Porsche drastically revised its electric vehicle strategy, scrapping plans to launch a high-end electric sport utility vehicle (SUV) and moving to strengthen internal combustion engine and hybrid models. With weak EV demand and expense pressures overlapping, this year's operating profit fell by €1.8 billion (about 2.66 trillion won), and the company sharply cut its outlook along with parent company Volkswagen. As a flagship German brand steps back from its EV transition strategy, shock is spreading across the industry.
According to Bloomberg on the 22nd (local time), since its 2022 listing Porsche has made EV expansion its core strategy. But consumer preference for high-end EVs was lower than expected, and the global economic slowdown and tariff barriers were a major drag on results. In China, local player BYD has dominated the EV market, weakening Porsche's position, and in the U.S. market, tariff policy under the Trump administration dealt an additional blow.
On this, auto analyst Matthias Schmidt said, "Consumers do not place great value on high-end EVs," noting, "Porsche has ultimately reverted to internal combustion models with higher profitability." In fact, Porsche scrapped plans for a new electric SUV and said it would add back internal combustion and hybrid vehicles to its lineup.
The weak results led to a stock plunge. Porsche shares fell enough to be dropped from DAX, Germany's flagship stock index, and Volkswagen also warned of a non-cash loss of about €3 billion (about 4.4 trillion won) related to Porsche. Volkswagen lowered its operating margin outlook for this year to 2%–3% from up to 5%.
Volkswagen, which had led the EV transition among German manufacturers, has partially scrapped its ambitious battery production project and is pursuing large-scale restructuring. It outperformed Tesla and BYD in the European market, but the slump among premium brands held it back. Audi Group, which includes Bentley, Lamborghini, and Ducati, already lowered its annual outlook as shipments fell in the first half of the year.
Porsche is moving to cut expenses through executive reshuffles, layoffs, and scrapping its in-house battery production plan. But repeated outlook cuts are intensifying pressure on Chief Executive Officer Oliver Blume. Bloomberg said, "The Porsche-Piëch owner family is searching for a successor, and even the possibility of replacing the next management is being discussed."
Experts do not view this incident as merely a single company's strategy tweak. The interpretation is gaining traction that weak EV demand is a signal exposing structural limits across the German auto industry. Even though automakers in European countries have poured in massive investments, EV sales have been weaker than expected, causing difficulties.
A person in the auto industry said, "The Porsche case shows that even premium brands have failed to secure EV profitability," adding, "The German auto industry's EV strategy is back on the test stand."