Frankfurt (Germany) (AFP) – Porsche said Friday it will close three subsidiaries, including an EV battery developer, with the loss of more than 500 jobs, in the latest sign of strains for the German luxury auto manufacturer. The maker of the 911 sports car has seen profits collapse due to plunging Chinese sales, US tariffs, and a costly decision to hit the brakes on its troubled electric transition.
As well as the outfit that developed electric vehicle (EV) batteries, a software-making subsidiary and one making systems for electric bikes will be shuttered, said Porsche, a subsidiary of Volkswagen. “Porsche must refocus on its core business,” said Michael Leiters, who took over as the manufacturer’s chief executive at the start of this year. “This forces us to make painful cuts — including our subsidiaries.”
A total of 360 of the job cuts are at the e-bike company, in both Germany and Croatia, with the rest at the other two subsidiaries. The cuts amount to around one percent of the group’s global workforce of some 42,000. Its shares were up 1.7 percent in Frankfurt after the announcement. The carmaker had already announced 1,900 job cuts in February last year.
Porsche is among automakers which have recently taken a hefty hit after ploughing huge sums into the electric transition, only to find demand weaker than expected. The manufacturer announced last year it was slowing its shift to EVs, a move that dented 10-brand Volkswagen’s profits by billions of euros. Measures included delaying the introduction of some fully electric cars, and extending the life of some combustion engine and hybrid models.
Volkswagen, Europe’s biggest automaker, and the broader German car industry are in crisis due to fierce competition in key market China, weak demand in Europe, and the choppy transition to EVs. Porsche’s profits virtually vanished last year, and it warned 2026 would also be tough, with lower sales and squeezed margins.
© 2024 AFP
