Porsche and Volkswagen Slash Earnings Forecasts Amid EV Challenges
Porsche AG and Volkswagen AG have significantly reduced their earnings forecasts due to delays in electric vehicle rollouts and weakening EV demand. Porsche lowered its 2025 operating return target to under 2.00%, faces a €1.80 billion profit hit, abandoned plans for an all-electric SUV, and scrapped battery production plans. The company is now focusing more on combustion-engine and plug-in hybrid models, initiating layoffs, and implementing leadership changes. Volkswagen reduced its operating return forecast to 2.00-3.00% and warned of a €3.00 billion non-cash impairment. The news negatively impacted both companies' stock prices, with Porsche's ADR falling 6.40% and Volkswagen's US-listed shares dropping 4.50%.
*this image is generated using AI for illustrative purposes only.
Luxury automaker Porsche AG and its parent company Volkswagen AG have significantly reduced their earnings forecasts, citing delays in electric vehicle (EV) rollouts and weakening demand in the EV market. This move marks a notable shift in strategy for both companies, particularly affecting their ambitious electric vehicle plans.
Porsche's Revised Targets and Strategy
Porsche AG has made several key adjustments to its business outlook:
- Lowered its 2025 operating return on sales target to not exceed 2.00%, down from the previous 5.00-7.00% range
- Faces a €1.80 billion hit to operating profit due to postponed EV launches
- Abandoned plans for an all-electric SUV above the Cayenne model
- Scrapped battery production plans
- Reduced medium-term profitability goal from 17.00% to 15.00%
This marks the fourth guidance cut for Porsche this year, highlighting the challenges faced by the luxury carmaker in the rapidly evolving automotive landscape.
Strategic Shifts and Cost-Cutting Measures
In response to these challenges, Porsche is implementing several strategic changes:
- Increased focus on combustion-engine and plug-in hybrid models
- Initiating layoffs to streamline operations
- Implementing leadership changes to navigate the new market realities
Volkswagen's Outlook
Volkswagen AG, Porsche's parent company, has also revised its financial projections:
- Reduced operating return forecast to 2.00-3.00% from up to 5.00%
- Warned of approximately €3.00 billion in non-cash impairment related to Porsche's restructuring
Market Reaction and Leadership Pressure
The announcements have had immediate impacts on both companies' stock performance:
| Company | Stock Performance |
|---|---|
| Porsche | -6.40% ADR |
| Volkswagen | -4.50% US-listed |
Porsche CEO Oliver Blume is facing increased pressure from investors, with reports suggesting that the Porsche-Piëch family, a major stakeholder, may be seeking new leadership.
Industry Implications
These developments at Porsche and Volkswagen reflect broader challenges in the automotive industry, particularly in the electric vehicle segment. The decisions to scale back EV plans and refocus on traditional powertrains suggest a recalibration of expectations regarding the pace of EV adoption and market demand.
As the automotive landscape continues to evolve, industry observers will be closely watching how these strategic shifts impact the companies' performance and the broader trajectory of electric vehicle adoption in the luxury and mass-market segments.
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