Why Did Porsche’s Early Electric Car Strategy Hit a Roadblock?
If you rewind just a few years, Porsche seemed to have the electric car game all figured out. The company’s leadership was vocal about its big ambitions, famously calling the battery cell “the combustion chamber of the future.” Porsche even snapped up Cellforce, a German battery startup, betting that in-house battery tech would give its EVs a true edge. The idea? Deliver electric cars with the same punch and prestige as their legendary gas-powered models.
But reality didn’t quite match the hype. In the first half of 2025, Porsche wrote off a staggering €1.3 billion on its battery ventures, including Cellforce and other battery-related activities. That’s not pocket change—it was enough to drag Porsche’s operating margin down to just 5.5% and knock its profits down by a third. For a company long known as a cash machine, this was a wake-up call.
So, what went wrong? The EV market simply didn’t grow as quickly as Porsche—and much of the industry—expected. CEO Oliver Blume admitted as much, saying the overall market volume for EVs was “much lower than we expected years ago.” The company’s plans for large-scale battery production are now on ice, and layoffs have followed.
How Did China’s Market Slowdown Impact Porsche’s Ambitions?
China was supposed to be Porsche’s golden ticket for EV sales. The company had set its sights on selling 100,000 cars a year there, after hitting a record 95,700 in 2021. But the luxury market in China—both for EVs and traditional cars—hit a wall. Consumer demand softened, and by last year, Porsche’s sales had plummeted to 56,887. This year, they’re bracing for just 40,000.
That’s not just a blip. Blume was candid: “We need to rescale our company, because 20% from China is missing and we expect won’t come back.” Porsche is now shifting its China strategy, focusing on special editions and factory orders rather than flooding the market with pre-built stock that ends up being heavily discounted.
What About the US? Did Tariffs and Policy Changes Hurt Porsche?
When China stumbled, Porsche looked to the US for growth—and for a while, things looked promising. The US even became Porsche’s largest market last year. But then came a curveball: tariffs on imported cars jumped from 2.5% to 27.5% before being partially rolled back to 15% after negotiations. Even so, the company took a €400 million hit in the first half of the year.
And it wasn’t just tariffs. Shifts in US policy, including the removal of generous EV leasing credits, made electric Porsches less attractive to American buyers. The result? Porsche’s EV growth strategy in the US took a hit, forcing the company to rethink its product mix.
In response, Porsche announced it would invest an additional €800 million in 2025 to extend the life of its internal combustion engine (ICE) models like the Cayenne and Panamera, and even develop a new ICE Macan for 2028. The previous goal of having 80% of sales be EVs by 2030? That’s now off the table.
How Has All This Affected Porsche’s Stock and Standing?
For a while, Porsche’s stock was riding high. After going public in 2022, it was the third most valuable carmaker in the world, trailing only Tesla and Toyota. But as the challenges piled up, Porsche’s share price tumbled—down 63% from its peak. It now sits in 11th place, overtaken by fast-growing Chinese players like Xiaomi and BYD, as well as established names like Volkswagen and General Motors.
The financial markets have taken notice. Some analysts, like those at Deutsche Bank, see the current slump as a buying opportunity, pointing out that Porsche still has a strong product lineup. Others are more cautious, with most major banks rating the stock as a hold rather than a buy.
Is Porsche’s Business Model Still Relevant in Today’s Auto Industry?
Porsche’s leadership hasn’t sugarcoated the situation. In a memo to employees, Blume wrote, “Our business model, which has served us well for many decades, no longer works in its current form.” That’s a rare admission from a company so closely associated with success.
But there’s a silver lining. Porsche believes it has hit the bottom and is now poised for recovery. Jochen Breckner, the company’s head of finance and IT, told investors they expect to see the “trough” this year, with a return to double-digit margins in the future. While he didn’t give a specific timeline—understandable, given recent downward revisions—there’s a sense that Porsche is learning from its missteps.
What’s Next for Porsche? Is There a Path Back to Growth?
Despite the setbacks, Porsche isn’t standing still. The company is adapting, investing in both electric and combustion engine models to give customers more choice. In Europe, EVs and plug-in hybrids already make up a significant chunk of sales—36% and 57% respectively in the first half of the year. That’s not far off from the 50% EV target set for 2025 back in 2021.
Porsche is also leaning into its strengths: exclusivity, customization, and a loyal fan base. In the US, for example, the company is confident that its customers are less price-sensitive and will absorb some of the tariff-related price increases.
The takeaway? Porsche’s journey through the EV transition has been anything but smooth. Early bets on electrification, shifting global markets, and policy changes have forced the company to rethink its strategy. But with a flexible approach, a strong brand, and a willingness to adapt, Porsche is positioning itself for a comeback. The road ahead won’t be easy, but if history is any guide, don’t count them out just yet.