Porsche AG has reported a near 93% collapse in its 2025 operating profit, a direct result of the luxury automaker abandoning its long-term all-electric vehicle strategy. The company’s group operating profit fell from €5.6 billion to €413 million, burdened by extraordinary expenses totaling approximately €3.9 billion linked to the costly pivot.
The financial hit includes roughly €700 million in battery-related costs and a similar amount from US tariffs. Porsche had been developing a dedicated new EV platform but terminated the project after years of investment, opting to refocus on combustion-engine models and plug-in hybrids. CFO Jochen Breckner confirmed that realignment measures will incur further one-off costs in the high three-digit million euro range.
This strategic reversal has broader repercussions for the Volkswagen Group, which saw a significant net profit decline and announced plans to cut 50,000 jobs in Germany by 2030, citing energy costs and trade pressures. Porsche faces about 3,900 of those job reductions.
The company warned of persistently challenging market conditions, particularly noting pressure on China’s luxury auto segment and ongoing intense price competition. Geopolitical uncertainties, including US tariff policies and potential impacts from Middle East developments, are expected to remain.
Porsche’s struggles reflect deepening challenges across the EU automotive sector. Manufacturers are grappling with surging energy costs, weaker demand, fierce competition from Chinese electric vehicle makers, and transatlantic trade tensions. The EU’s energy crisis, triggered by the reduction of Russian energy imports following the Ukraine conflict, has been exacerbated by recent disruptions in global oil and LNG shipments through the Strait of Hormuz, further inflating production and operational costs for the region’s carmakers.
