Porsche is scaling back its electric vehicle ambitions and redirecting investments toward petrol and hybrid models amid slumping sales and market challenges. The company has appointed Michael Leiters as its new CEO starting in January to lead this strategic shift. Factors including weak demand in China, potential US tariffs, and software delays are driving the change.
Porsche, a key profit driver for the Volkswagen Group, faces mounting pressures that have prompted a major strategic reversal. Long a reliable source of earnings—contributing nearly 30 percent of Volkswagen's operating profit despite only 3.6 percent of its global deliveries—the luxury brand has seen its shares drop almost two-thirds from their May 2023 peak. This follows profit warnings triggered by a sales slump in China and significant writedowns.
In September, Porsche cut its 2025 operating margin forecast to 0–2 percent, down sharply from 14 percent the prior year. Its midterm profitability target remains 10–15 percent, though analyst Stephen Reitman noted it would "be some time before we even get to that."
The company invested billions in electric models under outgoing CEO Oliver Blume, who has led Porsche for a decade while also serving as Volkswagen CEO since 2022. Yet electric vehicles comprised just 12.7 percent of sales last year, falling short of expectations. Last month, Porsche shelved a new electric SUV project, incurring a €1.8 billion impairment, and is now reviving development of petrol and hybrid successors to its popular Macan and Cayman models.
This pivot follows Volkswagen's Dieselgate scandal, where Porsche was "too bullish" on electrification, according to analyst Pal Skirta. Challenges persist in key markets: China sales fell nearly 40 percent from 2022 to 2024 amid rising local competition, while US imports face impending tariffs under President Donald Trump, as Porsche lacks local production.
Incoming CEO Michael Leiters, a former McLaren CEO and Ferrari technology chief with early Porsche experience, has long questioned EV readiness for luxury cars. "The technology isn’t ready," he told the Financial Times last year, citing lacking emotional appeal and faster depreciation.
Operational impacts include 3,900 job cuts by 2029, or 9 percent of the workforce, and ongoing EV software delays. IT board member Sajjad Khan said quality would improve in 2026 and 2027: "We have to work hard to execute perfectly."
Analysts warn this focus on combustion engines risks Porsche losing ground in the premium EV market long-term, as Skirta noted: "That’s the risk of the strategy that they will focus again too much on combustion engine vehicles, and then we’ll lose the EV race in the long run."