Porsche struggles with EV-centric business model

PORSCHE CEO Oliver Blume has admitted the company’s BEV-centric business model “no longer works” as the German manufacturer endures heavy competition in China, a slower than expected uptake of EVs and battery supply issues caused by a fire and subsequent bankruptcy of battery maker Northvolt… all impacting its bottom line.

The iconic German manufacturer, part of the financially mired Volkswagen Group, says it has been forced to delay the introduction of the Boxster and Cayman BEV sportscars because of the above reasons, but publication InsideEVs cuts to the chase saying Porsche is laying most of the “blame” directly on electrification for its deepening crisis.

The publication says Porsche “isn’t having the best time right now despite recently being 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 delaying the arrival of a new wave of electric products, including, among others electric 718 Boxster and Cayman replacements (now scheduled for 2027) and a long-awaited three-row SUV,” the report added.

The manufacturer was a relatively early and enthusiastic entrant into the BEVosphere plunging into EVs with ambition firstly with fully electric Taycan and then Macan EV but buyer preferences have moved (towards hybrids) and economic headwinds have worsened while at the same time the manufacturer underestimated the commitment its rusted on customer base has for ICE-powered sportscars.

It is generally understood that Porsche sportscar buyers (owners), many of whom often engage in motorsport at all levels, would not likely buy an electric 911 for example or an electric Boxster or Cayman and would consider them anathema to the pure Porsche credo.

Porsche has learned the hard way that its focused and inflexible electrification strategy spelled trouble, leading to Blume's “business model no longer works” statement this week.

In a report, Automotive News said the company’s overly aggressive and inflexible electrification strategy is to blame citing Fabio Hölscher, analyst at Warburg Research, who said “Porsche’s goal of going 80 per cent 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 US exports,” he said.

“Porsche cut 1900 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 $US2.2 billion ($A3.4b) and an additional 8000 jobs are at stake.”

Mr Hölscher told Automotive News that it did not 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,” he added.

Competition from China is eating into Porsche’s profitability, the company’s first-quarter sales there falling 42 per cent compared to the same period last year.

Industry pundits suggest Porsche could abandon the market (China) entirely particularly in light of China’s burgeoning high performance EV sector with cars like the Xiaomi SU7 Ultra and Yangwang U9 offering upwards of 1000hp (claimed) and active suspension tech… at affordable prices.

The question being asked within the automotive industry is what more will Porsche do to address its travails.

Apart from delaying the production of some models, possibly withdrawing from China and culling staff, it’s next focus will be on an executive team shakeup that sees VW Group bosses moving to replace incumbent Porsche bosses.

We’ll wait and see how that pans out…