By FREDA LEWIS-STEMPEL
One of the most famous luxury performance car makers in the world has warned it will make a wave of redundancies across its business after being 'hit hard' by falling electric vehicle sales.
In a letter to workers seen by Bloomberg, its CEO warned that a new package of cost cuts is coming, in addition to the current plans to reduce its workforce by a tenth by 2029.
As well as cutting 1,900 jobs in Germany by the end of the decade, Porsche will start negotiations with IG Metall trade union on additional reductions in costs in the second half of this year, with the aim to bolster profitability in the coming years.
In the note to employees, CEO Oliver Blume cautioned that the German marque's business model, that was once the envy of the industry due to its leading profit margins, 'no longer works in its current form'.
He blamed the global EV sales slumps, the introduction of Trump tariffs - which in recent days have been renegotiated with the EU - and plunging demand in China.
Porsche has already scaled back its original projection to reach an 80 per cent share of EV sales by 2030 in a change in places announced this time last year.
Porsche CEO Oliver Blume wrote to employees in Germany to warn that a second package of cost cuts is coming
Porsche is already planning to axe 1,900 jobs by 2029 as sales of EVs in particular have tanked
A Porsche spokesperson told This is Money: 'Our company is currently navigating significant global challenges.
'The fact that we are able to report the figures that we are reporting at the moment is largely thanks to the substantial investments we have made in previous years.
'We have introduced a new and strong product portfolio.'
Blume told his employees in Germany that 'business conditions have deteriorated massively within a short period of time'.
Porsche CEO Oliver Blume said that the conditions are 'hitting Porsche hard — harder than many other car manufacturers'
Porsche's global sales declined by three per cent in 2024, with profit margins now forecast for between 10 and 12 this year, below the long-term target of 20 per cent.
By the end of 2025, Porsche will lose the final current-generation Boxster and Cayman, with electric replacements not arriving before 2026.
The new Macan EV crossover has seen a strong start to sales, with 60 per cent of sales of the Macan in the first half of the year being electric. Globally Macan sales have improved overall by 15 per cent.
However, the Taycan - Porsche's first electric model - saw a 49 per cent decline in sales in 2024 and dropped another six per cent in the first half of 2025.
A string of recalls for the flagship EV hasn't helped Porsche's cause.
The German brand will therefore be hoping that the Cayenne EV will inject new sales.
Any slowdown of EV sales hurts the investments already made into models like the Macan.
Blume wrote that 'business conditions have deteriorated massively within a short period of time'. EV sales are one of the key issues...
'On the one hand we need EVs to fulfil regional CO2 regulations,' Blume wrote, 'but on the other the profit margins are far below those of our combustion engine cars'.
Porsche is also battling issues in the Chinese market, particularly with price wars for EVs.
The Stuttgart brand saw an overall sales decline in China of 28 per cent year-on-year, which was attributed to 'the continuing challenging economic situation in this region'. It marks the lowest sales level for Porsche in the region for 11 years.
North America is also causing the luxury car maker issues, despite being its largest market with price hikes eating into potential growth there.
Demand is strong but the combination of tariffs, which have just been confirmed at 15 per cent for European models, and a sharp decline in the US dollar versus the Euro has left Porsche 'under enormous financial pressure' there 'despite a delivery record in the first year,' according to Blume.
Sales of Porsche's flagship EV, Taycan (pictured), are down 49% in 2024 and 6% already in the first half of 2025. A number of recalls for the electric car haven't helped
The US market has caused further issues for the luxury manufacturer. Despite North America being its biggest market, tariffs and the sharp decline in the US dollar versus the Euro has left Porsche 'under enormous financial pressure' as profits are eaten into
The perfect storm of all three has seen one of the world's most valuable car makers lose 29 per cent of its share price so far this year.
'All of this is hitting us hard — harder than many other car manufacturers,' Blume said.
As a result the job losses announced for 2029 will see employees encouraged to take voluntary leave by accepting early retirement or severance packages, and Porsche will take a 'restrictive approach' to hiring.
Porsche commented: 'We have revised our product strategy to reflect the evolving demands of global markets and the slower-than-expected ramp-up of electromobility.
'Our portfolio is now more flexible and features compelling new models for the years ahead.
'We are investing heavily. Our cars are and will remain the beating heart of our company.
'Given the altered external conditions, we must redevelop our business model to be more flexible, regionally attuned and responsive.
'At the same time, we are building on our proven strengths.'
