Volkswagen expects a $5.9 billion hit to its operating profit in 2025

Porsche, a German automaker, has announced the delay of its electric car rollout, citing slowed market demand. The automaker has shifted its focus now to combustion and hybrid models, with a billion-dollar blow expected by the parent company, Volkswagen.

The German-based luxury car maker confirmed that the new SUV, expected to be the successor of Cayenne, known internally as the K1, will not launch as a fully electric vehicle. The firm, however, stated that K1 will combine a combustion engine and a plug-in hybrid option. The company is currently realigning its strategies following reduced sales and market pressures.

Volkswagen expects a $5.9 billion hit to its operating profit in 2025

According to Porsche’s statement, the decision to delay the rollout of a fully EV is a response to a slower growth in demand for fully battery-electric vehicles. The company confirmed that existing combustion models, including Cayenne and Panamera, will continue to be produced with successor generations being offered in a combination of petrol and hybrid powertrains. The next-generation EV platform, which had been scheduled to launch in the 2030s, will undergo a complete redesign in collaboration with other Volkswagen Group brands. 

In line with the ongoing shifts in Porsche’s long-term strategy, several key models remain on track, including the forthcoming Cayenne EV in standard and coupe-SUV formats, the Macan EV, and a two-door sports car in the 718 segment. The German automaker also insisted that the existing electric lineup, including the Taycan, remain on track. 

Oliver Blume, CEO of Porsche and the Volkswagen Group, revealed that the automotive industry is currently experiencing changes, and to meet market realities and changing customer demands, the firm has to realign across the board. 

Volkswagen confirmed that it faces a hit of $5.9 billion on its annual operating profit. Europe’s largest automaker will also write down the value of its Porsche stake by $3.52 billion, adding to its list of losses this year. The group noted that the delay of full EV production could impact the firm by approximately $2.11 billion, which was not factored into the earlier forecasts.

Porsche cuts 2025 profit outlook to 2% down from 5-7%

Porsche has effectively revised its full-year forecasts following the shifts in market dynamics. The German luxury car maker maintained its sales revenue between €37 billion ($43.46 billion) and €38 billion ($44 billion).63 billion). The operating profit on sales has been revised to 2% from earlier projections of 5% and 7%. The Volkswagen Group revised its profit margin forecast for 2025 to 2% and 3% down from 4% to 5%. 

Dr Jochen Breckner, Chief of Finance and Technology, revealed that with the clear plan now in hand, they are realigning the company for long-term success in the current challenging conditions. He acknowledged that the changes have negatively impacted the short-term financial results but reiterated that they are essential for the long-term. 

Porsche Cayenne cited several other factors that have contributed to the shift in their strategic plans, including tariff wars with the U.S., a reduced Chinese luxury market share, and increased competition from BYD, a Chinese EV manufacturer. Cryptopolitan covered the story recently, noting that BYD launched in the EU region in June with the Dolphin Surf hatchback in Rome. The Dolphin Surf model has a high-profile display with affordable pricing of £18,650 in the UK, offering competition to the existing highly priced EU models such as the Renault 5 E-Tech, Citroen e-C3, and Fiat 500e. 

Senior officials from Stellantis, BMW, and Mercedes-Benz organized a meeting with the European Commission President, Ursula Von Der Leyen, to discuss more flexible emission targets. The EU set the deadline for the ban of new petrol and diesel cars in 2035, but automakers have argued that the target is unrealistic considering the current market conditions. 

If you're reading this, you’re already ahead. Stay there with our newsletter.