Porsche adjusts EV targets and invests in Varta (update)

Porsche is responding to the slower electric ramp-up. Following the recent changes in the production of the electric Taycan, the production of the combustion-powered Cayenne is also being extended. Meanwhile, it has acquired 32% of the shares of battery specialist Varta.

Porsche has cautiously adjusted its target that more than 80% of cars delivered in 2030 will be fully electric. “Our product strategy is designed so that we could deliver more than 80% of our new vehicles as EVs in 2030,” it now says. “The most crucial factor is global demand. In other words, we could deliver when the customer wants.”

“The switch to electric cars will take longer than we assumed five years ago,” Porsche writes. The transformation process will take longer, making the drive strategy more flexible.

One concrete effect of this decision is that the current generation of the Cayenne will be built for a more extended period as a combustion engine and hybrid. Porsche is sticking with the purely electric successor generation but is not simultaneously discontinuing the combustion engine range for the large SUVs.

Three ICE models

This means that Porsche will still offer three combustion model series in the future: the 911, the Panamera, and the Cayenne. The Macan’s combustion engines will only be built for non-EU markets, and the smaller Porsche SUV will only be available in all-electric form in Europe.

With the upcoming generation change, the two smaller two-seaters in the 718 model series will only be available in all-electric form, unlike the Cayenne.

In 2023, Porsche sold around 95,000 Cayennes as combustion engines and (plug-in) hybrids, which totaled just under 30% of its sales. According to the German publication Automobilwoche, the electric target of 80% in 2030 is “hardly tenable with the Cayenne decision.”

Porsche has several model changes coming up this year. Due to these many model changes, Porsche expects a ‘V-effect’ in sales: as the old model is being phased out and the new one is not yet fully available, there will be a steep decline in sales, followed by equally rapid growth. Therefore, Porsche CEO Oliver Blume has already spoken of a ‘year of transition’.

Varta investment

The ailing battery manufacturer Varta is planning a restructuring through pre-insolvency reorganization proceedings. Three options were on the table, including an investment by car manufacturer Porsche.

Since the beginning of July, Porsche has been known to be considering acquiring a majority stake in Varta subsidiary V4Drive. The sports car manufacturer is one of the few customers of Varta’s V4Drive cells. So far, these have not been used in purely electric Porsches but in the electrified 911.

According to the German newspaper Frankfurter Allgemeine Zeitung (FAZ), Porsche could take a stake in the production of the Varta subsidiary V4Drive and the parent company Varta AG.

“The fact that the sports car manufacturer now apparently also wants to get involved with the parent company shows the dramatic situation of Varta AG,” says the FAZ. For Porsche, “only the high-performance cell is important.”

“The prerequisite for this is a sound financial basis for Varta AG. Under certain circumstances, we could, therefore, imagine participating in a financial restructuring of Varta AG. Discussions on this are still ongoing,” Porsche told the news agency Reuters in a statement in July.

This weekend, Porsche management decided to become a shareholder in Varta. The plan is to take over 32% of the shares, as much as the current majority shareholder, Tojner. Other shareholders will retain 36% of the shares. Varta will also disappear from the stock market.

Due to debt cancellation, the battery manufacturer’s ongoing debt was reduced from €485 million to €200 million. Outstanding loans will be prolonged, and Varta will also be allowed to borrow again.

Heavy flooding also influences the financial outlook

After heavy flooding disrupted aluminum supplies, Porsche lowered its sales and profitability outlook yesterday. The company said a shortage of aluminum alloy is affecting the production of all its models and could lead to shutdowns for one or more vehicle series.

Porsche did not name the aluminum alloy supplier. Several European countries, including Switzerland, have recently experienced significant flooding. Aluminum parts suppliers Novelis and Constellium, both of which have Porsche as a client, admit to having been hurt by the flooding of the Rhone River in Switzerland.

The disruption is expected to last several weeks. Porsche said it cannot fully compensate for delays in production and vehicle deliveries during the financial year. Bernstein analysts said the disruption could lead to a production loss of up to 17,400 vehicles in the second half, equivalent to over 11% of Porsche’s first-half deliveries.

Porsche said on July 23rd that it expects sales between €39 billion and €40 billion due to the disruption. Its previously expected revenues were between €40 billion and €42 billion. The company sees a return on sales between 14 and 15% for the year, down from its previous expectation of 15% to 17%.