Porsche, like other automakers, is taking a step sideways (not to say backwards) with its electrification plan, mainly because of weaker-than-expected demand in Europe, but also because of competition from domestic Chinese automakers on the Chinese market, where the automaker had been doing a brisk business for the past few years.
In China, Porsche vehicle deliveries fell by 28 percent in 2024. We're talking about a significant drop.
As a result, the brand will reinvest in the development of gasoline-powered and plug-in hybrid models. It is warning all concerned, however, that expanding its product range to include more diverse powertrains will hurt its return this year.
Porsche estimates it will lose 800 million euros in 2025 as a result of the range overhaul. This will reduce profit margins to between 10 and 12 percent. The initial projection was 14 to 17 percent. The company’s target is for 20 percent.
Let’s agree not to spill too many tears for the German luxury automaker. But it’s clear its financial results are not up to the standard expected of a luxury automaker, which is worrying some investors. Porsche shares fell 27 percent last year. Its market capitalization has halved since peaking at 109.5 billion euros in May 2023.
All of which goes to show just how onerous the costs associated with changes in strategy and focus can be for a manufacturer. But that’s the nature of the business. The customer is the ultimate arbiter, and companies that don't offer them what they want may pay an even bigger price in the long run.
Gasoline engines
So where is Porsche investing as it re-focuses on gasoline engines? New ICE versions are planned for both the Cayenne and the Macan. The latter went electric last year, and the original plan was not to renew the gasoline version. Ditto for the Cayenne. That has changed.
The gasoline engines of both models will be updated, as will those of the Panamera sedan. It too was to have become all-electric only.
Not that electric is being forgotten. We know that Porsche is working on a new electric model, larger than the Cayenne. However, it could also get a gas-engine version.