Life isn’t so easy for automotive manufacturers right now. Take Porsche, which just published preliminary financial numbers for last year and projections for 2025. While things aren’t Tesla levels of bad, they’re not exactly great. Sales were down 28 percent in China last year and 3 percent overall. Worse yet, profit margins are just over 10 percent, far below the 18 percent the company was targeting.
As a result, Porsche says it’s taking “extensive measures” to improve profitability, including adding more internal combustion and plug-in hybrid vehicles to go with the slow-selling EVs. All told, the company expects to spend $830 million (800 million euros) on expanding its non-battery EV lineup in 2025.
There’s a lot of that sort of thing going around. Last year, General Motors and Ford lamented missing where the market actually is with too many too-expensive EVs and not enough hybrids. And over at Porsche’s sister brand Audi, a similar realization set in, to the point that the brand developed a new combustion engine vehicle architecture (called PPC) to go alongside the new EV-only PPE platform. That new platform will presumably be welcomed over at Porsche as well.
The problem with Porsche's EV business in China is not that it makes a bad EV. It's that Chinese consumers do not (by and large, of course there's exceptions) really give a shit about what Porsche brings to the table, e.g. racing heritage, uncompromising dynamics, driver feedback, track performance, understated styling. Those are things that American and European car enthusiasts care about, because Porsches have been a luxury purchase in those areas for decades, there is a deep culture of driving and motorsports enthusiasm, and many owners participate in track days, Porsche Club of America events, group drives, that kind of thing. In China, Porsches do not have that kind of emotional pull. They're just another Western luxury brand, and broadly speaking, the enthusiast culture is almost nonexistent. Motorsports viewership is essentially nil in China outside of F1 and even that's a new thing, so Porsche's motorsports glories have very little traction, performance cars were rare as hen's teeth until relatively recently, and nobody's dad or cool uncle drove a 911 in '60s, '70s, even 2000s China - so why would the typical Chinese buyers give a shit about what makes Porsche special to me? In that market, buyers treat cars more like tech devices and fashion.
It's not surprising to me that Chinese buyers are looking for different attributes than what a storied German sports car brand brings to their market, but that doesn't mean a BYD with a dash that's 80% screen is better, just better suited to that market.