Porsche defends balanced petrol-EV strategy as China slump pressures margins

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Porsche's petrol-EV strategy

Highlights

Porsche will launch a new combustion-engine Macan in 2028 and refuses to make a 911 EV, reflecting a recalibrated product strategy under CEO Oliver Blume.
First-half Macan electric sales fell 40 percent while combustion Macan sales rose 2 percent, fueling margin pressure amid a 32 percent drop in China deliveries.
Porsche will reduce 9,000 jobs by 2035, exit EV-related subsidiaries, and has raised about 1 billion euros through asset sales to adapt to demand and margin challenges.

Product strategy reset and capital markets focus

As reported by the Financial Times, Leiters rejects the idea that he is an electric-vehicle sceptic and says Porsche is adjusting its product plan to reflect customer demand and margin pressure. Since taking over in January, he has pushed the Volkswagen-owned brand to develop new petrol models, including a combustion-engine version of the Macan due in 2028, while the powertrain choice for the upcoming K1 luxury SUV remains undecided.

Leiters says Porsche continues with the electric 718 sports car already in development, but maintains that there will not be an electric 911. He also warns the company must avoid making double investments in petrol and EV models within the same segment, calling that one of the more difficult questions for Porsche’s future.

The strategic debate comes ahead of Porsche’s capital markets day next week, where Leiters is expected to outline a more conservative outlook for China and a sharply lower break-even point. He says the company has to rethink its business model and organisational scale after a long period of expansion supported by Chinese demand.

China pressure and restructuring impact

Consumer demand is shaping that recalibration. In the first half, Macan sales data show electric-version sales falling 40 per cent year on year while the combustion version rises 2 per cent, even after Porsche stops selling the petrol Macan in Europe because of EU cyber security rules.

Leiters says Porsche is not at risk of falling behind in EVs because it can draw on Volkswagen technology, but he argues cost parity between EVs and petrol cars is unlikely in the short term. That means a higher EV mix continues to dilute margins, adding to the financial strain from the company’s retreat from parts of its earlier electric push.

Porsche is also cutting costs and simplifying operations. The company has agreed with unions to reduce 9,000 jobs by 2035, shut electric-bike, battery and software subsidiaries, sold its IT consulting arm to Tata Consultancy Services, and raised about 1 billion euros by selling stakes in Bugatti Rimac and Rimac Group.

The pressure from China remains severe, with first-half deliveries there down 32 per cent. Leiters says no additional job cuts are planned and medium-term operating margin targets stay at 10 per cent to 15 per cent, but he warns the Chinese market remains a huge challenge as domestic brands such as BYD and Xiaomi accelerate product launches in the premium segment.

Our earlier coverage of BMW’s cost-cutting push detailed how the automaker accelerated restructuring by eliminating more than 100 management roles as weaker China demand and U.S. tariff pressure weighed on profits. We also noted BMW’s guidance for several years of margins below its long-term target, even as it presses ahead with major manufacturing investment in Germany and a wide new-model rollout spanning EVs and SUVs.

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