Porsche plans to reduce its workforce by 1,900 positions at two of its German plants by 2029 in response to declining electric vehicle (EV) sales and rising costs associated with new model development. This move comes as the luxury sports car manufacturer revises its profit forecasts for the year, expecting margins to fall to 10-12%, significantly below its long-term target of 20%.
The workforce reduction, primarily at the Zuffenhausen and Weissach plants, represents a 15% decrease in staff at these sites. Porsche cited “challenging geopolitical and economic conditions” as the key factors driving the decision. The company intends for the job cuts to be voluntary, involving early retirement options and layoff packages, with job security agreements remaining in place for German employees until 2030.
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Alongside the layoffs, Porsche is taking a “restrictive approach” to hiring, signaling that growth may slow over the coming years. This shift in strategy comes as global deliveries of Porsche vehicles dropped by 3% last year, with a notable decline in sales in China, one of the company’s most profitable markets.
Porsche’s management has announced plans to counteract the downturn by introducing new internal combustion engine (ICE) and plug-in hybrid (PHEV) models, with development costs for these models and related battery projects expected to increase by 800 million euros in 2025. “We are responding to market challenges by expanding our product range with new ICE and PHEV vehicles,” a Porsche spokesperson said.
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The company’s efforts to regain profitability reflect broader trends in the automotive industry, as domestic EV manufacturers like BYD, XPeng, and Li Auto gain market share in China, putting pressure on foreign automakers. Some analysts suggest that other Volkswagen Group brands may follow Porsche’s lead in developing additional ICE and PHEV models to remain competitive, although these models may not arrive until after 2030.
Source: Bloomberg, Handelsblatt.