Porsche adjusts EV strategy, profits drop 99%

Porsche said its operating profit for the first nine months of the year fell 99% to €40 million, with a margin of just 0.2% compared to 14.1% in the same period last year. The company recorded an operating loss of €966 million in the third quarter, the company said, citing exceptional costs incurred in reviewing its electric vehicle strategy, combined with weak demand in China and pressure from US tariffs.

Adjusted EV strategy: role for internal combustion engines and hybrids

Porsche initially set a target of 80% pure electric vehicles by 2030. However, the company has adjusted its plans, deciding to maintain a significant proportion of internal combustion engine and hybrid models. As a direct result, Porsche plans to liquidate its battery subsidiary Cellforce (founded in 2021).

The strategic restructuring entailed an estimated €3.1 billion in additional costs this year. These were reportedly reflected heavily in the third quarter results, turning operating profit negative. At the same time, US tariff-related costs were estimated to have increased by €700 million.

Immediate financial impact across key metrics

Indicators	September 2024	Same period last year
Operating profit	40 million euros	4 billion Euros
Operating profit margin	0.2%	14.1%
Q3 operating loss	-966 million Euros	—
Strategic restructuring costs	3.1 billion Euros (expected this year)	—
Cost of US tariffs	700 million Euros (expected this year)	—
Worldwide delivery	212,509 vehicles	226,026 vehicles

Market Pressure: China Weakens, US Tariffs 15%

Porsche faces a “triple crisis”: a revised EV strategy, a slowing Chinese market, and US tariffs. Without a US factory, Porsche faces a 15% tariff on imported cars, which reduces its competitiveness. The company says the costs associated with tariffs are already eating into its bottom line.

In China, weak auto demand is a clear drag on luxury brands, including Porsche, with deliveries falling 6% in the first nine months to 212,509 units, compared with 226,026 units in the same period last year.

Pricing and Resources: US Price Increase, Staffing Review

In response to cost pressures, Porsche will raise prices in the US market. In addition, the company is discussing with unions the possibility of further job cuts to optimize operating costs. These are short-term steps to protect profit margins in an adverse environment.

Consequences for product portfolio

The significant retention of internal combustion engine and hybrid models shows that Porsche is adjusting the pace of the transition to pure electric vehicles. At the same time, the plan to liquidate Cellforce shows that the company will reduce its direct investment in battery production. These steps are explained as a balance of costs and market risks in the current period.

Outlook: Bottoming out this year?

“This year will bottom out and the business situation will improve significantly from next year,” said Chief Financial Officer Jochen Bleckner. However, the recovery outlook will depend largely on the pace of restructuring, demand developments in China and the US trade policy framework.

Quick Conclusion

Positives: Strategy reviewed to align with market realities; cost and pricing controls activated early.
Key risks: Sharp decline in profit margins; 15% US tariffs due to lack of domestic production; weak Chinese demand; large restructuring costs (€3.1 billion) and €700 million pressure from tariffs.
Watch: Speed of restructuring implementation, impact of Cellforce liquidation, market reaction to new US pricing.

Source: https://baonghean.vn/porsche-dieu-chinh-chien-luoc-ev-loi-nhuan-giam-99-10309370.html