German automobile manufacturer Porsche sees potential and profitability in electric vehicles.
Lutz Meschke, Porsche’s chief financial officer, sees more potential to raise the prices of EVs than its combustion engine models. He believes the EV margins will reach parity with those of combustion vehicles in just two years. Meschke says customers are willing to pay more for new technology.
The Volkswagen Group-owned sports-car maker mapped out a roadmap to grow return on sales to more than 20% in the long term, up from 16% in 2021. Porsche expects eight in 10 cars sold by the company by the end of this decade to run on electricity. It wants EVs to account for half the luxury automotive market in 2031.
Oliver Blume, Porsche CEO, revealed their target is to selectively expand higher-margin segments and to leverage EV pricing opportunities. Moreover, Porsche is pursuing an IPO at a time when the state of the industry is uncertain. Blume said automakers are posting high returns because supply-chain shocks are constraining output. This leaves them with no choice but to focus on the most lucrative models and raise their prices. In electrifying its lineup, Porsche is currently ahead of its competitors, Ferrari and Aston Martin.
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But Porsche produces fewer EVs than Tesla. Blume shared that a more meaningful EV ramp-up will take overhauling factories, retraining staff, and securing increasingly scarce raw materials for batteries. In regards to pricing, he said it’s unclear what happens with pricing power once EVs are not so fashionable. The car manufacturer is also planning a new electric luxury SUV with a starting price of around $84,800, but no launch date has been shared as of yet. It should be noted that the Macan has been delayed and will hit the showrooms no sooner than 2024. There are some software issues at the VW’s Cariad unit.