Car brands making record profits have one thing in common - a lack of electric cars: Why Toyota, Mazda, Mitsubishi and others are making more profit than Tesla and Volkswagen | Analysis

With the Japanese fiscal year ending in March, manufacturers including Nissan, Mazda, Mitsubishi, Subaru and Toyota have reported record – or close to – yearly profit figures. 

Something those manufacturers all have in common is a very limited selection of – if any – electric cars. They’re also all Japanese, benefitting from a weaker yen and strong export sales. However, Jaguar Land Rover (JLR) is in the same boat with higher Q1 margins and only one electric car.

Tesla, meanwhile, has reported a 15-month low low for sales in Europe, with the company cutting margins to stay competitive with up-starts from China that are capitalising on export markets as home demand for electric cars tails off.

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Ford is another example, reporting a A$2 billion loss on its electric vehicles in three months as it discounted EVs like the F-150 Lightning and Mustang Mach-E to shift units in the US. 

As a counterpoint, performance of Mazda, Nissan and Mitsubishi in the United States is excellent. All carmakers reported growth driven by new upmarket models – especially Mazda with its Large Product architecture accounting for nearly 50 per cent of profits. 

For some non-premium models, these Japanese companies get around the 25 per cent US ‘Chicken Tax’ by building vehicles in North America. Examples include the Mazda CX-50, sixth-gen Subaru Forester and Nissan Titan pick-up.

As for Toyota, the world’s biggest carmaker’s operating profit surged 78 per cent in the first quarter of 2024. For the full fiscal year, Toyota made a staggering 5.35 trillion yen profit (A$51.6 billion). It only sells one electric model globally, the bZ4X.

Mazda is making bank on new CX-90 and its relations.

Looking at Volkswagen, it isn’t all doom and gloom for those invested in electric cars. With market-dependent split strategies as well as hybrid and combustion options, Volkswagen’s one per cent revenue dip in the first quarter of the year is expected to turn around. The brand is reporting twice as many EV orders in the books as 2023, too. 

A longer-term electric carmaker, BMW, has also struggled at the start of 2024 with margin falling to 8.8 per cent from its 12.1 per cent 2023 figure. Put this down to a shrinking appetite for luxury vehicles in China that's also affecting Audi, Porsche and Mercedes-Benz.

BMW is in a decent place, though, with its i4 among the very best electric cars on sale thanks largely to continued investment in electric technology from before the groundbreaking i3 and i8 releases in 2014. 

For now, it looks like the hybrid and combustion-heavy strategy taken by Mazda, Nissan, Toyota and others is paying off. Tariffs on China-made cars will continue to hurt Volvo, Polestar and others especially in the United States with Europe also potentially entering the fray. 

The bZ4X is Toyota's only electric car.

But what does the long-term future hold? Even with some tweaking to targets as seen in the US, emissions regulations will continue to penalise high-emissions vehicles. 

If Toyota and others are to catch up to established EV makers, investment in technology is going to have to come thick and fast. Pairing up – as Honda and Nissan have pledged to do – may be the only way to get out of a sticky situation.