Porsche Prepares Strategy to Make Electric Cars More Profitable than Combustion Cars

It has been proven that electric cars represent an important way out for the decarbonization of the automotive fleet, taking into account the large amount of carbon emissions (CO2) coming from combustion vehicles. However, the business model is still a pending issue for manufacturers to obtain profitability from these new technologies.

Emblematic companies of the industry, such as Porsche, have already shown their plans in the short term, where they assure that they will have important economic returns in the midst of the transition towards electromobility.

The German brand sees high possibilities of increasing the prices of its electric vehicles with respect to its combustion engine models.

Porsche’s CFO, Lutz Meschke, believes that the margins of electrified cars will reach parity with gasoline cars in two years. He assures that because customers are willing to pay more for advanced technology, in 5 years electric vehicles will be more profitable than traditional ones.

In that regard, the company has laid out a roadmap to increase sales profitability to more than 20% in the long term, up from 16% last year.

“Electric vehicle margins will reach equity with combustion models within the next two years. Once this has occurred, customers will be willing to pay more for the new technology,” said Meschke a few days ago at the Porsche AG Capital Markets Day event.

Porsche estimates that by the end of this decade, 8 out of 10 models sold will be electrified, while by 2031, they expect electric cars to account for half of the luxury car market worldwide.

Prestigious Offering

Among the new features announced by Porsche are creating an electric version of its popular Macan SUV. The plug-in model is likely to be priced well above the $60,000 price tag of the base gasoline range. In addition, the manufacturer is also planning a new luxury electric SUV positioned above the Cayenne, with pricing starting at around 83,000 euros.

Porsche CEO Oliver Blume points out that the aim is to selectively expand the higher-volume segments and take advantage of pricing opportunities for electric vehicles.

He stresses that Porsche is unique because the brand has luxury appeal and benefits from economies of scale. In fact, it sold 27 times more cars than Ferrari last year. However, maintaining that production during the shift to electric and increasing margins at the same time will be challenging.

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