Porsche Halts EV Expansion Amid Record Stock Plunge

Earlier today, shares of Porsche AG in Germany fell by the largest margin on record after the ailing sports car maker revealed it would scale back its electric vehicle (EV) rollout. Porsche abandoned plans for a future battery-powered luxury SUV and refocused on petrol engines and hybrid variants. This decision will produce a $2.1 billion hit to operating profit and oblige both Porsche and its parent, Volkswagen AG, to amend their full-year forecasts.

“Markets are being driven lower by Autos, STOXX Europe 600 Automobiles & Parts Index [SXAP] is down 2.8%, following the two profit warnings from Porsche and Volkswagen after the close on Friday. Porsche AG is down 7.8% and Volkswagen is down 8%,” UBS analyst Marisa Vethanayagam wrote in a client note earlier.

Friday’s profit warning was the fourth time this year Porsche reduced guidance, with shares off 28% year-to-date. The slide has pushed the carmaker so far down that it is now poised to be removed from the DAX, Germany’s benchmark index. Porsche’s growing problems — worsened by tepid EV sales in key regions and mounting competition from Chinese manufacturers — are increasingly burdening its parent, Volkswagen. On Friday, Volkswagen said it would record a $3.5 billion non-cash impairment linked to Porsche’s operating-profit hit and cut its projection for operating return on sales this year to 2%–3%, down from 5%.

Besides Porsche and Volkswagen, other European peers, such as Stellantis NV and Renault SA, are also grappling with weak EV demand after investing billions in the technology. Across the sector on the continent, the MSCI Europe Autos Index is down 6% year-to-date, trading near a delicate support level around €160.

Here’s commentary from leading Wall Street research desks on Porsche trimming its EV program, prompting a guidance cut and weighing on peers across Europe (courtesy of Bloomberg):

RBC (Sector perform, PT EU43)
Revisions highlight notable near-term strain, with EV platform delays and a shift toward hybrids and internal-combustion drivetrains indicating issues in the electrification approach, analyst Tom Narayan writes
Updated 2025 guidance shows marked deterioration in profitability Medium-term targets at the lower bound of historical profitability further raise doubts about Porsche’s capacity to compete effectively in the premium EV and luxury segment amid intensifying rivalry
Jefferies (hold, PT EU40)
Re-basing of guidance may be the last, but makes the recovery a protracted process with product-cycle and brand obstacles, according to analyst Philippe Houchois
Beyond the Porsche effect, VW’s guidance postpones cash conversion yet again
Cuts Porsche price target to €40 from €47
Citi (buy, PT EU58)
Exceptional charges pull FY25 Ebit margin guidance down from 5%–7% to between 0% and 2%, a superficial and unacceptable margin level for the Porsche brand, analyst Harald Hendrikse writes
Management reiterated this would be the final such re-statement, but investors have heard this before and will remain skeptical until Porsche stops delivering negative shocks
Shares likely to stay subdued as they have been

Matthias Schmidt, an independent auto analyst based near Hamburg, told Bloomberg that auto buyers “are putting little value on luxury electric cars,” adding, “Porsche has now realized this and is jumping back into high-margin combustion-engine models.”