Volkswagen incurs a USD 6 billion financial setback, stemming from Porsche's reorganization efforts
Porsche AG, the German luxury car manufacturer, has announced significant adjustments to its product portfolio, as it adjusts its strategy to reflect slower-than-expected growth in the electric vehicle (EV) market.
The product overhaul at Porsche, which is 75.4% owned by Volkswagen, will see the production period of currently available vehicle models with combustion and hybrid drivetrain extended. This decision comes as the company prepares for a shift towards electrification, but with a focus on a gradual roll-out of EV models.
One of the key changes is the new sports utility vehicle above the Cayenne model at Porsche. Initially, this vehicle will not be offered as an all-electric vehicle, but will be available with combustion-engine and hybrid models. The initial new Cayenne generation will first be offered with combustion engines and hybrids before transitioning fully to electric.
The electric successor of the Cayenne, however, will be based on the jointly developed PPE (Premium Platform Electric) platform with Audi and is planned to launch as a fully electric SUV in 2026.
The change in strategy at Porsche is expected to reduce its operating profit by up to 1.8 billion euros this year. In line with this, Porsche itself has cut its outlook for profit after tax, and Volkswagen will take a 5.1 billion euro hit from the product overhaul at Porsche.
Porsche now expects its automotive EBITDA margin to be between 10.5% and 12.5%, down from the previous range of 14.5% to 16.5%. Both Volkswagen and Porsche have also cut their profit margin targets for the current year.
The market launch of certain all-electric vehicle models at Porsche AG will take place at a later date due to the delayed ramp-up of electromobility. This decision is part of the strategy to prioritise quality over speed in the transition to EVs.
The announcement of changes in Porsche's product strategy was made on Friday. With these adjustments, Porsche aims to strike a balance between preserving its traditional performance and luxury image while embracing the future of electrification.
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