Audi Lowers 2025 Profitability Outlook Amidst U.S. Tariffs and Costly Electric Vehicle Transition
Key Insights
Audi has revised its 2025 operating margin forecast downwards for the second time, citing significant impacts from U.S. import tariffs and the high costs associated with its electric vehicle transition.
The premium carmaker now anticipates an operating margin between 4% and 6%, a reduction from its previous projection of 5% to 7%, while maintaining its revenue outlook.
U.S. tariffs are projected to cost Audi approximately 1.3 billion euros in 2025, prompting the company to consider establishing a manufacturing plant in the United States.
Audi plans to implement aggressive cost optimization measures and reduce operational complexity to navigate challenging economic conditions and intensified market competition.
Volkswagen's premium brand, Audi, announced a second downward revision of its 2025 profitability guidance, attributing the adjustment to persistent U.S. import tariffs and the substantial capital expenditure required for its transition to electric vehicles (EVs). The German automaker now projects an operating margin of 4% to 6% for 2025, a decrease from its earlier forecast of 5% to 7%, though its revenue outlook remains unchanged.
U.S. tariffs have significantly impacted Audi's financial performance, costing the company 850 million euros ($991 million) in the first nine months of 2025. The full-year tariff burden is estimated to reach 1.3 billion euros. This financial pressure, coupled with the strategic imperative to localize production, has prompted Audi to accelerate its decision-making process regarding the establishment of a U.S. manufacturing facility, a move confirmed by CFO Juergen Rittersberger. Unlike its sibling brand Porsche AG, Audi currently lacks production capabilities within the United States, making it particularly vulnerable to these trade barriers.
The broader Volkswagen Group experienced a third-quarter loss, partly due to billions in additional tariff payments and a costly strategic pivot within its Porsche unit. Audi's brand group, which encompasses Bentley, Lamborghini, and Ducati, reported an operating margin of 3.2% for the first nine months, down from 4.5% in the previous year. This decline is attributed to tariffs, ongoing restructuring efforts, and compliance costs related to carbon emissions regulations.
In response to these headwinds, Audi is implementing a comprehensive strategy focused on cost optimization and complexity reduction across its operations. "We are addressing the challenging overall economic situation and intensified competition with consistent cost control," Rittersberger stated. The company's full-year guidance hinges on a stable supply of semiconductors and related components, a critical factor given potential supply chain disruptions, such as those stemming from the dispute involving Dutch chipmaker Nexperia. Audi maintains that, despite monitoring the situation closely, its supply chain remains on track.
This strategic recalibration underscores the significant financial and operational challenges facing traditional automakers as they navigate a global shift towards electrification amidst a complex geopolitical trade landscape. The decision on a U.S. plant will be crucial for mitigating tariff impacts and strengthening Audi's position in a key EV market.