Major car manufacturers are facing turmoil after a challenging year for electric vehicle sales as global interest to switch away from petrol and diesel models has impacted the automotive sector.
It comes after German car giant Volkswagen saw its operating margin fall to 5.9 per cent in 2024, down from seven per cent the previous year.
The company's vehicle sales dropped by 3.5 per cent to nine million units, as growth in South America failed to offset declining interest in China.
Despite these challenges, Volkswagen reported an 88 per cent increase in order intake for all-electric vehicles in Western Europe during 2024.
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The German brand saw profits drop as interest in electric vehicles slipped last year
REUTERS/GETTY
Meanwhile, Nissan has announced a major leadership shake-up, appointing Ivan Espinosa as its next chief executive amid "worsening earnings" and "faltering sales" particularly across its EV market. The Japanese manufacturer recently reported a sharp 78 per cent drop in third-quarter profit with investors demanding action.
Nissan's appointment of Espinosa comes after years of management turmoil and declining performance in key markets. The Mexican national, who has been with the company for two decades, will take the helm on April 1.
Former CEO Makoto Uchida had faced mounting pressure following the collapse of merger talks with Honda earlier this year, which could have created a substantial shift in the electric car market.
Last year, Nissan warned it could be forced to leave the UK market due to the lack of appetite for electric cars against the Zero Emission Vehicle mandate, which requires manufacturers to have at least 28 per cent of new car sales be electric by the end of the year. It would also see non-compliant cars fined £15,000.
The merger between Nissan and Honda fell through last year
GETTYVolkswagen has faced similar challenges in producing affordable electric models while competing with cheaper Asian rivals amid significantly higher manufacturing costs.
"Our outlook reflects the global economic challenges and the profound changes that are happening in the industry. We keep combustion engines technologically competitive, we are simultaneously investing in electric models and software," said CFO Arno Antlitz.
Volkswagen has also implemented deep cost-cutting measures in Germany, which should help raise €1billion (£840million) in savings by the end of 2025, according to Antlitz.
In China, earnings have now been forecast to drop by up to €1billion (£840million) as the company steps back to work on new models. Notably, the challenges facing traditional automakers extend beyond individual company struggles, reflecting an industry-wide shift.
Volkswagen's all-electric ID.EVERY1 will launch in 2027 for around €20,000 (£16,800) and will be built in Portugal but will incorporate some components from Chinese suppliers to reduce costs.
The manufacturing details came during an analyst call on Tuesday, as the company seeks to make its electric vehicles more affordable. Volkswagen's battery subsidiary PowerCo plans to build three plants with a combined capacity of up to 170 gigawatt hours.
However, Antlitz noted that the ramp-up of capacity within these plants would be delayed due to lower-than-expected EV sales.
Oliver Blume, CEO of Volkswagen Group shared: "With the ramp-up of affordable e-mobility, our autonomous vehicle fleet and the battery cell production in Germany, Volkswagen is showcasing European innovation for the world – as the global automotive tech driver."
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The Volkswagen ID. Every1 electric vehicle will cost less than £17,000 VOLKSWAGENAntlitz emphasised the need for both innovation and efficiency, noting that in order to achieve this, "we continue to offer our customers highly attractive vehicles, while consistently reducing costs and increasing profitability."
Last year, Volkswagen sold about 744,800 battery-electric vehicles worldwide, representing a 3.4 per cent decrease from the previous year.
