German manufacturer Porsche is facing a perfect financial storm as the consequences of its stalling electric vehicle (EV) transition and imminent tariffs threaten to smash profits.
Porsche is the latest in a long list of brands to have walked back their ambitious electrification targets. After previously promising EVs would account for up to 80 per cent of its sales by 2030, the hallowed Stuttgart marque was forced to soften its stance in mid-2024.
A slowing electric vehicle market and increased competition have led to Porsche executives considering a “range of product scenarios”, including the addition of petrol and plug-in hybrid vehicles alongside its current and future EVs.
Porsche’s top-seller, the Cayenne, will continue to be available with V8 power alongside the next generation model due next year, and reports from Europe claim the Macan will once again be offered with petrol power globally, despite the second-generation model launching as an EV.
The same could happen with the upcoming 983-series 718 Cayman/Boxster electric sports cars that were due to be revealed this year.
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The Taycan electric sedan and wagon could also come under the microscope, with sales stalling globally.
The Cayenne remained Porsche’s top-seller globally in 2024, when the Zuffenhausen brand refreshed four of its six models, and overall sales slipped from 320,221 to 310,718.
But Macan sales fell from 87,355 to 82,795, of which the EV accounted for 18,278 examples, because the combustion-powered model was discontinued in Europe, the UK and Australia, while 718 sales soared by 15 per cent in what could be its final full year of sales with petrol power.
Automotive News now reports that Porsche will wear a US$831 million (A$1.33 billion) hit as a result of its EV backflip and the costs associated with expanding its product portfolio with more combustion engine and plug-in hybrid models.
For context, Porsche projects a profit margin of 10-12 per cent this year – around half its long-term goal of 20 per cent. Slow sales and the looming threat of tariffs are also contributing to the worsening situation at Porsche.
Deliveries fell by 28 per cent in China last year, the world’s largest car market, while recently elected US President Donald Trump has promised to target manufacturers with new tariffs on vehicles shipped into the US.
In a move to protect the local automotive industry, Trump is proposing taxes on new vehicles imported into the US from regions including China, the EU, Canada, and Mexico.
The two main Porsche plants are in Germany – in the Zuffenhausen district of hometown Stuttgart and the city of Leipzig – leaving the manufacturer open to bearing the brunt of the new tariffs.
North America is Porsche’s largest market and, unlike its German competitors, it does not make vehicle in the US.
In the face of numerous challenges, Porsche shares fell 27 per cent in 2024, although the share price has remained steady so far this year.
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