Porsche expects market value to halve after billions of dollars in EV losses
Porsche is facing financial troubles after reporting billions of dollars in losses on investments in electric vehicles.
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Volkswagen was hit hard in the third quarter by an expensive turnaround at subsidiary Porsche P911_p.DE, resulting in an operating loss of 1.3 billion euros ($1.5 billion) and billions of dollars more on top of pressure from U.S. tariffs.
Volkswagen VOWG_p.DE has booked a 4.7 billion euro charge from Porsche’s electric vehicle strategy shift announced in September, but Europe’s largest automaker is expected to suffer losses of up to 5 billion euros this year due to U.S. import tariffs and the resulting drop in sales, the company said on Thursday.
The tariffs will increase pressure on Volkswagen boss Oliver Blume, who last month warned the company would take a multi-billion euro hit and is set to take over as CEO of the troubled Porsche division early next year. Former McLaren manager Michael Leiters will take over as Porsche’s successor.
Tariff issues will continue
Volkswagen’s finance chief Arno Antlitz said at least 4 billion euros of the tariff costs were direct, with the rest related to margin losses from countermeasures.
The company believes it has room to stem additional costs by, for example, strengthening its belts and expanding its production base in the United States, and plans to decide by the end of the year whether its subsidiary Audi will set up a factory in the United States.
Volkswagen shares rose as much as 2% in volatile trading following the results, but turned negative by 1134 GMT, down 1.1%.
“The picture is mixed,” Antlitz said, noting that strong demand for Volkswagen cars in Europe is offsetting weakness in China, but that the company’s increasingly popular electric models are becoming more expensive to manufacture, weighing on profitability.
Volkswagen’s operating loss in the third quarter was down from the group’s operating profit of 2.8 billion euros a year earlier, but less severe than the 1.7 billion euro loss expected by analysts surveyed by Visible Alpha.
Porsche, which is 75.4% owned by Volkswagen, also suffered a steep loss in the third quarter as it delayed its EV rollout in an effort to win back consumers with hybrids and internal combustion engines.
Guidance maintained but overshadowed by chip supply concerns
Blume stepped down as Porsche CEO after investors began to question his ability to simultaneously lead both companies at a time when both companies are facing major challenges.
Volkswagen maintained its full-year forecast on Thursday, but said it was predicated on sufficient chip supply, hinting at the company’s next front line as a trade dispute over Dutch chipmaker Nexperia threatens to halt production in the auto industry.
Antlitz said Volkswagen is working “day-by-day, week-by-week” to secure production from supply shortages.
(1 dollar = 0.8575 euro)
Reporting by Rachel More and Christina Amann. Additional reporting by Christoph Steitz. Editing: Kirsti Knolle, Kim Coghill, Emelia Sithole-Matarise
