German sports car manufacturer Porsche says it faces major cost reductions and could lay off up to 8,000 employees.
Porsche has been suffering the consequences of a failed e-car strategy and a heavy drop in sales in China, which it said led to the need for drastic changes.
Despite coming out of a strong period overall, it reported that the last quarter has been disappointing and the super-car maker’s Chinese performance has been sliding backward for the past two years.
Plans for electrification have failed and the company is said to be in crisis, while employees have reportedly been panicking about their work prospects. Contracts of up to 1,000 temporary workers could no longer be renewed.
The company has reportedly been looking for a new strategy and was likely to invest in research and development.
German trade magazine Automobilwoche reported on December 16 that in the first nine months of 2024, sales in China dropped by almost 30 per cent.
Despite the Communist country being a giant market, Porsche is being locally out-competed, especially regarding electric vehicles (EVs.)
Porsche CFO Lutz Meschke said at the recent presentation of the figures for the third quarter: “In China, a combustion engine in the premium segment, which costs €70,000 to €80,000, sees itself in competition with Chinese vehicles in the electric segment, which are pushed into the market for €30,000 and also have a lot to offer.”
Porsche has already started to reduce the size of the entire sales organisation in China.
In Germany, a 20 per cent reduction will be necessary, it said, which would mean over 8,000 of the current 42,000 jobs could be at risk.
Automobilwoche noted: “In Europe and the USA, too, the Stuttgart-based company’s ambitious electric strategy is currently blowing up in its face.”
The magazine pointed out that Porsche aimed to have 80 per cent of its cars electric by 2030, leading the pack on climate intentions, but this was, it said, overambitious.
“Vehicles like the Porsche Taycan have become slow sellers. In the case of the E-Macan, software problems of the VW Group have delayed the market launch by up to two years. The car is now coming to customers in the middle of the electric doldrums.
“And the electrification of the 718-model series with the Boxster and Cayman is also anything but smooth. As Automobilwoche learned, this project is also well behind schedule. The complexity of the battery is to blame”, the magazine wrote.
A report by Swedish economic researcher Jonas Grafström has criticised the EU’s industrial policy, citing Northvolt’s collapse as evidence of flawed taxpayer-funded investments. https://t.co/t1NwtBwJEd
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