The EV industry has experienced remarkable growth far beyond what many envisioned a decade ago. In 2024, total EV sales surpassed 17 million units worldwide, marking a 25% year-on-year increase. As the market expanded, new EV companies emerged and rapidly scaled into multibillion-dollar enterprises. However, a closer look at their financials reveals that while a select few have reached operational profitability, many continue to operate at a net loss.
N.B. In this article Rho Motion has examined the operating income ratio (operating income/revenue). This figure is a reflection of the core profitability of automakers operations as it indicates how efficiently each company turns revenue into operating profit after covering production and overhead costs.
Which companies operate at a profit?
As of 2024, Tesla remains the most profitable EV brand, with an operating margin of 7.2%. Close behind is BYD, with a margin of 6.4%. Notably, while Tesla’s margin has declined since 2023, BYD’s has improved, a trend expected to continue this year as Tesla’s sales have had a shaky start to the year. It is also worth noting both Tesla and BYD are vertically integrated players which has allowed them to improve margins and scale rapidly.
Beyond these two, only two other EV brands have reached operational profitability, Li Auto and Seres Group (based on Q1-Q3 financials 2024), the latter encompassing sub-brands such as Seres, AITO, and Landian. Li Auto and Seres Group are the first non-vertically integrated EV companies to reach profitability.
Which companies are still yet to reach profitability?
In China, many well-established pure EV brands including Zeekr, Leapmotor, Xpeng, and Nio have yet to turn a profit. Of these, Zeekr is the closest, with an operating margin of -8.5% in 2024.
Outside China, many pure EV brands continue to operate at significant losses as they scale. For example, Lucid recorded a -374% operating margin in 2024, though this marks an improvement from over -500% in 2023. Lucid benefits from substantial backing by the Saudi Public Investment Fund, which enables it to sustain such large negative margins. Similarly, Vinfast, Rivian and Polestar rely on significant external funding to operate with substantial negative operating income ratios.
Have you read?
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- What does BYD’s megawatt charging system mean for the charging industry?
- Are battery swapping EVs heading towards mass adoption in China?
- Energy Transition Capital Monthly – February 2025
When will the EV market reach widespread profitability?
A clear trend is emerging profitability is approaching for EV makers. From 2023 to 2024, all EV brands improved their margins, with Seres Group achieving profitability for the first time.
The key driver of these improvements is scale. Every company with a negative operating margin in 2024 experienced higher sales compared to 2023. If this trend continues, brands such as Zeekr, Leapmotor, and Xpeng are likely to reach profitability in the near future.
More information
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Source: https://rhomotion.com/news/when-will-the-ev-market-reach-profitability/
