Author: Xu Shanshan, Editor: Li Motian
Porsche, once a pioneer in the electrification transition of the European auto industry, has recently been reversing its historical course.
On October 7, Porsche released its Sportwagenschmiede ’35 mid-term strategy [1], which mainly covers two areas:
First, layoffs. Management positions will be cut by 40%, and functional departments by 30%, resulting in the clearance of nearly 10,000 employees in total. It is worth noting that as recently as June this year, Porsche's official stance was a 15% workforce reduction by 2029. The mid-term strategy is much more aggressive, indicating that the situation has changed once again.
Second, a clear return to internal combustion engine (ICE) vehicles. Multiple powertrain routes will run in parallel, and updates to the ICE product line will resume. This is actually no secret. Earlier this year, outgoing CEO Oliver Blume spoke his mind: the all-electric Macan was a mistake. The new CEO, Luo Mingkai, also emphasized: the 911 will never have an all-electric version.
The German phrase Sportwagenschmiede ’35 also has some meaning behind it: Sportwagen refers to sports cars, Schmiede literally translates to forge or blacksmith shop, which is extended to refer to Porsche's technical heart, the Weissach Development Center, and 35 represents the year 2035.
In 2022, also at the Weissach Development Center, Porsche高调 announced that by 2030, all-electric vehicles would account for more than 80% of new car deliveries [2]. In just a few years, the former strategy has been completely overturned.
What changed Porsche?
Not a Sudden Impulse
The statement of "returning to ICE vehicles" sounds shocking and seems sudden, but it is actually the conclusion of a series of strategic moves by Porsche.
From 2020 to the present, Porsche's global deliveries first rose and then fell, reaching a peak of 320,000 units in 2023, before turning downward. Last year, it had already dropped by 40,000 units, which is consistent with the overall downward trend of ICE vehicles.
Porsche's dismal performance in China is well known, but the decline in sales cannot be entirely blamed on the Chinese market. China is just updating its version faster:
In 2021, Porsche's sales in China reached a peak of 95,000 units, with the Macan and Cayenne making significant contributions. However, in 2022, the domestic NEV market experienced a massive explosion, and Porsche began to shrink rapidly in the Chinese market.
North America and Europe did not reach their sales peaks until 2024, with sales of 86,000 units and 110,000 units respectively. Meanwhile, in2024, Porsche's sales in China had already fallen to 56,000 units, nearly halved compared to the peak.
A series of electrification measures by Porsche have also failed to reverse the downward trend in sales.
In the first nine months of this year, Porsche's global sales continued to decline by 16%, dropping from 212,000 units in the same period last year to 178,000 units. The Chinese market saw the fastest decline, falling from 32,000 units to 21,000 units, while Europe dropped from 72,000 units to 65,000 units.
Therefore, starting from 2025, Porsche has been orderly scaling down its electrification-related businesses.
In 2025, Porsche abandoned its plan to produce battery cells in-house, retaining only R&D; in May 2026, it further cut the R&D phase. The software subsidiary Cetitec and eBike Performance were also shut down one after another, and the new flagship SUV positioned above the Cayenne shifted from an all-electric priority to launching the ICE version first.
At the same time, Porsche's new-generation all-electric platform has been delayed until after 2030, and the technical route has been redesigned. Anything related to electricity is either shut down or postponed.
After completing a series of preparatory work, Porsche announced its mid-term strategy of returning to ICE vehicles. In other words, the seemingly sudden "return to ICE vehicles" is actually the conclusion of a series of historical reversals by Porsche.
What is truly worth exploring is: why is Porsche doing this?
Don't Fight Yourself
In 2025, Porsche's revenue fell to EUR 36.27 billion, and its operating profit plummeted from EUR 5.64 billion to EUR 410 million, a decrease of over 92%, with the sales return rate dropping to a record low of 1.1%. Isolating the automotive business, this figure is as low as only 0.3%.
In the first half of this year, Porsche's revenue declined by 5.1% year-on-year, while its operating profit actually increased by 33.9%, growing from EUR 1.01 billion to EUR 1.35 billion.
The reason is not that more cars were sold, but the power of accounting. In the first half of last year, due to strategic adjustments, Porsche accrued a one-time expense of EUR 800 million. This year, the one-time expense is only EUR 100 million.
So-called one-time expenses, for example, Porsche's battery cell project requires building factories and purchasing equipment. Although these expenses are spent in reality, financially, they must be depreciated year by year according to their useful life.
If Porsche decides to shut down the battery cell project, the subsequent depreciation must be accrued at once, which will significantly affect the company's operating profit. For example, if the depreciation for the next five years is EUR 10 billion, and selling the equipment and factories only recovers EUR 5 billion, EUR 5 billion must be recorded in the current profit and loss.
Throughout2025, Oliver Blume, who has confirmed his departure, has successively accrued expenses totaling EUR 1.071 billion, including development costs and equipment impairment. Adding various other miscellaneous expenses, the accumulated amount is even larger. The purpose is to reduce future depreciation pressure, so that the new CEO does not have to repay the debts left by his predecessor and can travel light as much as possible.
If these non-recurring gains and losses are excluded, Porsche's overall operating condition is actually not bad.
Especially after deducting the accounting effect of "spending money last year and saving money this year", Porsche's sales declined by 16% in the first half of this year, while revenue only dropped by 5.1%. This indicates that although car sales have declined, the average price per vehicle has actually increased.
Looking at the models, in the first nine months of this year, the Macan, Taycan, and Panamera are all declining, and the 718 series has even plummeted by 79%. Only the Cayenne remains relatively stable, with a mere 2% decrease.
Of course, the Cayenne is just updating its version faster; it already experienced a round of decline last year.
Among the series of product lines, only the Porsche 911, which has the highest positioning and the most expensive price, remains very firm, and has instead driven up Porsche's average price per vehicle.
Calculated at the current exchange rate, Porsche's average price in the first half of the year has exceeded CNY 1 million. Correspondingly, in the first half of this year, Porsche sold 30,534 units of the 911, a year-on-year increase of 19%, making it the only model that is still growing.
In this year's macro environment, one really wants to know where these car owners are making their fortunes.
In other words, by the first half of this year, what was placed in front of Porsche's management was such a market report:
Cayenne owners defected to the NIO ES8 last year, Macan owners were poached by the Li Auto L9 this year, Taycan and 718 owners are constantly flirting with the Xiaomi SU7 Ultra, and only the Porsche 911 owners remain absolutely loyal, resolutely refusing to take the crooked and evil path of electrification.
On our own side, a lot of money has been砸 (smashed) into electrification, but not a single electric car can be sold. As management responsible to users, what Porsche should do is self-evident.
According to Jlanlu, in the first half of the year, the domestic NEV penetration rate for vehicles over CNY 600,000 was only 15%, and overseas it will only be lower.
Reflected in Porsche's operations, demand for the all-electric Taycan has cooled, and the sales proportion of the all-electric Macan is less than half. In the overall structure, the proportion of all-electric vehicles was only 22.2% last year, and further slipped to 19.4% in the first half of this year [3], which is completely disproportionate to the investment.
And in the comfort zone of the 911, Porsche remains a hard currency. Slowing down electrification and returning to ICE vehicles is a very pragmatic decision.
Selling More Expensive Cars
Porsche's mid-term strategy corresponds to a series of very specific measures:
First, expanding high-profit businesses. Establishing the "Home of Sports Cars" segment, integrating high performance (including Manthey), exclusive customization (Exclusive Manufaktur and Sonderwunsch), and the Heritage series, to systematically expand the personalized customization business.
Among them, the core Sonderwunsch, literally translated as "special wish", is Porsche's highest-level customization service.
Second, expanding the product line of high-profit models. Strengthening its position in the D-segment market through 911 derivative models, and developing a mid-engine supercar positioned above the 911.
During the same period, the D-segment SUV positioned above the Cayenne that Porsche is still exploring is actually the K1 project that wanted to debut as all-electric four years ago.
According to a report by Car and Driver [4], compared to the 911 Carrera, the 911 GT3 is priced 53% higher, and the GT3 S/C is priced 95% higher. However, Porsche stated that future GT models may be priced more than 200% higher than the base models.
Based on these two main grips, Porsche's ultimate goal is to increase the average selling price of top models by about 20%, from about EUR 270,000 this year to EUR 330,000.
Therefore, "returning to ICE vehicles" is just a facade. Porsche's actual direction is based on the Porsche 911 product line, strengthening the sports car brand influence, and further increasing the average price per vehicle.
The new CEO Luo Mingkai sees it very clearly: "People do not buy a Porsche because they really need it, but because they desire to own it. People are willing to pay the corresponding price for their dreams and desires."
Blathering on and on, isn't it just selling the badge?
Electric vehicles inherently carry the attribute of egalitarianism. Color TVs, refrigerators, and big sofas have become standard equipment, and horsepower is even a cheap commodity. But Porsche's horizontally opposed engine, PDK transmission, and chassis engineering polished on the track are difficult to completely replace with the three electrics and faster 0-100 km/h acceleration — if it can't be a functional component, it can be a work of art.
Frankly speaking, in this era, an auto company that can still sell the badge also possesses a kind of scarce capability.
Placed in the entire ICE vehicle camp, Porsche's strategic shift is not unique. It is doing the same thing as other automakers: first hold the basic盘 (plate/base) of ICE vehicles to ensure the company survives.
Electrification may be the trend, but ultimately, one must survive today before considering the problems of tomorrow.
One wonders if Porsche, which has repeatedly failed in electrification and had its purchase tax record broken at the Nürburgring, has ever recalled its era of being lonely in seeking defeat (unbeatable).
References
[1] Porsche releases new strategy for2035, Porsche
[2] Porsche aims for growth in the luxury segment, Porsche
[3] Porsche delivery data
[4] Porsche’s Future Includes More One-Offs and Possibly a New Supercar, Car And Driver