Porsche CEO defends shift back to petrol amid EV concerns

Investing.com -- Porsche CEO Michael Leiters rejected criticism that he is skeptical of electric vehicles, defending his strategy to revive petrol model development alongside the company's EV plans.

Since becoming chief executive in January, Leiters has refocused the Volkswagen-owned sports car maker on new petrol models to boost profits that suffered during an aggressive push into electric vehicles.

To counter falling sales in China, Leiters plans to introduce a combustion engine version of the Macan SUV in 2028. For the upcoming K1 luxury SUV, the company has not determined which engines to use, though Leiters noted stronger demand for petrol cars in premium segments.

In his first interview with international media, Leiters told the Financial Times that his reputation as an EV skeptic was unjustified. "I think that's unfair," he said. "We have to recover our petrol strategy, but I'm very positive that once we have the Macan with the petrol engine, we have a very balanced offer for our customers on electric and petrol cars."

The company continues development of an electric version of its 718 sports car. Leiters stated that the signature 911 model will not receive an electric version.

Sales data shows clear consumer preferences. Electric Macan sales dropped 40% year-over-year in the first half of the year, while the combustion version rose 2%, despite Porsche stopping petrol Macan sales in Europe due to EU cyber security regulation failures.

Leiters said he was not worried about falling behind in EVs, citing access to Volkswagen's technologies. He noted that cost parity between EVs and petrol models remains unlikely in the short term, meaning higher EV sales would continue to reduce Porsche's margins.

The CEO has cut non-core operations and reached an agreement with unions to eliminate 9,000 jobs, or roughly 20% of the workforce, by 2035. He said the company needed to "dramatically" reduce its sales targets and scale, which became "overblown" during two decades of China-driven growth.

At a capital markets day next week, Leiters plans to present a revised outlook on China and will "dramatically lower" the company's break-even point. In 2023, Porsche delivered about 320,000 vehicles with an 18% operating profit margin. Last year, its margin fell to 1.1% on sales of roughly 280,000 cars.

China deliveries fell 32% in the first half of the year. Volkswagen recently issued a profit warning, citing a €6 billion writedown on its Porsche stake and a slowdown in China.

Leiters said no additional job cuts are planned and medium-term operating profit margin targets remain at 10% to 15%. He warned China would continue to pose "a huge challenge."

He described "an incredible inflation of product launches" in China, with about two new products rolling out daily, calling it "self-destroying." He predicted consolidation but questioned how long it would take.

Leiters has closed the company's electric bike, batteries and software units, and sold its IT consulting business to Tata Consultancy Services (NS:TCS). Earlier this month, Porsche raised about €1 billion by selling stakes in Bugatti Rimac and the Rimac Group.

Porsche faces a product gap until the new petrol Macan arrives in 2028. Chinese competitors including BYD and Xiaomi are entering the premium market traditionally controlled by German manufacturers.

Leiters said German manufacturers could match Chinese speed and cost if not for differences in labor and energy costs and Europe's regulatory environment. "Fix that and we will be there," he said. "If we have an even playing field, we don't have to fear any competition."

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