Porsche Will Reportedly Invest $830 Million in Combustion Engines

Porsche is making a major shift in its plans after a disappointing experience with electric vehicles (EVs). The company had been pushing hard to move into the EV market but is now scaling back that effort.

They announced that they will put €800 million into developing more traditional combustion engines and hybrid models instead of focusing on fully electric cars. This change is largely in response to weak demand for its electric models, especially in China, where Porsche struggled to make a mark against local EV brands.

The move is going to cost Porsche, with its 2025 profit margins expected to dip to 10-12%, far below the company’s usual goal of 20%. As a result, Porsche’s stock fell by 6%. In addition, Porsche SE, the company’s parent group controlled by the Porsche-Piëch family, warned it could lose up to €3.5 billion on its investment in Porsche AG, a much larger loss than previously estimated.

Porsche’s troubles go beyond just disappointing sales. The company’s performance in China has been particularly bad, with a 28% drop in deliveries there, mainly due to poor sales of the Taycan EV.

This is a significant setback for Porsche, as it had hoped the Chinese market would drive its electric car sales. Instead, local brands like BYD have outperformed Porsche in China.

Along with these challenges, Porsche is facing internal issues. There are reports of a management shake-up, with the company considering removing CFO Lutz Meschke and sales head Detlev von Platen.

This is partly due to disagreements over the company’s electric car strategy and sales performance. Tensions between CEO Oliver Blume and Meschke are also reportedly adding to the unrest.

On top of this, Porsche SE is dealing with rising debt. The group owes €5.2 billion, much of which came from its 2022 purchase of a 25% stake in Porsche AG. While not all of this debt needs to be repaid right away, more than €2 billion must be settled by 2028, raising questions about the group’s financial flexibility.

Porsche’s shift back to combustion engines may be seen as a temporary solution to align with current market conditions, especially with the slowing demand for EVs. But, analysts like those at Deutsche Bank believe it’s a smart move to adjust production based on weaker global demand, particularly in China.

Despite this step back, Porsche still plans to focus on electrification in the long term, expanding its hybrid offerings while moving forward with a more cautious approach to full EVs.

It’s clear that Porsche is not abandoning the electric future entirely, but for now, it’s prioritizing what’s working in the market. This change in direction aligns with a broader trend in the auto industry, as other companies like Mercedes-Benz and Ford are also pulling back from aggressive EV pushes due to slower consumer interest and infrastructure challenges.

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