing aggressive cost cuts and capacity reductions, including 50,000 job reductions in Germany by 2030, 1 billion euros in realized savings so far, and a target of 6 billion euros in annual net savings by 2030. Volkswagen also reaffirmed longer-term goals of an 8% to 10% operating margin by 2030.

Volkswagen ETR: VOW3 used its 66th annual general meeting to outline a difficult but active 2025 fiscal year, with executives pointing to product launches, electric-vehicle momentum and restructuring progress while warning that tariffs, competition and geopolitical pressures continue to weigh on profitability.

Hans Dieter Pötsch, chairman of the supervisory board of Volkswagen AG, opened the virtual annual general meeting from Munich and said the group had “held its own” in an environment shaped by geopolitical tensions, tariffs and intense competition. He said the company made progress in its strategic realignment with around 30 new models and that restructuring measures were being pursued consistently.

Blume Highlights Product Push and EV Growth

Oliver Blume, chairman of the board of management, described 2025 as “a year of action” and said Volkswagen continued its model push with 30 new vehicles across brands, segments and drivetrains. He cited models including the Volkswagen Tayron and new T-Roc, Škoda Elroq, Audi A6 e-tron and Q3, Lamborghini Temerario, electric Cayenne and new Porsche 911 derivatives.

Blume said Volkswagen’s global deliveries of all-electric vehicles grew by about one-third in 2025, while European all-electric deliveries rose by more than two-thirds. He said the group held a 27% market share in Europe for all-electric vehicles in 2025 and that five of the 10 best-selling electric models in Europe came from the group.

In China, Blume said Volkswagen’s “In China for China” strategy was gaining traction after three years of realignment. He said the company had built its largest research and development center outside Germany in Hefei, reduced vehicle development times by 30% and cut material costs by as much as 50%. Volkswagen plans to launch around 30 new models in China by the end of 2027, including all-electric vehicles, plug-in hybrids and range-extender models.

2025 Results Pressured by One-Off Effects and Tariffs

Volkswagen delivered around 9 million vehicles worldwide in 2025, roughly in line with the prior year and the average of the past five years, Blume said. Sales revenue was about 322 billion euros, also approximately level with the prior year.

However, operating result fell to about 8.9 billion euros, with an operating margin of 2.8%. Blume attributed the decline chiefly to high one-off special effects and U.S. tariffs, which he said totaled almost 9 billion euros. Net cash flow in the Automotive division rose to 6.4 billion euros, exceeding the company’s 2025 target, while net liquidity stood at about 34.5 billion euros.

The board of management and supervisory board proposed a dividend of 5.26 euros per preferred share for fiscal 2025. Blume said the company was distributing more than 30% of its result and had not taken into account special effects related to a non-cash impairment of goodwill allocated to the Porsche segment.

Cost Cuts and Capacity Reductions Continue

Blume said costs remain the area where Volkswagen has the greatest need for action. The group has agreed to reduce jobs in Germany by about 50,000 by 2030 and said it is on track. At Volkswagen AG, including Sachsen and Osnabrück, headcount is expected to be reduced by 19,000 by the end of the year, while more than 28,000 binding departure agreements through 2030 have already been concluded.

Volkswagen cut factory costs at its German sites by more than 20% in 2025, Blume said. Through collective bargaining agreements and downsizing measures, the group has achieved sustainable cost savings of around 1 billion euros to date and is targeting annual net savings of 6 billion euros by 2030.

Blume also said Volkswagen is adjusting its production network to a market environment closer to 9 million vehicles annually, compared with pre-pandemic planning based on 12 million vehicles. The company has removed about 2 million units of capacity from its production network in Europe and China over the past two years, including six vehicle factories where operations have stopped, and has initiated measures to cut a further 500,000 units in China.

U.S. Tariffs and Regional Strategy

Blume said tariffs are having a “massive impact” on Volkswagen’s North American market situation, with a negative effect of about 5 billion euros per year from direct and indirect effects. He said this particularly affects exports from Europe and products from Mexico that can no longer be exported economically into the United States because of high tariff levels.

Despite those pressures, Blume called the United States the region with the largest growth potential for the Volkswagen Group. He said the company is proceeding with construction of its factory in North Carolina tied to the revival of the Scout brand and is reviewing expanded partnerships and localization of Audi products in the United States.

Diesel Settlements Returned to Shareholders

Christiane Benner, deputy chairwoman of the supervisory board, addressed agenda items tied to settlements connected with the diesel issue. She said Volkswagen’s 2021 annual general meeting had approved liability settlements with former executives Martin Winterkorn and Rupert Stadler, as well as a coverage settlement with D&O insurers, by majorities of more than 99.9%.

Benner said Germany’s Federal Court of Justice later declared the 2021 approval resolution on the coverage settlement void on formal grounds, not because of deficiencies in the settlement’s contents. Volkswagen, Audi and Porsche entered into a new 2026 coverage settlement with D&O insurers for about 278 million euros, allowing the companies to retain payments already made.

Benner said Volkswagen is asking shareholders to approve the 2026 coverage settlement and confirm the 2021 approval resolution on the liability settlement with Winterkorn. She said Volkswagen still estimates damages attributable to Winterkorn at about 2.5 billion euros and continues to believe full recovery would be unrealistic even if the company prevailed in court.

Looking ahead, Blume said Volkswagen expects 2026 operating return on sales of 4% to 5.5%, Automotive net cash flow of 3 billion to 6 billion euros and net liquidity of 32 billion to 34 billion euros. He said the company’s 2030 ambition is an operating return on sales of 8% to 10% and net cash flow of more than 60% of Automotive operating result.

About Volkswagen ETR: VOW3

Volkswagen AG manufactures and sells automobiles in Germany, Europe, North America, South America, the Asia-Pacific, and internationally. The company operates through four segments: Passenger Cars and Light Commercial Vehicles, Commercial Vehicles, Power Engineering, and Financial Services. The Passenger Cars and Light Commercial Vehicles segment engages in the development of vehicles, engines, and vehicle software; produces and sells passenger cars and light commercial vehicles, and related parts; and offers motorcycles.

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