By 2034, Europe aims for all new car sales to be electric, but sales are slowing, leading the EU to consider hybrid and synthetic fuel options. Porsche faces challenges with its electric models, resulting in plans to cut around 1,900 jobs by 2029. The company will maintain some combustion engines in its lineup while grappling with significant losses. Other automakers are also adjusting strategies, with some reverting to traditional vehicles amid changing market dynamics.
The Shift to Electric Vehicles in Europe
By 2034, all new car sales in Europe are set to transition to fully electric models, as mandated by the European Union. This ambitious goal was reaffirmed towards the end of 2024. However, recent trends indicate a slowdown in electric vehicle (EV) sales across the continent, prompting a reevaluation of this directive.
Challenges Facing Manufacturers
The European Union is now contemplating a potential easing of its stance, which may include allowing hybrid vehicles and those powered by synthetic fuels. Automakers have made significant investments in electrification, yet the anticipated returns have been disappointing. The electric vehicle sector continues to struggle, impacting numerous car manufacturers, with Porsche notably facing challenges in recent months.
Porsche, based in Stuttgart, has encountered difficulties in attracting buyers for its electric offerings, particularly the Taycan, which has seen stagnant sales. In response, the company announced in July 2024 that it will retain hybrid and traditional combustion engines for its Cayenne model. Similarly, the Macan, originally slated to be entirely electric, will also feature these engine types. Unfortunately, Porsche’s troubles seem far from over as it grapples with a challenging market environment.
In a significant move, Porsche is contemplating the reduction of approximately 1,900 jobs by 2029, as reported by Bloomberg. This decision affects two of the brand’s manufacturing plants, citing “challenging geopolitical and economic conditions” as the rationale. The factories located in Zufnhausen and Weissach are expected to see a workforce reduction of around 15%.
The company initially aims to achieve this reduction through voluntary departures, particularly early retirements. However, layoffs may also be necessary, although specific details remain undisclosed at this time. Notably, an employment security agreement will remain in place until 2030, providing some reassurance in contrast to Volkswagen’s decision to terminate similar agreements due to its own struggles. While Porsche plans to reduce new hires, it has not completely halted recruitment.
The future remains uncertain for Porsche, as it also plans to discontinue contracts with temporary workers amidst this crisis. The manufacturer is projecting a staggering loss of approximately 800 million euros due to unforeseen expenses related to the development of new thermal engines. Moving forward, Porsche intends to concentrate on hybrid and plug-in hybrid engines, despite the environmental concerns associated with these types of vehicles. The company is proceeding cautiously, given the unpredictable landscape ahead.
In communication with Bloomberg, Porsche emphasized that “Volkswagen has not altered its strategy to gradually phase out combustion engines in Europe by the early 2030s.” The group also noted its commitment to remain flexible in responding to market shifts. This uncertainty is echoed across the industry, as manufacturers, including Ford and Nissan, face similar pressures from stringent CAFE regulations alongside lagging electric vehicle sales.
Furthermore, other brands within the Volkswagen umbrella are likely to revert to gasoline and plug-in hybrid vehicles. Rumors suggest that the upcoming Golf may be available with traditional combustion engines, alongside models like the Tiguan and Audi A3. Meanwhile, several new electric models priced below 25,000 euros are under development, including the anticipated ID.1. The aim is to offer affordable electric options to motivate consumers to make the switch while sharing development costs across the group.