Porsche shares plunge after EV rollout delay; VW to overhaul Porsche lineup

Porsche's shares fell more than 7% on Monday after the carmaker warned that delays to its electric-vehicle rollout will dent its 2025 earnings. The parent company, Volkswagen, also dropped more than 7% the same day after saying it would spend billions to overhaul Porsche's lineup of vehicles.

Porsche said it would slow its push for electric vehicles as demand weakens. The company also cut its projected profit margin from up to 7% to 2% or less, citing US import tariffs, a slowdown in the Chinese luxury market, and the slower ramp-up of electric mobility. In a strategic shift, an upcoming line of sport utility vehicles, originally planned as fully electric, will now launch exclusively with combustion engines and plug-in hybrids. Current models such as the Panamera and Cayenne will remain available with non-electric options well into the 2030s, underscoring the balance the group is seeking between electrification and gasoline-powered performance.

Industry executives have urged policymakers to relax the 2035 deadline to ban new petrol and diesel cars in Europe, arguing that the target is not feasible given current technology adoption and market dynamics. The shift away from a fully electrified SUV lineup marks a notable departure from earlier plans and comes as the company sheds some of its earlier e-mobility emphasis.

Volkswagen said it would spend billions to overhaul Porsche's lineup to align with the new strategy, confirming that the restructuring will extend beyond product planning into capital allocation and cost controls. The move comes as the group faces broader pressure to cut costs and secure margins in a market where luxury brands compete for demand against both traditional rivals and a rising tide of Chinese EVmakers.

The broader European auto sector is watching closely. BMW and Mercedes-Benz have also been cutting costs to stay competitive, reflecting a sector-wide recalibration as ferried by investors and policymakers the world over. European manufacturers face fierce competition from Chinese brands such as BYD and XPeng, which are waging price wars in the domestic EV market and expanding aggressively abroad. The pressure is compounded by a slowing economy in key markets and a shift in consumer preferences for electrified premium vehicles at a time when luxury buyers are cautious about price.

In China, the market dynamics add another layer of complexity. Average car prices have fallen by an estimated 19% over the past two years to around 165,000 yuan, or about £17,150 ($23,190), reflecting a broader price war and cooling demand in the world’s largest EV market. That environment has intensified competition for European luxury makers, who must contend with tariff structures, local partnerships, and a rapidly expanding array of domestic options.

Analysts say the margin downgrade highlights the tension between investing in electrification and protecting earnings in the near term. The Porsche and Volkswagen updates illustrate the challenges for European luxury brands as they navigate the dual pressures of regulatory timelines and a shift in consumer appetite toward electrified vehicles that still must be profitable at scale. The market response on Monday underscored investor concerns about the pace of EV adoption, the durability of premium pricing, and the willingness of high-end buyers to absorb elevated costs in a slowing economy.

Overall, the episode reflects a broader question facing European automakers: can they accelerate electrification while preserving margin and prestige in a market that is growing more price-sensitive and competitive? The coming quarters will show whether the reassessment of product strategy and the allocation of capital toward traditional combustion and plug-in hybrid models can stabilize earnings while still delivering on long-term decarbonization goals.