Porsche Decides to Make Major Adjustments to Product Strategy

After a significant drop in profits in the first half of the year, Porsche has made an aggressive shift, making a 180-degree turn in its strategy by temporarily abandoning its goal of producing more all-electric vehicles. On Friday, Porsche announced that several of its electric models will enter the market later than expected. This move is intended to "respond to the apparent slowdown in demand growth for luxury all-electric models." The main points of the strategic adjustment include:

1. The product lineup will specifically increase iconic models equipped with internal combustion engines.

2. Due to market demand, the initially planned all-electric new SUV series (positioned above the Cayenne) will only offer internal combustion engine and plug-in hybrid versions for its initial models.

3. The existing internal combustion engine models will continue to be sold. For these models, corresponding successor models are also planned to be launched.

4. The development of a new electric vehicle platform scheduled for 2030 will be rescheduled.

5. The existing series of pure electric vehicles will be further developed.

6. These measures are intended to support financial results in future fiscal years, but will result in significant additional depreciation and provisions in the short term.

Porsche CEO Oliver Blume stated, "We are completing the final step of our product strategy realignment. The automotive industry is undergoing significant transformation, which is why we have undertaken a comprehensive repositioning of Porsche. With this initiative, we are responding to new market realities and customer demands, providing exciting products for our customers and delivering solid financial results for our investors. These decisions are built on previously initiated measures, enabling us to achieve a very balanced product portfolio. This enhances our flexibility and strengthens our position in the current highly volatile market environment. By offering a compelling combination of internal combustion engines, plug-in hybrids, and fully electric vehicles, we aim to meet the needs of all customers. In the medium term, this approach will support our business model and strengthen our market position."

Porsche had promised to sell almost exclusively electric vehicles by the 2030s and used this commitment to drive its IPO three years ago. However, it is now investing billions of euros more into internal combustion engine vehicles. The stock market has every reason to view this as a crisis. Following the announcement of the strategy shift, the stock prices of Porsche AG, its parent company Volkswagen Group, and Porsche SE, the major shareholder of both Porsche and Volkswagen Group, all fell in response.

The launch of Porsche's electric vehicle models will slow down. The new large electric SUV, originally aimed at the U.S. market, will initially only be offered with internal combustion and plug-in hybrid versions. Since the beginning of the year, Porsche has invested in new internal combustion engines again. With these changes, Porsche shows that its transition to electrification is not going smoothly. Porsche has also recently abandoned its plans to produce batteries in-house.

Due to the reorganization of its product portfolio, Porsche expects to face a significant financial burden, and the profit forecast for 2025 has been significantly lowered. Therefore, Porsche plans to cut costs and jobs in the Stuttgart headquarters area. Currently, another cost-cutting plan is being planned. Blume confirmed last Friday that discussions with employee representatives have already taken place.

Due to changes in the external environment, Porsche is expected to face considerable additional burdens. These include U.S. import tariffs, a decline in the luxury car market in China, and a slowdown in the promotion of electric vehicles. Porsche anticipates that the planned strategic adjustments can only partially offset these additional burdens. Therefore, the company's current goal is to achieve a mid-term double-digit operating profit margin, up to a maximum of 15%, under favorable business conditions.

Due to the reorganization of the new electric vehicle platform, the operating profit for the fiscal year 2025 is expected to be impacted by up to 1.8 billion euros in depreciation and provisions. These burdens have not yet been taken into account in Porsche's current forecast for the fiscal year 2025. In light of this, Porsche has decided to adjust its forecast for the fiscal year 2025.

• Operating income is expected to be between 37 billion and 38 billion euros (previous forecast: 37 billion to 38 billion euros).

• The operating profit margin is slightly positive, up to a maximum of 2% (previous forecast: 5% to 7%).

• The net cash flow profit margin for the automotive business is 3% to 5% (previous forecast: 3% to 5%).

• The EBITDA margin for the automotive business is forecasted to be 10.5% to 12.5% (previously estimated: 14.5% to 16.5%).

• The proportion of pure electric models in the automotive business is 20% to 22% (previous forecast: 20% to 22%).