- Porsche is struggling amid changing EV demand.
- A lack of flexibility in product planning is seen as hurting the brand.
- Strong competition in China, where high-horsepower EVs are surprisingly cheap, is also seen as a factor.
Porsche isn't having the best time right now. Recently considered among the world's most profitable automakers on a percentage basis, the German sports and luxury marque faces dropping sales, steep tariffs, and stiff EV competition in China. It's even reportedly delaying the arrival of a new wave of electric products, including electric 718 Boxster and Cayman replacements and a long-awaited three-row SUV.
So, what went wrong? According to a new report from Automotive News, the company's overly aggressive and inflexible electrification strategy is to blame. The report cites Fabio Hölscher, analyst at Warburg Research, saying Porsche's goal of going 80 percent electric worldwide by 2030 is at the heart of its issues.
“Because the battery electric adoption is behind schedule, Porsche now has to develop additional combustion models on top of dealing with the costly delays in BEV ramp-up, as well as managing the weak situation in China and uncertainty around U.S. exports," Hölscher told Automotive News.
Porsche cut 1,900 research and manufacturing jobs across its German facilities in February, citing a "delayed ramp-up of electromobility." Now, its 2025 sales revenue goals are cut by around $2.2 billion (€2 billion) and an additional 8,000 jobs are at stake, according to German publication Automobilwoche.
Hölscher told Automotive News that it didn't have to be this way. If Porsche had adopted “a more flexible production approach," with more plug-in hybrids and shared platforms, such as BMW did, it would've been able to adjust more quickly to shifting trends in demand.
As if flagging EV demand isn't enough, there's also stiff competition from China. Porsche's first-quarter sales there fell 42 percent compared to the same period last year, and it could abandon the market entirely, according to the brand's CEO. At the same time, China's performance EV market has surged ahead, with cars like the Xiaomi SU7 Ultra and Yangwang U9 offering four-figure horsepower and active suspension tech at relatively affordable prices. Porsche's "biggest problem is China," Gartner Vice President of Research Pedro Pacheco told Automotive News Europe.
Can Porsche right the ship, and quickly? It's shaking up its executive team, with Michael Steiner, former VW Group development boss moving to deputy chairman of Porsche's executive board. At the end of February, Porsche replaced its finance and sales bosses, too. Known for its high-end sports cars and extensive motorsports pedigree, Porsche has brand equity in spades. If it can get through the next few years and bring its next-generation EVs to market, it should be in good shape.
But its electrification plans, combined with a competitive Chinese market and tough economic climate, may give its leadership headaches for the foreseeable future.
