Porsche is set to deepen job cuts following a difficult year marked by a costly shift in its electric vehicle (EV) strategy and falling sales in China, a crucial luxury car market. The German automaker blamed a €3.9 billion impairment charge tied to adjusting its EV plans for wiping out a large portion of its profits, alongside a continued sales slump in China where local competitors are gaining ground. Porsche’s new CEO, Michael Leiters, who took over on January 1, has announced further workforce reductions as part of a broader corporate restructure aimed at making the company leaner and more agile.
Porsche employed around 40,000 people and had already planned to cut roughly 3,900 jobs by 2030. Leiters signaled these reductions would accelerate. ”We need to strengthen company optimization, which will lead to further job cuts,” he said. The company aims to flatten its management structure and reduce bureaucracy, with more details expected to be unveiled this autumn. The mounting pressure arises not only from a tough China market-accounting for about 15% of Porsche’s deliveries-where local manufacturers have surged, but also from the lingering impact of trade tariffs imposed by the Trump administration that have dented sales in North America.
Overall deliveries dropped 10% to 279,000 vehicles, pushing revenue down 12% to €32.2 billion. Operating profit plunged to €413 million, a sharp fall from €5.6 billion the previous year. The EV strategy shift, involving a substantial impairment charge, reflects a re-evaluation of Porsche’s ambitions in electric mobility rather than immediate cash losses. As the automaker shelves some planned EV projects, it is reintroducing more internal combustion engine (ICE) models, viewed as more profitable in the near term.
For example:
- Electric versions of the Boxster and Cayman are now expected only by 2027.
- The high-profile electric SUV K1 model’s release has been postponed to around 2029, with hybrid and petrol variants included.
The job cuts and strategy pullback at Porsche also shadow Volkswagen Group’s broader struggles, its parent company, which announced plans to slash 50,000 jobs by the end of the decade amid sales declines in China and North America. Porsche, historically a major profit engine for Volkswagen with an operating margin of 14.5% in 2024, now faces the challenge of regaining its profit mojo amid fierce competition and a volatile global economic climate.
Moreover, geopolitical tensions-such as recent US and Israeli actions against Iran-introduce uncertainty that Porsche has acknowledged but not yet factored into its forecasts. Layoffs, delayed EV launches, and a strategic pivot toward more profitable internal combustion engines show Porsche’s pivot is as much about financial survival as it is about technological innovation. The company’s cautious approach may help it weather the storm but raises questions about its long-term electrification goals in a market where rivals push aggressively into EV territory.