Volkswagen Group expects a €5.1 billion ($5.98 billion) hit to 2025 profits after Porsche delayed its all-electric vehicle rollout, cut medium-term return targets, and abandoned a joint project in its original form. The group has lowered its operating margin outlook to 2–3% and will take write-downs and impairment charges totalling several billion euros. Revenue forecasts remain steady, but cash flow and liquidity projections have been trimmed as the company adjusts to slower EV adoption and rising costs.

Volkswagen Group has warned of a substantial financial hit to its 2025 performance as its premium subsidiary Porsche postpones the introduction of new all-electric vehicles. The German automaker now expects its operating return on sales to fall to between 2% and 3% next year, down from the earlier 4–5% forecast, translating into a potential €5.1 billion ($5.98 billion) impact on its operating profit.

EV Delays and Project Realignment

Porsche confirmed that established models such as the Panamera and Cayenne will continue to be sold with internal combustion and hybrid powertrains well into the next decade. The company has also revised Volkswagen Group’s medium-term profit goals, cutting projected returns from 15–17% to 10–15% for the 2026–2030 period.

The sports car maker has also scrapped the original version of a joint vehicle programme with Volkswagen, instead pursuing a more adaptable approach to powertrain systems. It explained that slower progress in electric mobility meant several all-electric models would launch later than planned. The next-generation EV platform for the 2030s will also be re-engineered and rescheduled in cooperation with other Volkswagen brands.

Cash Flow, Liquidity, and Strategic Outlook

Porsche expects these delays, combined with write-downs on capitalised project costs and additional provisions, to dent its own operating profit in 2025 by up to $1.94 billion. Volkswagen will also book a non-cash impairment of about $3.24 billion on Porsche goodwill, with a further $2.27 billion one-off charge linked to the altered project and Porsche’s reduced forecast. Together, these factors have prompted Volkswagen to downgrade its 2025 expectations for operating return on sales to 2–3%.

The company’s net cash flow in its automotive arm is now expected to hover around $0 billion, compared with an earlier estimate of $1.08–3.25 billion, while net liquidity is projected at $32.38 billion instead of $33.52–35.66 billion. Revenue forecasts, however, remain broadly unchanged compared with last year. Volkswagen’s board has said it will exclude the impairment charge from the dividend base for 2025, payable in 2026.

Explaining the shift, CEO Oliver Blume – who heads both Porsche and Volkswagen – said the company was “realigning Porsche across the board” to reflect “massive changes” in the car industry and evolving customer expectations. The realignment, he said, aims to balance appealing products with solid financial returns.

Meanwhile, Volkswagen’s works council chair Daniela Cavallo has renewed calls for Blume to step down from one of his two CEO positions to avoid conflicts and improve focus.

Written By: 

*Cole Jackson

Lead Associate at BRICS+ Consulting Group 

Chinese & South American Specialist

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