Plummeting Porsche second-quarter earnings by a staggering 91% - Porsche experiences a dramatic 91% decline in quarterly profits
Porsche Struggles in Q2 2025: Macroeconomic Headwinds, US Tariffs, and E-Mobility Transition Take a Toll
Porsche, the luxury car manufacturer known for its iconic sports cars, has experienced a significant decline in profits in the second quarter of 2025. The company's operating profit dropped by a staggering 91%, amounting to just 154 million euros, a stark contrast to the 1.7 billion euros it reported a year ago [1].
The reasons for this profit collapse are multifaceted, with a confluence of macroeconomic headwinds, escalating US tariffs, slower-than-expected growth in China, and costly strategic adjustments in the transition towards e-mobility taking their toll [1][2][3][4][5].
Challenges in China and the USA
The slowdown in China, a key market for luxury automakers, has affected Porsche's revenue. Sales growth and demand in China have cooled, putting pressure on margins and profitability [5]. In the USA, significant tariffs on imported vehicles, amounting to around 27.5%, have raised Porsche’s production costs, negatively impacting operating margins. Analysts expect these tariffs to weigh heavily throughout the year, with current guidance possibly underestimating their impact beyond April and May [2][3][4].
Transition to E-Mobility
Porsche has faced subdued demand for its flagship EV, the Taycan, with deliveries dropping 6% in the first half of 2025. Meanwhile, the newer Macan EV has done relatively better, especially in North America [4]. Due to slower EV adoption globally, infrastructure challenges, and economic pressures including high capital expenditures and tariffs, Porsche has scaled back its aggressive EV targets. The company has moved away from aiming for 80% EV sales by 2030, now focusing more on hybrid models and internal combustion engine technologies, aiming to balance electrification with profitability [4].
In an effort to cut costs and streamline operations, Porsche has already initiated a cost-cutting program and aims to reduce its structures, planning to cut around 1,900 jobs in the Stuttgart region by 2029 [6]. The company also recorded a €500 million writedown on its Cellforce battery joint venture and €200 million in restructuring costs, further pressuring Q2 profits [2].
Looking Ahead
Oliver Blume, CEO of Porsche, had prepared the workforce for further cuts in a letter last week. Porsche will present its detailed financial results, including the result after taxes, next Wednesday (30 July). It is expected that the company will provide more insight into the exact reasons for the poor performance in the second quarter.
Interestingly, the VW core brand significantly outperformed Porsche and Audi combined in Q2, with an operating profit higher than that of Porsche [7]. The financial results of Porsche and other brands within the Volkswagen Group were disclosed in the half-year results of the company. Despite the challenges faced by Porsche, the company remains a significant contributor to the financial stability of the Volkswagen Group, pouring a large portion of its profits into the coffers of Volkswagen despite relatively low sales [8].
[1] Reuters [2] Automobilwoche [3] Bloomberg [4] Car and Driver [5] CNBC [6] Autocar [7] Volkswagen AG Half-Year Results 2025 [8] Reuters
- In an industry where electrification is increasing, Porsche, a luxury car manufacturer, has revised its employment policy to focus more on hybrid models and internal combustion engine technologies, aiming for a balanced approach between electrification and profitability.
- The luxury automaker has been affected by the finance policies implemented in the US, as significant tariffs on imported vehicles have raised Porsche’s production costs and negatively impacted the company's operating margins.
- The slowdown in the Chinese industry, a key market for luxury automakers, has put pressure on Porsche’s revenue, with sales growth and demand in China cooling significantly.
