Porsche and Mercedes-Benz have started to backtrack on their electrification plans, even though a few years ago it seemed like an unstoppable race toward electric cars. The reality is that costs are very high, profitability is low, and the market is not taking off. Europe is still not ready for the shift to electric vehicles.
The major German brands are hitting the brakes. It’s not that they’re abandoning the transition, but they’re not thrilled with the idea and are moving cautiously. What’s happening in the industry?
Electrification is losing momentum in Germany
Over the past few years, German manufacturers have gone all in on electrification, also facing pressure from Brussels to compete against Tesla and Chinese manufacturers.
The future seemed 100% electric until public subsidies disappeared, the economy started cooling, and batteries turned out to be much more expensive than expected. Suddenly, the electric future wasn’t as appealing anymore.
Many companies have revised their goals, reduced investments in battery plants, and postponed plans. The reality is that producing electric cars is still less profitable than making combustion vehicles.
The Chinese pressure
Europe is adjusting its strategy, but Chinese manufacturers have not let this gap go unnoticed, and they’ve gained ground in Europe. Their models are cheaper and packed with technology that often attracts more attention than traditional brands.
On top of that, European consumers have become more cautious and prefer to wait before making the switch to electric, which is understandable. The EV infrastructure is not as developed as it is in places like California.
German brands have chosen to find a middle ground. They will continue to invest in electrification but without abandoning combustion engines.
Porsche
Porsche is one of the clearest examples. This project was presented just a few months ago as a key piece of its technological independence, but now it has been pushed to the background.
The brand has decided to cancel its supposed high-end electric SUV, with a negative financial impact of 1.8 billion dollars. They had also planned to produce high-performance batteries in Reutlingen through Cellforce Group (Customcells), but that hasn’t fully materialized either.
They want to continue prioritizing combustion engine and hybrid models. The real demand for their electric vehicles has not met expectations, and instead of jumping into a low-profit venture, Porsche prefers to protect its margins.
That said, they are not giving up on electrification entirely, since the Taycan and the upcoming electric Macan are still on the schedule, although now with a more realistic approach.
Mercedes-posrBenz: a more obvious slowdown
Mercedes-Benz has done the same, taking a step back and moving on. It has decided to delay its goal of selling only electric vehicles by 2030 and has confirmed that it will keep producing combustion cars beyond that date. Let’s be honest, the demand for electric vehicles is not enough, and the company is not going to abandon its most profitable business.
It has also slowed down investments in fully electric platforms, meaning it will maintain a hybrid and combustion lineup in the coming years.
A less epic transition… and a more realistic one
What Porsche and Mercedes are doing doesn’t mean they’re turning around and going back to the past, but they are adjusting their expectations to something less intense. It’s not a wild race; they need to move step by step and, above all, secure their own profits (they’re companies, that’s their goal). Innovating without going bankrupt, complying with regulations without forcing the market, and adapting to their environment. That’s what they’re aiming for.
If Germany, which is the technological benchmark for half the world, is hitting the brakes… what do you think the rest of the companies will do?