The brand had high ambitions in the electric vehicle market. However, given current market conditions, it is being forced to review its strategy and adjust its product ranges. Internal combustion engine models and hybrid versions will therefore continue to feature in the catalog, at least until the next decade.
It should be remembered that the European Union has adopted a law stipulating that from 2035, only new light vehicles (cars and commercial vehicles) with zero carbon dioxide emissions will be allowed to be sold. With this in mind, Porsche decided to accelerate its transition to all-electric vehicles. However, the economic situation is now catching up with the brand.
Firstly, the electric vehicle market is slowing down: costs remain high overall (batteries, purchase price), the charging network is still limited, and subsidies are decreasing. Secondly, competitive pressure is intensifying with the offensive by Chinese manufacturers, who are gaining ground with their low-cost models, to the detriment of European brands. Finally, import tariffs imposed by the US administration are likely to limit growth in North America, which is its main business (one-third of sales), well ahead of Europe.
The brand is therefore forced to maintain a diversified offering with combustion engines. This is not Porsche's first strategic shift: last year, the manufacturer already scaled back its electric ambitions. And more recently, it announced the elimination of nearly 4,000 jobs by 2029 in order to regain efficiency and start afresh on a sounder footing.
For many analysts, however, these announcements have one advantage: they provide more realistic targets and a more realistic roadmap, thereby freeing the German group from the pressure of unsustainable expectations for the coming quarters. Investors familiar with the situation have known for months that the current market does not enable the brand to approach the coming years with an all-electric strategy.
Despite its stockmarket slump (the share price has fallen by two-thirds since May 2023), Porsche remains significantly overvalued relative to its German peers. The manufacturer is still trading at 26x its expected earnings this year, compared with just 9x for Mercedes and even less for BMW. The market therefore continues to treat Porsche as a luxury player. However, the current difficulties call for a more nuanced view of this status: its performance is no longer that of a premium brand, its margins remain low by luxury industry standards, and the reorganization of its portfolio will lead to significant write-downs and a negative impact on profits. FY 2025 is therefore shaping up to be a difficult year, especially as Porsche shares are being demoted from the DAX index to join the MDAX mid-cap index.
In the wake of these announcements, Porsche's share price has fallen by nearly 8%. Volkswagen, which still owns three-quarters of the brand's capital, has also taken a heavy hit. This latest setback is putting further pressure on a European automotive industry that is already in crisis.
