TLDRs;
- Porsche stock dropped 4.2% after halting plans for a new electric SUV and focusing on hybrid and gas models.
- The pivot is expected to cause a €1.8 billion profit hit, leading Porsche and Volkswagen to slash earnings forecasts.
- Porsche will exit Germany’s DAX index as shares continue to weaken, further straining investor sentiment.
- Volkswagen, meanwhile, is pushing ahead with affordable EVs, unveiling the ID.Cross compact SUV for a 2026 debut.
Porsche Automobil Holding SE (POAHF) shares fell more than 4% on Monday after the luxury automaker confirmed it is abandoning plans for a fully electric SUV and will instead shift focus back to combustion-engine and hybrid vehicles.
The move marks a major reversal from its once-aggressive electric vehicle (EV) strategy and underscores the growing challenges facing premium carmakers in the transition to electrification.
A costly pivot from EVs
The Volkswagen-owned brand disclosed that pulling back from its battery-electric roadmap will trigger a €1.8 billion (US$2.1 billion) hit to operating profit. The financial impact forced both Porsche and parent company Volkswagen to cut their earnings outlook for the remainder of the year.
This development represents the fourth profit guidance downgrade in 2025 for Porsche, intensifying concerns among investors about the company’s ability to navigate shifting consumer demand.
The automaker is also implementing sweeping cost-cutting measures, including job reductions, and has scrapped plans to produce its own batteries. Executives cited weak global EV demand as the primary reason for abandoning the project.
Exit from the DAX index
Adding to the pressure, Porsche is expected to lose its spot on Germany’s benchmark DAX index, a symbolic blow that highlights the decline in its market value over recent months.
Shares closed at $38.52, down 4.21%, reflecting investor unease over the company’s long-term strategy and profitability.
Analysts warn that continued downgrades and restructuring efforts could further weigh on investor confidence in the near term.
Contrasting paths with Volkswagen
While Porsche takes a step back from full electrification, Volkswagen is doubling down on its EV portfolio. Earlier this month, Volkswagen unveiled its ID.Cross, a compact electric SUV aimed squarely at the mass-market segment.
With an expected price between €28,000 and €30,000, the vehicle aligns with Volkswagen’s long-standing strategy to capture consumers in the €25,000–35,000 range.
Volkswagen is preparing to launch around 60 new models across 2024 and 2025, including affordable EVs like the ID.Polo hatchback, CUPRA Raval, and Skoda’s upcoming Epiq SUV. Industry analysts believe this aggressive rollout is a direct attempt to cement market share before potential trade tariffs and intensifying global competition erode pricing power.
Industry pressure mounts
Porsche’s retrenchment highlights the widening gap between luxury automakers and mass-market players when it comes to EV adoption. While affordability has become the dominant theme in Europe’s EV market, Porsche continues to wrestle with aligning its high-margin luxury strategy with consumer realities.
Trade tensions, particularly between the U.S. and Europe, add further complexity. Analysts warn that potential tariffs could dramatically raise costs for European carmakers exporting to the U.S., compounding the challenge of maintaining competitiveness in an already crowded EV landscape.
For now, Porsche is betting that hybrids and combustion-engine models can stabilize its financials while it reassesses future EV projects. Whether that bet pays off in a market increasingly oriented toward electrification remains to be seen.
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