Porsche is walking back its aggressive push into Electric Cars
, instead investing €800 million (about $830 million) into combustion engines and plug-in hybrids in response to shifting consumer demand. The move comes as the German sportscar maker struggles with slowing EV sales, particularly in China, leading to a significant profit downgrade for 2024.
Porsche’s EV Struggles Lead To A Major Strategy Shift
The automaker’s shares tumbled 6% last week after Porsche warned that its profit margins would shrink to between 10% and 12%, well below its long-term 20% target. The drop reflects the financial strain of keeping up with the evolving automotive market, where many buyers are reconsidering their EV choices.
Concerning Stats For Porsche
- Porsche bracing for an 8-10% drop in expected profit margin
- Global Porsche deliveries last year fell by 3%
- Taycan EV failed to gain traction in China with domestic brands being favored
Last year, Porsche’s global deliveries fell by 3%, but the real damage came from China, where sales plunged 28%. The brand’s flagship
Taycan EV
failed to gain traction in a market that is increasingly favoring domestic electric brands over premium European imports. Analysts have pointed to China’s price wars and growing skepticism about high-end EVs as major hurdles for Porsche.
Porsche is now rebalancing its portfolio by expanding its combustion engine and hybrid offerings, a move that some industry experts see as necessary but costly.
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Leadership Shake-Up And Family Concerns Add To The Pressure
Beyond the financial challenges, Porsche is also facing internal turmoil, with reports suggesting a major leadership shake-up is in the works. The automaker is reportedly in talks to end the contracts of CFO Lutz Meschke and head of sales Detlev von Platen. Sources indicate the move is partly due to disagreements over Porsche’s EV strategy, but also tied to an ongoing power struggle between Meschke and CEO Oliver Blume, who also heads parent company Volkswagen.
Meanwhile, Porsche SE—the holding company controlled by the Porsche-Piëch family—has also been hit hard by the automaker’s struggles. The family recently revised a planned writedown of its Porsche stake, increasing the estimate to between €2.5 billion and €3.5 billion, roughly double its previous projection.
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With debt obligations piling up, Porsche faces increasing financial pressure over the next few years. For now, Porsche is betting on a hybrid-heavy future to stabilize sales and protect profits. However, with leadership changes looming and financial pressures mounting, the automaker is facing one of its most uncertain periods since its public listing in 2022.
