Porsche is dramatically scaling back its push into electric cars, shelving key models and extending the life of gasoline and hybrid vehicles. The sudden reversal comes after a profit warning and has unsettled investors. One of Germany’s most celebrated luxury brands is in turmoil and intends to fight back by looking to its roots.
The Volkswagen Group’s most valued car brand, which only a year ago was promising to make 80% of its sales fully electric by 2030, has now pushed back that goal indefinitely. Instead, it will continue to sell combustion-engine versions of its Cayenne SUV and Panamera saloon “deep into the 2030s”, and is preparing an all-new gasoline-powered SUV above the Cayenne (K1).
U-turn
Initially, the K1 was slated for a battery-electric driveline, but that plan has been scrapped due to its limited market appeal in the States. The same applies to the next 718 Boxster and Cayman sports cars. These will no longer be purely electric but are being developed to retain high-performance petrol variants alongside the zero-emission versions.
It’s a U-turn, no doubt. And it follows after disappointing sales of the Taycan, Porsche’s flagship electric saloon, and a much weaker-than-expected performance in global markets. The shining jewel on Volkswagen’s crown has faded for now. The brand saw profits dwindle by more than 90% this year. Symbolically, it was kicked out of the DAX ranking (Germany’s 40 most valuable companies). The carmaker admits that the road back will be long and cumbersome.
Too small, too low
Demand is sluggish, particularly in China, where a faltering luxury market and rising competition from domestic carmakers have eaten into Porsche’s share. And there seems hardly any hope for a return on the world’s largest car market, as the sports car maker is in the process of terminating more than thirty contracts with local dealers (30%).
In the US, things aren’t much better. Tariffs on imports have further eroded margins, with Porsche unable to dodge duties by producing locally, unlike some rivals. Its portfolio is too small, and the annual output numbers are too low.
Oliver Blume, CEO of Porsche and parent company Volkswagen, framed the shift as a pragmatic response to customer demand. “With a convincing mix of combustion engines, plug-in hybrids and battery-electric vehicles, we want to meet the entire range of customer requirements,” he told shareholders. “This increases our flexibility and strengthens our position in a highly volatile environment.”
New CEO
Stock markets responded without any empathy. Porsche shares slumped 7% after the announcement, extending a two-year slide that has wiped out nearly half of its value.
Volkswagen, which owns 75% of Porsche, saw its stock fall by a similar margin. Porsche expects a €3.1 billion hit from the overhaul, accompanied by the dire market situation. Its operating margin will slide to just 2%, compared with more than 15% in its best years.
For Blume, the pivot is also a personal test. Long criticised for juggling dual leadership of both Porsche and Volkswagen, he is expected to hand over day-to-day control of the sports carmaker after pressure from the Porsche and Piëch families, who hold the most significant voting stake in both companies. A new chief executive is due to be appointed in the coming months.
In the short term, Porsche will refresh its existing electric line-up, with a Cayenne EV due later this year. The long-awaited new EV platform has been delayed until the 2030s, to be re-engineered in coordination with other Volkswagen brands.
