Porsche CEO Defends Renewed Focus on Gasoline Engines Amid EV Slowdown

Porsche's Chief Executive Officer Michael Leiters is defending a strategic pivot to re-emphasize gasoline-powered vehicles, pushing back against criticism that he is skeptical of electrification. The move is part of a broader plan to boost profitability following a challenging period marked by slowing electric vehicle (EV) sales and a significant downturn in the crucial Chinese market.

A Shift in Powertrain Strategy

Since taking the helm in January, Leiters has refocused the Volkswagen-owned automaker on developing new internal combustion engine (ICE) models to run alongside its EV portfolio. In his first interview with international media, he told the Financial Times the move was necessary to create a "balanced offer" for customers.

To counter a sharp sales decline in China, Porsche plans to introduce a gasoline-powered version of its Macan SUV in 2028. This follows data from the first half of the year showing sales of the electric Macan dropped 40% year-over-year, while the combustion version's sales rose 2%. Leiters confirmed, however, that the company's iconic 911 model will not receive a fully electric version, though development of an electric 718 sports car continues.

Margin Pressure and Market Realities

The strategic adjustment comes amid severe financial headwinds. Porsche's operating profit margin fell dramatically to 1.1% last year on sales of roughly 280,000 cars, a steep decline from the 18% margin achieved in 2023 with 320,000 vehicle deliveries. The CEO noted that cost parity between EVs and ICE models remains unlikely in the short term, meaning higher EV sales would continue to pressure the company's margins.

Ad

The slowdown has had a ripple effect, with parent company Volkswagen recently issuing a profit warning that cited a €6 billion writedown on its Porsche stake and weakness in China, where Porsche's first-half deliveries fell by 32%.

Restructuring for a New Era

Leiters stated the company needed to "dramatically" reduce its sales targets and scale, which he described as "overblown" during two decades of growth fueled by China. The company has already reached an agreement with unions to eliminate 9,000 jobs, or about 20% of its workforce, by 2035.

As part of the restructuring, Porsche has closed its electric bike, battery, and software units and sold its IT consulting business. Despite the challenges, Leiters said no additional job cuts are planned and maintained a medium-term operating profit margin target of 10% to 15%. He described the Chinese market as a "huge challenge" with an "incredible inflation of product launches" that he called "self-destroying."