Porsche scales back EV plans
Facing cooling demand and mounting platform delays, Porsche and the wider Volkswagen Group are scaling back their electric vehicle rollout plans. With €5 billion in write-downs, postponed launches, and a return to ICE and hybrid models, the road to electrification is no longer a straight line.
Like many vehicle companies, Porsche had planned to go largely
electric in Europe by 2035. Given the popularity of its classic 911 in ICE
format, going fully electric was unlikely. But its direction of travel was
clear; now, things have changed. Porsche, along with the rest of the Volkswagen
group, will continue with EV launches, but there will be fewer of them, and
some models which were once planned to be 100% BEVs will now have ICE and PHEV powertrains,
and BEV timings have been thrown up into the air.
The postponement of the EV version means Porsche will take a €1.8 billion write down as the vehicle, which was due to be released in 2027, is delayed until the early 2030s
This has all sorts of implications in terms of finances, investment
and the group’s manufacturing footprint plans, not least of these issues is the
delay to the much-heralded Scalable Systems Platform (SSP) and the Porsche
derivative, SSP Sport. Mainstream VW group brands are now unlikely to use SSP
until the late 2020s (the new Golf EV may be the first to adopt SSP), but
Porsche has postponed its version of this software-led platform until “well
into the 2030s”. Suppliers who had been working on components and platforms on vehicles
such as the Porsche K1 have had their work stopped or postponed.
Platform delays come at a cost
The K1 will still be a very significant model for Porsche.
It will be larger than the Cayenne, an SUV with three rows, targeted at the US,
Middle East and Chinese markets. It was due to be a pure BEV, built on Porsche’s
version of SSP. The postponement of the EV version means Porsche will take a €1.8
billion write down as the vehicle, which was due to be released in 2027, is
delayed until the early 2030s. It will now come with ICE and PHEV powertrains, most
probably using an updated and lengthened version of the Porsche PPE platform.
The K1 is not the only Porsche to have a revised powertrain strategy.
While there will be a Cayenne BEV (based on the current Cayenne) in 2026, there
will be a new Cayenne with ICE and PHEV powertrains; the same will apply to the
next Panamera. Four EVs will be retained by Porsche, i.e. the current Taycan,
the recently launched Macan electric, the upcoming Cayenne BEV and electric versions
of the 718 Boxster/Cayman. The ICE 718s will continue and the electric 718 has
been delayed until 2027. Porsche will also introduce a new Macan ICE model,
quite possibly using a different platform to the electric model.
The €1.8 billion hit for Porsche is bad enough but for the VW group there will be a financial hit of more than €5 billion because it too has had to make several changes to its EV plans
This is quite some change, adding complexity to Porsche’s production
arrangements, as well as creating numerous marketing and positioning challenges
for the brand. For the purists and traditionalists, the 911 will retain ICE powertrains
for quite some time. Porsche clearly sees sustained demand outside the EU for its
ICE vehicles and would appear to be expecting the EU to amend its ZEV vehicle plans.
Most vehicle companies now expect longer timescales to be allowed for hybrids,
and potentially ICE vehicles too, beyond the existing 2035 deadlines for ICE powertrains’
banning.
Wider implications for the VW Group
Carmakers and regulators rethink EV timelines as ICE makes a comeback in Europe
Electric vehicle momentum is slowing across Europe as automakers delay EV launches, extend hybrid and ICE models, and push for regulatory flexibility. The EU is under pressure to revise zero-emission targets and support its own supply base.
The €1.8 billion hit for Porsche is bad enough but for the
VW group there will be a financial hit of more than €5 billion because it too
has had to make several changes to its EV plans. The SSP platform has been
delayed until the end of the decade, meaning that vehicles like the Golf EV and
future ID vehicles bigger than the Golf have been delayed. The current Golf ICE
model will see its transfer to the VW factory in Puebla, Mexico put back until
2028, possibly 2029. Also, plans to reduce production at Zwickau to just one
model, have been delayed. This decision has been taken because cutting Zwickau
to just one model on a single shift basis would actually make utilisation
levels there far too low. Vehicles which were due to move Wolfsburg will stay
in Zwickau.
The VW group will no doubt survive but it will be a much leaner and arguably better focused company than it would have been without the current changes
In a recent investor presentation VW presented some bullish figures
but also highlighted figures regarding the EV market which underscore the problems
facing the group. The group had based its EV plans on total EU market EV volumes
of 5m pa and 4m pa in the US by 2026. Now it expects around 3m pa in Europe and
less than 2.5m in the US. In total VW now expects the cumulative impact of
lower EU and US EV sales to be around 8m through to 2026. These figures explain
the revised investment plans and changes to manufacturing plans across the
group, not just at Porsche.
EVs for entry level segments
There will be new EVs, especially in lower or entry segments
in Europe, with the ID Polo, ID Cross and ID Every1 to the fore from 2026
onwards. There will be more vertical integration in EV drivetrain production
and batteries will move to lower cost LFP chemistries and cell-to-pack assembly
arrangements. BEVs will gradually approach cost parity with ICE equivalents,
but the idea of having a largely EV line-up by 2030, even 2035, has been revised
heavily. More than 50,000 jobs will still be cut and across the group capacity
will be “rightsized” with the elimination of around 1m units of annual capacity,
mostly in Europe. More multi-brand production arrangements will be adopted to
save individual brands on investment commitments. For example, making the new Volkswagen
Passat and Skoda Superb together in Bratislava will, it is claimed, save around
€650m over the vehicles’ lifecycles compared to the costs of two separate
lines.
The VW group will no doubt survive but it will be a much
leaner and arguably better focused company than it would have been without the
current changes. However, if the EU does not relax rules regarding the ending
of ICE and hybrid vehicles by 2035 then further cutbacks and/or damaging financial
results will be inevitable. VW – and Porsche – however will not be the only
ones to face these challenges and will have to hope they are better placed than
others to survive.
