PORSCHE IS SLASHING JOBS, DELAYING CARS, AND LOSING CHINA — WHAT WENT WRONG?

Porsche's ambitious electric vehicle strategy has failed to keep pace with market changes, leading to a serious management crisis.

In February, Porsche cut 1,900 jobs in Germany alone and is now facing the risk of additional layoffs of up to 8,000 jobs.

At the heart of this crisis are deteriorating profitability, sluggish performance in major global markets, and an overly rigid electric vehicle-centered strategy.

Side Effects of a Rigid Electric Vehicle Strategy

Porsche has boldly taken on electrification with the goal of converting 80% of its total vehicle sales to battery electric vehicles (BEVs) by 2030.

However, this strategy has actually acted as a risk as it coincides with the rapidly changing market environment. In particular, the offensive of high-performance, low-cost electric vehicles in the Chinese market is threatening Porsche's competitiveness.

Porsche's electrification strategy has caused problems as it coincides with slowing market demand. In addition, as demand for electric vehicles has grown more slowly than expected, Porsche has been burdened with the double burden of having to develop high-cost BEVs while also developing internal combustion engine vehicles.

Accordingly, Porsche has postponed the launch of new electric models one after another. The successor models to the 718 Boxster and Cayman, as well as the long-awaited launch plan for a three-row electric SUV, have been put on hold.

Intensifying Competition

Another major crisis facing Porsche is its sluggish performance in the Chinese market. Porsche's sales in China in the first quarter of 2025 fell 42% year-on-year.

The vice president of Gartner Research, Pedro Pacheco noted that Porsche's biggest problem is the Chinese market, citing increased competition as the main cause.

With high-performance electric vehicles with over 1,000 horsepower, such as Xiaomi's SU7 Ultra and Yangwang's U9, pouring in at reasonable prices, Porsche, a traditional luxury sports car brand, is losing its competitiveness in both price and performance. In response, Porsche's CEO has hinted at the possibility of withdrawing from the Chinese market.

Restructuring Management

Porsche has reorganized its management to overcome the crisis. It appointed Michael Steiner, former head of Volkswagen Group Development, as vice chairman of the board of directors, and replaced its finance and sales managers at the end of February.

Industry insiders analyzed that Porsche could have avoided the current crisis if it had pursued a flexible electrification strategy like BMW, along with strategies such as plug-in hybrids (PHEVs) and platform sharing.

In addition, poor sales and failed strategies have had a major impact on Porsche's financial outlook. As a result, Porsche has lowered its sales target for this year by about 2.2 billion USD from the previous target.

Meanwhile, Porsche's future success or failure depends on a new strategic adjustment and recovery in the global market. However, the current situation shows that excessive confidence in electrification has actually been poisonous.

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2025-05-21T03:22:55Z