Porsche Plans In Parlous Peril

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In September 2022, Volkswagen Group came up with a plan to raise a bunch of money by making Porsche a standalone financial entity and selling shares to the public via an IPO. It was considered a masterstroke at the time, with executives at Volkswagen Group and Porsche chest bumping each other and marveling at how smart (and rich) they all were. They celebrated by ringing the opening bell at the Frankfurt stock exchange as the initial shares quickly sold out at €82.50 each. CEO Oliver Blume enthused, “Today, a big dream comes true for Porsche. Our increased degree of autonomy puts us in a very good position to implement our ambitious goals in the coming years. Making our customers’ dreams come true is what drives us. With the completion of the IPO, we are beginning a new chapter in the unique history of our company. This is a historic moment for Porsche.”

Porsche exulted in the moment. Its IPO was the largest ever carried out in Europe and established the capitalization of Porsche at around 78 billion euros. “We aim to inspire customers and fans around the world with successful products and compelling financial performance. We want to share this passion with investors, and we are excited about welcoming those who have become a part of our unique Porsche family in this way,” said Lutz Meschke, deputy chairman of the executive board and member of the executive board for finance and IT at Porsche. “Together, we are working with determination to implement our long-term strategy. Here, we can leverage the best of both worlds: the advantages of our luxury positioning and the synergies with the Volkswagen Group.”

Porsche announced that with the IPO complete, it was shifting up a gear and setting itself ambitious goals economically, ecologically, and socially. Oliver Blume proclaimed, “We aim to redefine the concept of modern luxury by combining luxury with sustainability and social commitment. Porsche wants to grow with its luxury products and services and assume social responsibility.” Porsche also sees itself in a leading position when it comes to electromobility and has set itself ambitious targets. In 2030, Porsche’s ambition is for over 80 percent of new vehicles delivered to be battery electric. As part of that strategy, the company is working towards a net carbon neutral value chain in 2030 and a net carbon neutral future for its electric models.

Porsche Plunges

We can forgive the enthusiasm Porsche exhibited at the time. In the fall of 2022, everyone in the CleanTechnica community was feeling pretty chuffed about the future of electric cars. But the bright promise of that time has dimmed considerably in some parts of  the world, especially in the US, where fossil fuel interests have captured much of the machinery of government and are pushing back fiercely against the idea that people should drive on electrons instead of molecules. Pride rides before a fall, my old Irish grandmother liked to say. Today, Reuters is reporting that all those lofty plans Porsche had are turning to ashes as it watches its once lofty share price get pummeled by disappointing financial results.

Costs are mounting because company leaders have badly misjudged how eager its customers are to switch to battery electric cars, Reuters says. But that’s not all. The iconic Porsche 911 used to have 20 percent profit margins back when the IPO first took place. Today, they have been slashed to just 10 percent. The stock dropped on February 7, 2025, to a new low since the IPO, closing down as much as 8%. The “sharp deterioration” in outlook is a “major concern,” Bernstein analyst Stephen Reitman said in a note to investors. He urged Porsche executives to convene a call with investors “to further explain and reassure an inevitably febrile market.”

At around €50 billion, Porsche’s market value is now less than half what it was in May of 2023. The steep decline is putting more pressure on Oliver Blume, who is the head of both Porsche and Volkswagen Group. Porsche indicated this past weekend that the supervisory board likely will oust both its chief financial officer and its sales chief. Porsche was among the major automakers to pull back from transitioning to electric vehicles last year, citing underwhelming demand. Challenges with making the jump to EVs have cost the company dearly in China, where deliveries dropped 28 percent last year. More than 50% of new vehicle sales in China are now plug-in vehicle sales.

Porsche said late Thursday that it will take an €800 million ($831 million) charge this year related to expanding its product portfolio with more combustion engine and plug-in hybrid models. While the company’s all-electric Taycan got off to a fast start following its 2020 debut, sales stumbled last year, and a new electric version of the Macan sport utility vehicle has underwhelmed. Return on sales for 2024 is expected to end up at the lower end of its forecast range, or around 14 percent. That projection was already lowered back in July, with executives blaming supply chain snags. “Porsche is a luxury brand OEM and is not generating profitability in line with that,” Citigroup Inc. analyst Harald Hendrikse said in a note. “The €800 million hit doesn’t fully account for Porsche’s shortfall, suggesting some execution gaps.”

As a result of Porsche’s disappointing outlook, the holding company majority owned by the billionaire Porsche–Piëch family said late Thursday it expects to book an even bigger decrease on the carrying value of its investment in the carmaker. Porsche Automobil Holding SE said the impairment could be in the €2.5 billion to €3.5 billion range. Last December, the holding company was bracing for a €1 billion to €2 billion setback. In addition to expenses tied to rolling out more gasoline and hybrid models, Porsche blamed the lower forecast for this year on efforts to bolster its car customization offerings and increasing investments in battery subsidiaries. Porsche announced this past weekend that the supervisory board has authorized discussions with CFO Lutz Meschke and sales head Detlev von Platen to terminate their appointments. German media outlets have speculated that Blume may also have to relinquish his position at the top of Porsche to focus on leading Volkswagen.

Musical Chairs

Playing musical chairs in the board room may not have much of an effect on the bottom line at Porsche (or Volkswagen Group, for that matter). The appetite for electric cars varies greatly from country to country, depending on local incentives. The US has always been a major market for Porsche automobiles, but none are manufactured in America, which means every car Porsche builds is at risk if the current administration elects to add new tariffs on imported automobiles. When Germany ended its electric car incentives at the end of 2023, sales of EVs took a nosedive in that country and have not recovered much since then, although they are doing well in other European countries.

While the EV revolution continues its slow and steady pace, Porsche needs people to get excited about driving electric cars from the Stuttgart brand. Porsche is an emotional brand, much like Ferrari or Lamborghini. Appeals to saving the planet are not going to move cars out of Porsche showrooms and into customers’ driveways. The company was not alone in assuming that people would just stop demanding conventional cars and start demanding EVs. It has a lot of work to do to if it wants to convince them to do so.