Porsche Plans To Cut Costs To Account For Lower Profitability Of EVs
Porsche looks for an additional €6 billions in savings
According to Bloomberg, Porsche is working on a plan to improve overall efficiency of the company to compensate for the lower profitability of new electric models.
The idea is to improve operating profit by €6 billion (about $6.8 billion) over eight years by 2025, which is about €750 million annually on average. Savings are expected in:
- streamlining operations
- increasing efficiencies
- cutting costs
- boost contribution from new business such as digital offerings
High profitability of Porsche is very important not only for the brand in its transitional period from ICE to EVs, but in general for Volkswagen Group (Porsche is the most profitable brand in the group), especially since Volkswagen recently struggles with falling sales.
According to the article, the all-electric Porsche Taycan will cost from €6,000 to €10,000 euro more to produce than a comparable conventional model, but the German manufacturer will not increase the price because of that, which means that the margin will be lower.
After 2025 Porsche hopes to increase efficiency and savings to €2 billion annually when half of car sales will be electrified. For comparison, Porsche noted €23.5 billion of revenues in 2017 and operating profit of €4.1 billion at operating margin of 17%.