Why Audi Has A Unique Set Of Headaches These Days

I’m overdue in giving you, InsideEVs reader, my review of the new Audi SQ6 E-Tron. But the top-level takeaway is that I like it a lot. And I think it further proves my theory that every new Volkswagen Group electric vehicle I drive feels like a quantum leap over the last one. The German conglomerate does seem to be figuring this stuff out.

Unfortunately, even rapid technical advancement can’t save the VW Group from its current headaches. And arguably, no brand has a worse migraine right now than Audi.

That kicks off this Monday edition of Critical Materials, our morning roundup of automotive industry and technology news. Also on deck today: China’s BYD has another monumentally good April, and tariffs are coming for your car parts. Let’s dig in.

30%: Audi Faces Tough Tariff Situation In America Amid China Sales Decline

Photo by: Patrick George

When Kevin Williams and I were in China these past few weeks, we saw the new Audi E5 Sportback pretty much everywhere. Not the car itself; it’s not due on the roads until this summer. What I mean is that Audi is advertising its new by-China, for-China EV—one co-developed by local partner SAIC—on billboard ads all over the country. 

Audi really needs that car to be a hit. As is the case with the other VW Group brands, sales and profits from China are down precipitously as consumers favor local brands. Audi’s China sales dropped 11% in 2024 compared to the previous year. Company officials have high hopes that the E5 Sportback can help reverse that trend.

But Audi also has big problems in North America, thanks in large part to President Donald Trump’s enthusiasm for tariffs. It has no U.S. factories, and so all of its imported models could face increased costs to manufacture and sell. And this is tearing into profit margins, reports Bloomberg: 

The German brand’s operating margin came in at 1.5% in the first quarter, a slight improvement over the 1.1% in the same period last year, Audi said Monday. Deliveries of fully electric vehicles were a bright spot, rising 30%.

U.S. tariffs lowering the value of vehicles in transit from Europe weighed on Audi’s result, as did the higher share of low-margin EVs and the cost of European emissions regulations. Collapsing sales in China and model changeovers have held back profitability at Volkswagen’s core brands VW, Audi and Porsche. All three have hammered out measures with unions to cut labor costs this decade.

[…] The brand’s strategy for coping with U.S. tariffs depends on how duties on Mexico develop, and what competitors including BMW AG and Mercedes-Benz Group AG do, Chief Financial Officer Jürgen Rittersberger said.

“We also have the option to discuss prices, but we first have a detailed look at how the competition reacts,” he said on a call with reporters.

A “good” profit margin in the auto business is usually around 6% per vehicle, but as any business owner will tell you, more is always better. Audi is working on pulling itself out of this hole, including with 10 new models coming soon and U.S. production under consideration; it could also lean on its cousin Scout Motors for help there, which we’ve been hearing even before Trump was elected. But that’s a ways away, and relief for Audi can’t come soon enough. 

30%: BYD Has Another Outstanding Month In April Thanks To EV Sales

Photo by: Patrick George

Meanwhile, China’s BYD, which made news across the world recently after unveiling a five-minute EV fast-charging system, faces no such headwinds. April sales were some of its best yet, reports Bloomberg:

BYD Co. posted its best month of sales yet for 2025, a further sign the Chinese juggernaut is on track to hit its full-year target of 5.5 million deliveries.

New-energy vehicle sales for April were 380,089, up more than 20 percent year-on-year, according to a statement May 1. Of those, passenger cars were 372,615. Notably, BYD’s battery passenger electric vehicle sales of 195,740 last month topped its plug-in hybrid deliveries of 176,875, the first time pure EV sales have been in front since early 2024.

BYD is currently unveiling new EV models following some lagging sales; the automaker has seen more success as of late with plug-in hybrids, but that lineup got a similar overhaul last year. This is a story we’ll be watching closely this year.

90%: Tariffs On Car Parts Are Here

Photo by: Patrick George

Hyundai Georgia Metaplant

This isn’t even an EV-specific story. But no matter what you drive, here’s some pain we may all be feeling soon. 

Tariffs on imported car parts went into effect on Saturday. That applies a 25% duty on most of what makes up a new vehicle—or is used to repair any kind of vehicle.

Thankfully, EVs generally need fewer repairs than combustion cars, but there’s no way to sugar-coat how expensive this could get for anyone in need of fixes. (Also, I drive a gas car in addition to my EV and I need to replace some fuel system components soon, so I’m not exactly thrilled about this one.) 

Here’s CNN with more:

The added cost of tariffs could still come to an average of about $4,000 per vehicle, according to estimates derived from a CNN analysis of government trade data.

For car buyers, it might take a while to see price hikes. General Motors CEO Mary Barra told CNN Thursday tariffs will cost her company between $4 billion and $5 billion this year, but she doesn’t expect car prices to change in the near term. Ford CEO Jim Farley told CNN on Wednesday that it would extend its “employee pricing” offer through July 4.

But everyday Americans will still see higher prices elsewhere, like the repair shop.

“The tariffs on parts that will lead to higher inflation in repair and maintenance and insurance which impact every American and not just the people thinking about buying a new imported vehicle,” [Jonathan Smoke, chief economist at Cox Automotive] said.

If you see any impact on your own EV and hybrid repair costs, drop us a line to let us know. 

100%: Are You Worried About Auto Tariff Impacts?

Photo by: Volvo

Volvo EX90 assembly at the Volvo Ridgeville factory in South Carolina

Buying a new car soon? Getting your current one fixed? We may all soon be feeling the tariff sting. Or maybe you aren’t worried at all here. Either way, let us know what you’re dealing with in the comments below.

Contact the author: patrick.george@insideevs.com