German luxury carmaker Porsche is facing a sharp financial squeeze as delays in its electric vehicle (EV) rollout, slowing demand in China, and higher tariffs in the United States hit profits.
Shares of Porsche (P911_p.DE) tumbled more than 7% on Monday after the automaker cut its profit margin outlook for 2025 to just 2%, down from earlier guidance of 5% to 7%. The company also warned that operating profits could shrink by up to 1.8 billion euros this year.
Parent company Volkswagen (VOWG_p.DE) said it would take a 5.1 billion euro ($6 billion) hit from reworking its EV strategy, delaying several models in favour of hybrids and combustion-engine cars. Volkswagen shares also dropped 7.5%, marking their steepest fall since 2023.
The setback underscores a broader challenge for European automakers as Chinaโs economic slowdown and aggressive EV price wars erode demand, particularly for premium brands like Porsche. โIt will take time and money to reset the product program to provide flexibility and drive-train choices customers want,โ analysts at Bernstein wrote.
At its stock market debut in 2022, Porsche had promised long-term returns of more than 20%. But since then, its shares have lost nearly half their value. In 2023, the company delivered an 18% operating margin, which slipped to 14% in 2024. Now, Porsche is targeting a medium-term recovery of 10% to 15%.
A local stock trader described the reversal as unavoidable. โThe correction of the former mistake to become too dependent on EVs will take time,โ the trader said.
Volkswagen, which owns 75.4% of Porsche, has also cut its own profit margin forecast to 2โ3%, down from 4โ5%. The move, analysts warn, could raise further questions about the leadership of Oliver Blume, who serves as CEO of both Volkswagen and Porsche.
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