Are EVs Profitable? Why Most EV Makers Are Losing Money

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In July 1999, at the Sun Valley conference, Warren Buffett walked an audience of media and technology executives through the history of the American car business. There had been at least 2,000 car makes, he said, and the industry came down to three U.S. car companies.

The automobile changed the country. The survivors, in Buffett's words, were "no lollapaloozas for investors."

Nine years later, Berkshire Hathaway bought 10% of a Chinese company that made batteries for cell phones. That company, BYD, became the world's largest EV maker. Berkshire sold the last of its stake in 2025. In August, BYD reported its first drop in interim profit in six years.

EV advocates have spent much of the past year criticizing legacy automakers for slowing their EV plans. Weaker government mandates and EV incentives explain part of that pullback. First-half financial results explain more.

Most companies building battery-electric vehicles at scale lost money. The few that made money earned less.

To me, EVs are less a new industry than a new powertrain inside a very old one. This memo asks whether EVs changed the economics of the car business, or only what powers the car.

Who Actually Makes Money Selling EVs?

Only three companies that sell EVs at scale made money in the first half, and two of them earned less.

BYD's first-half net profit fell 20.5% to 12.33 billion yuan, its first interim decline in six years. Tesla's second-quarter operating margin was 1.4%, and a $1.005 billion gain on its SpaceX stake made up most of its $1.11 billion of net income.

Leapmotor earned 210 million yuan, up from 30 million a year earlier, then cut its full-year profit target from 5 billion yuan to about 3 billion.

Lucid, Rivian, XPeng, Li Auto, NIO and Xiaomi's EV business all lost money. GM added $2.3 billion of EV charges in the second quarter, bringing its EV write-downs to about $11 billion.

BYD, Li Auto and Leapmotor also sell plug-in hybrids, so their results mix the two.

EVs Are Still Cars

The car business can be very profitable. GM is guiding to $14 billion to $16 billion of adjusted EBIT this year, carried by full-size trucks and SUVs.

What the car business has never been is forgiving. It rewards scale and pricing power in the right segments, and it makes everyone else carry factories, engineering, and retail investments that only volume or pricing can pay for. That is the business Buffett described at Sun Valley.

EVs inherited that business. A battery pack replaced an engine. Factories, labor, warranty, and price competition came along.

What Does Tesla's Pivot Tell Us?

The company that made EVs mainstream no longer describes itself as a car company.

Elon Musk said in 2024 that valuing Tesla as just an auto company was the wrong framework. In September 2025 he posted that about 80% of Tesla's value will come from its Optimus robots. In January Tesla said it would stop building the Model S and Model X and replace that Fremont line with one that can build up to 1 million Optimus robots a year.

Whatever the reason, the most valuable EV maker in the world is not betting its future on the margin from selling EVs.

Structural analysis of automotive disruption

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Where Did the EV Profit Go?

In the first half of 2026, Chinese battery maker CATL earned 43.28 billion yuan, about three and a half times BYD's profit. It supplies an estimated 40.2% of the world's EV batteries, though energy storage drove much of its growth.

The PC industry went through a phase like this. PC makers such as HP and Dell lived on single-digit margins while Intel and Microsoft took most of the profit.

CATL must have studied that history. In 2024 the Chinese outlet 36Kr reported that CATL was pushing a "CATL Inside" logo program modeled on the Intel Inside campaign during the PC era.

Berkshire bought a battery company that became a carmaker. CATL stayed a battery company, and this year it is earning more than three times as much.

Are EV Economics Different This Time?

There is a case against my view. EVs have fewer parts, and the largest cost, the battery, keeps getting cheaper.

A historical argument exists as well. Steven Klepper of Carnegie Mellon counted 272 U.S. car producers in 1909. By 1941, there were only 9.

The survivors earned large profits for decades. Tesla didn't post its first profitable year until 2020, 12 years after delivering its first car.

Using that history, today's EV losses might be part two of a similar automotive sector shakeout.

Is This Like Detroit After 1909?

Buffett's point in 1999 was that a technology can change the world without rewarding most of the companies that build it. The EV industry is testing that theory today.

So far, the steadiest money in EVs has gone to a battery maker that doesn't build cars. It also went to an investor who held BYD for 17 years and then sold. Carmakers are still waiting for their turn.

An important question is whether this shakeout ends the way Detroit's did, with a few survivors earning GM-like margins on the right vehicles. Or will the EV makers still standing be the ones that, like Tesla, stopped counting on the car to make the money?

If you have a perspective or disagreement, reply directly. I read every response.

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Framework Reference

This memo applies TaaSMaster's cost architecture and margin capture frameworks to the pure EV business. The CATL section extends my June 15, 2026 memo “40.1% - The Layer the Stack Race Has Already Lost,” which argued that CATL's share of global EV battery installations has turned it from a supplier into infrastructure automakers depend on.

“The Auto Sector: A Hundred Years Before the AI Buildout” (June 25, 2026) used the 1920s auto shakeout to ask which AI bets survive. “The Retreat Detroit Didn’t Make Alone” (July 20, 2026) examined the legacy automaker EV pullback that this memo puts in profit terms.