Party hats were compulsory headgear at VW’s Zwickau plant in eastern Germany this week. The factory produces six different EVs for various VW Group brands and just built its millionth electric car, an ID.3 GTX hot hatch. But Zwickau’s busy production lines are causing a headache for the bean counters at VW’s Wolfsburg HQ.

The problem is that EVs are expensive to build and deliver smaller margins than equivalent combustion-powered cars. And while electric sales doubling in Europe in the first quarter of 2025 is something to celebrate, some of those sales come at the expense of ICE sales.

Related: VW ID.2 Might Have A Shot In America, But ID.1 Is ‘Highly Unlikely’

As EVs take up a greater proportion of the sales mix – they accounted for one in five VW Group cars in Jan-March – they push profitability down, reducing the margin to 4 percent. And the withdrawal of EV subsidies in many European countries means VW can’t lean on government incentives to allow them to charge more.

But there is light at the end of the tunnel in the form of the VW ID.2 and its various spinoffs and related EVs. The €25k ($28k) ID.2, which will be built in Spain, goes on sale in 2026 and should be one of the first Western-built EVs to return margins close to an ICE car’s. The baby VW and its sister SUV, plus the Cupra Raval and Skoda Epiq use a new front-wheel drive version of the MEB platform that costs less to produce.

Earlier this month VW revealed that earnings before tax were down 40 percent to €3.1 billion ($3.5 bn) in Q1 even as deliveries increased by 1.4 percent. The company’s finance chief Arno Antlitz partly attributes this to EVs taking a bigger slice of the sales pie.

But President Trump’s tariffs threaten to throw an even bigger spanner in the VW Group’s plans. The constantly-changing US import tariff situation is making it harder for automaker to make financial forecasts for the rest of the year, but VW, which is badly exposed due to Audi and Porsche’s lack of US production sites, has already downgraded primed investors to expect a less successful year than previously anticipated.

ABT is widely known for turning Audi models into something a bit more exciting, but the German tuning company isn’t limiting itself to just one brand. They’ve expanded their reach within the Volkswagen Group, now partnering with Cupra to create a series of “customized vehicles.”

The announcement took place at ABT’s headquarters in Kempten, Germany, further expanding the collaboration of the two brands, which are already working together in the Extreme E and Formula E motorsport series.

More: ABT Takes The Cupra Formentor VZ5 To 444 HP For 911-Rivaling Performance

The first Cupra products to receive the official ABT treatment will be the Leon and the Formentor. While ABT already offers aftermarket packages for both models, Cupra will now add special ABT-customized versions to its lineup, starting in 2026.

The two models, which received an extensive facelift last year, will feature an ABT-designed bodykit and a new set of 21-inch alloy wheels enhancing their sporty stance. ABT’s exterior touches include a sharper front splitter, combined with matching side skirts and rear diffuser extensions, a larger rear spoiler, and ABT emblems.

The official announcement doesn’t mention any performance or chassis upgrades for the Leon and the Formentor, meaning that the ABT special edition models could be limited to aesthetics.

In any case, ABT’s aftermarket catalogue includes engine upgrade options, alongside stiffer suspension springs for improved handling.

More: The Next Cupra Leon Will Be EV Only

According to ABT, the Cupra Leon and Formentor are “just the start of a long-term collaboration over the coming years”. Another member of the lineup that will receive a similar treatment is the fully electric Cupra Raval, which is a twin to the upcoming VW ID.2.

Hans-Jürgen Abt, CEO of the ABT Group said: “Cupra and ABT have enjoyed an intensive and trusting partnership for many years, which is now being taken to a new level with this cooperation. We are happy to present a customized special edition of the Cupra Formentor and Leon that carries the ABT denomination.”

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