Porsche operating profit collapses after costly retreat from electric strategy

Wednesday 11 March 2026 - 07:00

By: Dakir Madiha

Porsche operating profit collapses after costly retreat from electric strategy

Porsche’s operating profit plunged by 98 percent in 2025, falling to just 90 million euros from 5.3 billion euros a year earlier after billions of euros in charges tied to a major shift away from its all electric vehicle strategy wiped out nearly all earnings. The results, released Tuesday as part of Volkswagen’s annual report, show the sports car maker’s operating margin dropped to 0.3 percent from 14.5 percent the previous year.

The sharp decline followed 4.7 billion euros in exceptional charges linked to goodwill impairments and write downs of capitalized electric vehicle development projects. Porsche revised its strategy by extending internal combustion and hybrid versions of key models such as the Panamera and Cayenne into the 2030s rather than replacing them with fully electric successors. Additional pressure came from United States tariffs, which added about 700 million euros in costs beginning in mid 2025.

Underlying performance also weakened. Vehicle deliveries fell 10 percent to 279,449 units, the steepest annual drop since the global financial crisis of 2009. Revenue declined roughly 12 percent to 32.2 billion euros.

China, once Porsche’s most valuable market, became the company’s biggest challenge. Deliveries there dropped 26 percent in 2025 after already falling 28 percent in 2024. Domestic luxury brands backed by Huawei have gained market share with aggressive pricing and advanced technology.

Chief financial officer Jochen Breckner described 2025 as a low point for the company, saying Porsche had knowingly accepted weaker short term financial results in order to strengthen long term resilience and profitability.

Sales of the Taycan electric sedan also declined sharply. Global deliveries fell 22 percent to 16,339 units in 2025 as the aging model struggled to compete with newer and cheaper Chinese electric vehicles.

The leadership transition adds another layer of change. Michael Leiters, former head of McLaren Automotive and previously chief technology officer at Ferrari, became Porsche’s chief executive on January 1, 2026. He replaced Oliver Blume, who continues to lead the Volkswagen Group.

Leiters inherits a cost reduction program announced last year that will eliminate about 3,900 jobs by 2029. The plan includes 1,900 positions lost through natural attrition and another 2,000 through the expiration of temporary contracts.

Porsche is also reshaping its product strategy. After positioning itself as Volkswagen’s flagship electric brand, the company is now prioritizing hybrid powertrains and investing about 800 million euros in new internal combustion models.

For 2026, Porsche expects sales to decline again but aims for a return to profitability with a sales margin above 5 percent, which management sees as the first step toward a recovery. Volkswagen’s own net profit fell 44 percent to 6.9 billion euros during the year, with the Porsche write downs playing a significant role.