Luxury car brand's CEO warns weak EV demand ‘hitting us hard' with thousands set to lose their jobs

Scottish Sun

a day ago

They currently expect to sell 250,000 units this year, compared to 311,000 sold last year
HARD TIMES Luxury car brand's CEO warns weak EV demand 'hitting us hard' with thousands set to lose their jobs
LUXURY car maker Porsche is feeling the squeeze - with their CEO warning staff of job cuts in the near future.
The German giant is currently trying to navigate a significant crisis that affects its business model, workforce and financial performance.
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Porsche has been feeling the squeeze in recent months with their CEO warning staff of job cuts in the near future
Credit: Getty
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The may be forced to cut thousands of staff as they prepare for a drop in annual car sales
Credit: Getty
According to Fortune, the firm is planning to cut over 3,900 jobs in Germany by 2029 and is in the process of negotiating further reductions with its labour union - in response to an ever-changing market.
This comes as the car maker - famous for the 911, as well as the Cayenne and Macan - is preparing themselves for a drop in annual car sales with their current forecast reading 250,000 units to be sold, compared to 311,000 sold last year.
One key issue is their demand in China, a key market for Porsche, which has seen sales plummet by 28% in the first half of the year.
This is largely down to a price war in the EV sector, with Porsche - which has two all-electric cars in its range, the Taycan and the Macan Electric - previously anticipating that 80% of its sales would come from EVs by 2030.
'Business conditions have deteriorated massively within a short period of time"
Oliver Blume, Porsche
This target is now considered unrealistic, largely due to slower adoption rates.
EVs, while necessary to meet CO2 regulations, generate lower profit margins compared to combustion engine cars, something the firm's decision-makers are identifying as a major concern.
Chief executive Oliver Blume, said: 'Our business model that sustained us over many decades no longer is functioning today in its current form.
'Business conditions have deteriorated massively within a short period of time.'
On EVs, he added: 'On the one hand we need EVs to fulfil regional CO2 regulations, but on the other the profit margins are far below those of our combustion engine cars.'
Another issue is the current climate in the US, with Porsche facing challenges from a weaker dollar and President Donald Trump's tariffs - which are impacting its profitability.
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Furthermore, Porsche's operating margin is forecast to drop significantly - from 14.1% to between 6.5% and 8.5% - which means in the worst-case scenario, their margins could fall to as low as 7%.
They have also seen a decline in their share value, with prices falling by 29% this year.
Worse still, investors who bought stocks during its 2022 public offering - when Porsche was seen as the world's third most valuable carmaker after Tesla and Toyota - have since seen losses of nearly 50%.
Amid the turmoil, the marque is restructuring its leadership team, appointing four new executives to handle critical areas such as finances, marketing, personnel and procurement.
TOTAL RECALL
Another recent issue for Porsche is related to the Taycan.
In May, the company mysteriously told its retailers to stop selling a specific batch of the electric sports car, following a request from the Driver and Vehicle Standards Agency (DVSA) which manages motor recalls in the UK.
The problem reportedly relates to a previous recall issued in November by the DVSA which said it could pose a fire risk.
According to the DSVA, the reason for that recall was: "A short circuit within the battery modules during the vehicle's service life cannot be ruled out under certain circumstances which could lead to thermal events and later to a fire in the vehicle."
New software that will detect the problem and display a warning to the vehicle owner if it occurs has since been made available.
Porsche GB said in a statement: "Enhanced battery monitoring software is anticipated to become available for first generation Taycan models towards the end of June.
"With its imminent arrival, we've advised our retail partners not to sell a small, specific batch of first generation Taycan models until the software update is live."
One Porsche dealer said: "Unfortunately Porsche and the DVSA haven't put a definitive timeframe on approved Taycans so at the minute we're now having to remove all Taycans from sale for the foreseeable future.
"Porsche head office have sent out a bulletin to say we need to remove them from sale and not deliver any until further notice."
Both Porsche GB and the DVSA have previously issued 12 safety recalls on various Taycan models.
This includes recalls to replace brake hoses, address problem with welding and suspension components and replacing cell blocks in the high voltage battery.
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Porsche have been forced to recall the Taycan model for numerous issues
Credit: AFP