From Tesla to Porsche: Winners and losers in the car industry in 2025

A few years ago, there was talk that the global auto industry might be nearing “peak supercar.” In hindsight, that assumption looks wildly premature. If anything, 2025 has underlined how resilient — and profitable — the ultra-luxury end of the market can be, even as much of the broader industry struggles with slowing growth, electric vehicle uncertainty, and geopolitical headwinds.

Over the past 12 months, brands such as Bugatti, Ferrari, Lamborghini, Pagani, and Koenigsegg have continued to sell every car they can make, often with waiting lists stretching well beyond a year. While tariffs, uneven EV demand, and intense competition from Chinese manufacturers have weighed on mass-market and premium automakers, the top-tier luxury players have enjoyed strong margins and full order books.

Luxury vehicles more broadly had a standout year. In the US, the average transaction price for entry-level luxury models climbed above $56,000, reflecting sustained demand from affluent buyers. Traditional internal combustion engines — especially paired with manual gearboxes — found renewed appeal, and buyers increasingly sought bespoke designs that reflected personal taste rather than mass-market trends.

At the same time, global EV sales continued to rise, but at a slower pace than many automakers had anticipated. Companies including Audi, Ford, General Motors, and Volvo faced stiff competition from lower-priced Chinese EVs, the winding down of government incentives, and growing political polarization around electric mobility. These factors combined to cool demand in several key markets.

After a strong start to the decade, some once-dominant EV names found themselves under pressure in 2025. Tesla endured a difficult year marked by increased margin pressure and a decline in year-over-year Trailing Twelve Months (TTM) revenue, which, alongside falling market share in the US, fueled investor concern. The company also faced reputational challenges, including lawsuits linked to vehicle safety concerns and public backlash tied to CEO Elon Musk, which spilled over into protests and consumer unease.

Lucid Group also struggled, weighed down by supply-chain disruptions and persistent cash burn. But the sharpest reversal arguably came at Porsche. The German luxury brand grappled with deeper financial issues and a lukewarm response to its electric models, despite aggressive marketing campaigns and celebrity endorsements. Repeated forecast downgrades led to its removal from Germany’s benchmark stock index, and by October the company absorbed a significant multi-billion euro impact from a strategic realignment of its product and battery strategy, which caused a staggering 99% drop in operating profit for the first nine months of the year.

Beyond the financials, Porsche faced growing dissatisfaction among its traditionally loyal customer base. Longtime enthusiasts voiced frustration over rising prices and a shift toward digital interiors at the expense of the brand’s analog heritage. A leadership shake-up followed, with Oliver Blume preparing to step back from his dual role overseeing both Porsche and Volkswagen, as Dr. Michael Leiters takes charge of Porsche from January 1, 2026.

Where luxury still thrives If Porsche’s year highlighted the risks facing legacy luxury brands, Ferrari offered a sharp contrast. The Italian automaker emerged from 2025 with industry-leading margins and an order book that stretches into 2027. Crucially, Ferrari has less exposure to China than many rivals, with the market accounting for under 10% of its sales.

Ferrari has also benefited from taking a more cautious approach to electrification. The company recently reaffirmed a flexible timeline, clarifying that electric models will account for a managed portion of sales by 2030—a cautious approach compared to earlier, more ambitious timelines. This strategy may help protect residual values, a growing concern for high-end EVs elsewhere in the market.

The brand is not without risks. Prices have climbed sharply, making Ferraris disproportionately expensive even within the luxury segment, and the arrival of its first fully electric model in 2026 will test buyer appetite. Still, loyalty remains strong, with the majority of vehicles sold to existing customers, reinforcing Ferrari’s position at the top of the luxury hierarchy.

Brands to watch in 2026 Looking ahead, Audi and Cadillac stand out as brands worth watching. Both are set to enter Formula One in 2026, with Audi taking control of Sauber and Cadillac joining as the sport’s 11th team. For Cadillac in particular, the move is part of a broader effort to modernise its image and compete more credibly with established European luxury marques.

Formula One’s growing cultural relevance — especially in the US — makes it a powerful marketing and technology platform. With viewership at record highs and global brands investing heavily in sponsorships, the sport offers automakers far more than traditional race-to-road messaging.

Audi, meanwhile, is using its F1 return alongside a renewed design push. Recent concept reveals hint at a sleeker, more emotionally driven future for the brand, blending modern interiors with subtle nods to iconic models from its past.

With high-end sports and luxury cars continuing to attract deep-pocketed buyers, the momentum seen in 2025 looks set to carry into 2026 — even as the rest of the industry grapples with slower growth and an uncertain transition to electric mobility.

Summary

The car industry in 2025 was defined by stark contrasts. Ultra-luxury brands such as Ferrari thrived with strong demand and disciplined electrification strategies, while companies like Tesla and Porsche struggled with slowing EV adoption, financial pressure (including a massive operating profit drop for Porsche), and brand challenges. As automakers recalibrate for 2026, motorsport, design innovation, and selective electrification are emerging as key differentiators in an increasingly divided market.

FAQs

Q1: Why did 2025 become such a strong year for supercar and luxury brands? 

Ultra-luxury automakers benefited from sustained demand among high-net-worth buyers, long waiting lists, and limited production volumes. These brands were largely insulated from mass-market pressures such as price sensitivity, EV subsidy cuts, and competition from low-cost manufacturers.

Q2: How did broader economic conditions impact the auto industry in 2025? 

Rising interest rates, geopolitical trade barriers, and uneven consumer confidence weighed on mainstream automakers. In contrast, affluent buyers continued spending on luxury vehicles, pushing average transaction prices in the entry-level luxury segment above $56,000 in the US.

Q3: Why did electric vehicle sales grow more slowly than expected? 

EV adoption was affected by the rollback of government incentives, growing competition from affordable Chinese EVs, charging infrastructure gaps in some markets, and increasing political polarization around electrification policies.

Q4: What factors contributed to Tesla’s difficult year in 2025? 

Tesla faced increased margin pressure, a decline in year-over-year TTM revenue, reputational challenges linked to leadership controversies, and intensified competition in both the US and international markets, particularly from Chinese EV manufacturers.

Q5: Why did Porsche struggle despite its strong brand legacy? 

Porsche was hit by weaker demand for its electric models (especially in China), rising costs, and customer backlash over pricing and interior design choices. These issues led to forecast warnings and a massive nine-month operating profit drop (approx. 99%) following a multi-billion euro strategic realignment.

Q6: How did Ferrari manage to outperform other luxury automakers? 

Ferrari maintained tight production controls, strong pricing power, and a cautious approach to electrification. Limited exposure to China and high customer loyalty helped protect margins and preserve brand exclusivity.

Q7: Is Ferrari’s slower shift to EVs a long-term risk?

While delaying electrification carries some regulatory and technological risks, Ferrari’s customer base remains strongly attached to internal combustion models. The company is betting that a gradual transition, including a flexible EV target for 2030, will better protect brand value and resale prices.

Q8: What role does Formula One play in automakers’ strategies? 

Formula One offers global brand visibility, advanced technology development, and strong engagement with younger audiences. For brands like Cadillac and Audi, F1 participation supports image refreshment and innovation narratives beyond traditional advertising.

Q9: Why is Cadillac’s entry into Formula One significant? 

Cadillac’s F1 debut as the 11th team marks a strategic effort to reposition the brand as modern and performance-driven, helping it compete more directly with established European luxury manufacturers.

Q10: What should investors and industry watchers look for in 2026? 

Key indicators include EV demand trends, pricing power in the luxury segment, the performance of new electric models, leadership transitions (like Michael Leiters taking over at Porsche), and the commercial impact of Formula One investments.

Q11: Does the continued success of supercars signal “peak luxury” has not arrived? 

Yes. Strong demand, personalization trends, and expanding global wealth suggest that ultra-luxury vehicles will remain resilient, even as mass-market car sales face structural challenges.

Q12: How could these trends shape the future of the global auto industry? 

The widening gap between mass-market and ultra-luxury automakers may lead to more selective electrification strategies, increased focus on brand differentiation, and greater reliance on experiential marketing and motorsports.