Despite booming interest in electrification, just four EV-exclusive carmakers posted a positive operating margin in 2024: Tesla, BYD, Li Auto and the lesser-known Series Group (responsible for China's Seres, Aito and Landian brands).
According to newly released data from Rho Motion, profitability remains elusive across much of the EV sector, even as sales volumes climb. Tesla led the field with a 7.2% operating margin last year, marginally ahead of BYD’s 6.4%.
However, the trajectories tell a deeper story: Tesla’s margin has dipped from prior highs, while BYD’s continues to trend upwards. If current momentum holds, BYD may soon overtake Tesla as the world’s most profitable EV-only brand.
Vertical integration and scale
Both Tesla and BYD have heavily leaned on vertical integration – manufacturing batteries, drivetrains and software in-house – to control costs and improve efficiencies. This strategy is also reflected in the profitability of Li Auto and Series Group, both of which operate with a similar integrated model.
“Vertical integration is clearly separating winners from laggards in this segment,” the report noted, adding that brands without control over their supply chain continue to struggle with margins.
Chinese brands closing the gap
Several Chinese EV startups are also inching toward profitability.
Zeekr, a premium offshoot of Geely, posted a -8.5% margin in 2024, down sharply from previous years. Meanwhile, Xpeng and Leapmotor have made notable progress, each cutting their operating losses by more than half year-on-year.
However, others remain well behind.
Nio’s margin was more than -30% last year, while Polestar and Rivian, both darlings of Western markets, are still deep in the red despite trimming losses.
Lucid continues to post the worst figures in the segment, with a -374% operating margin in 2024 – an improvement on the -500% recorded in 2023, but still eye-watering by any measure.
The brand’s existence is currently underwritten by Saudi sovereign wealth, cushioning it from the commercial realities facing smaller, independent rivals.
Tesla remains the only non-Chinese EV maker with sustainable profitability, but with competition rising and price wars tightening margins, that position is far from secure.