VMs still waiting for EV dividends

A new report has found that manufacturers will continue to earn the vast majority of revenue from petrol and diesel models next year.

Bloomberg Intelligence’s (BI) Global Autos Industry Outlook 2024 has found that electric vehicles will represent only about 15% of revenues generated in 2025.

Michael Dean, automotive equity research analyst at BI, said: “The high cost of electric batteries is keeping BEV margins well below a comparable ICE model. Volkswagen said they will reach BEV-ICE profitability breakeven in 2026-27, while Renault aims to turn BEVs profitable in 2025 through its electric branch Ampere.”

However, luxury brands may be better positioned to reach profitability breakeven as they can rely on strong pricing power and brand reputation to keep BEV prices high and improve their margins.

Dean added: “As we expected, luxury automakers were a safe haven in the first half of the year, which should continue since Ferrari, Porsche and Lamborghini’s order books and pricing remain strong. Porsche’s share-price outperformance since its late-September IPO and Ferrari shares trading at an all-time high could encourage a €20bn Lamborghini IPO by VW, particularly as its Ebit margin has overtaken Ferrari’s.”