Porsche is in serious trouble. The kind that could lead to the end of Porsche. It isn’t making money. Operating profit is down 98 percent, from €5.3 billion (Euros) to €413 million. In the third quarter of last year, Porsche reported its first-ever operating losses, amounting to €967 million Euros (about $1.1 billion dollars).
The company is about to cut another 5,000 jobs, according to news reports.
It is not because Porsche’s cars aren’t selling. It is because Porsche hasn’t been able to sell electric Porsches like the Taycan. More finely, to make money selling them. Porsche says the debacle is due to “the slowdown in the adoption of electromobility.” In other words, blame Porsche buyers for not wanting to be pushed into EVs. That is what is meant by “adoption.” Unfortunately for Porsche – as well as other car companies who bought into “electromobility” – it’s hard to make people “adopt” things when they still have the option not to. The state – in this case it is chiefly the German state – can of course make Porsche (and other car companies) manufacturer lots of EVs. This is the Soviet-model of manufacturing; i.e., instead of market demand driving the market, demand things be made.
The Volga canal, for instance.
“Much of the damage stems from Porsche’s costly attempt to force a rapid transition to electric vehicles. The company was forced to write off approximately €2.4 billion linked to product strategy changes and abandoned EV programmes, while battery-related investments generated hundreds of millions more in costs. The once-celebrated Taycan has struggled to meet expectations, with deliveries falling sharply as many traditional Porsche buyers continue to favour combustion-engine models,” sums up one analyst’s analysis. 
Porsche also blames “intense competition in the Chinese market.” It’s a strange way to describe things. “Competition” in the “Chinese market” being something like “customer service” at the DMV. It also entirely misses the point, a common problem when it comes to trying to sell battery powered devices to car enthusiasts. There is not all that much to be enthused about when it comes to battery-powered devices. A cordless drill is a useful tool, certainly. But does it summon enthusiasm? People buy cordless drills mainly because they need them. If they want them, it is because they need them. The want – by itself, in the absence of need – is rarely the motivating factor.
What is an electric vehicle? Is it not a kind of scaled up cordless drill? That is to say, it is a tool that may serve a need – that of transportation. But want is another matter – when it comes to vehicles such as Porsches. No one needs a Porsche, except in the sense that a man needs a supermodel. If he can afford one. Most can’t, so they make due without. They buy a tool that gets the job done. It is a utilitarian transaction, not fundamentally different from paying the power bill. People pay the power bill because they need the electricity to not be cut off.
Buying a Porsche is the expression of a want – for those with the means to satisfy their wants.
Well, what does the Porsche buyer want? Probably, he wants a Porsche. That is to say, something that is not just another battery-powered vehicle. The distinction is easy to understand, which is why it is so interesting that so many do not understand it. All that’s necessary to understand it is two vehicles, parked side-by-side. One of them an electric vehicle, the other a Porsche. That is to say, one with an engine. In particular, Porsche’s signature engine – the flat (horizontally opposed) six. Start the Porsche’s engine.
Do you understand, now?
What does a battery sound like?
The other vehicle shows no signs of life when you push the on button (EVs, having no engine, do not start). Lights come on and that is the only sign of life. Next to you, the Porsche’s engine is alive and that causes its driver to feel alive. If the Porsche has a clutch, the driver – his hand on the shifter – feels the engine’s life. He is connected to it. What does the driver of the EV feel?
What is there to feel?
Some will retort something about the feel of ferocious and immediate acceleration. Yes, indeed. But what is the difference – how does it feel different – vs. the equally ferocious but equally androgynous acceleration of other-brand high-performance EVs? A Tesla Model S accelerates more quickly than any Porsche with an engine yet it is lacking that certain something if you’re wanting something different as opposed to something the same that looks different.
Philip Dick – the great sci-fi writer – titled one of his most famous novels, Do Androids Dream of Electric Sheep. Maybe they do. But – in the novel – it’s a kind of degradation to own an electric sheep or any other false animal. The thing people want is the real thing. Even if it’s a only a spider. Just the same, even an old jalopy has more life than a battery powered thing. It is why people bestow affectionate (even if grudgingly) names upon old jalopies. No one gives a name to their cordless drill. They use it until it becomes useless and then they throw it away.
No one throws away a Porsche – unless of course it’s a battery powered thing that merely looks like one. Not many people are interested in buying them, either.
Why pay a premium price for an EverReady when you can buy a Duracell for less?
. . .
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This is just me supposing things.
Suppose you want to soft-conquer America and you realize like any normal person would that the large-scale manufacturing base is a tactical resource you’d like to do away with pre-emptively. The automobile industry is a big part of that large-scale manufacturing base, seeing that it’s able to produce things like tanks and armored personnel carriers with very little re-tooling.
Suppose that as part of the soft-conquest plan of taking out this large-scale industrial base you gain control of the federal government (AIPAC), which empowers you to set policies. Let’s say you want to start your conquest by using both propaganda and internal hires to both convince the automakers that “electric is the future”. So, they’re all in. And you use your governmental control to create “tax credits”, which artificially inflates the market demand. Even with an artificial market demand, you’re sure going to take advantage of it, right?
So now you’ve created what in finance is called a “bubble”. But we’re looking to tank the manufacturing base, so now we engage the next step in our plan, which is to kill the tax credits and start our own propaganda blitz against the products we originally told everyone that they wanted. So, now you have sagging sales from EV’s making they WAY not profitable and the media buzz against them, and suddenly you’ve got billions invested and you’re hemorrhaging money.
Then perhaps you turn around and begin manipulating the oil markets by waging war in places like, say, Iran, which will likely create an upsurge in EV sales as gas goes from $4 a gallon to $7-$8 a gallon. Then you have built another mini bubble, smaller than the first, but still a money pit to any company that’s invested in tooling and design.
Perhaps you do this bubble-pop-bubble-pop until the auto companies are hanging on bailouts and bankruptcy filings and you buy them up for pennies on the dollar and ship all the equipment to China.
I’m saying that, perhaps, if you wanted to conquer America, this would certainly be a really easy way to do it without firing a shot and making a ton of shekels in the process.
Or perhaps I’m wrong about all this and the jews are really wonderful people.
OK, hear me out.
California has banned gasoline yard tools (lawn mowers, blowers, etc.) – because of course they have. So, I’ve been working on a bracket system to mount a gasoline engine generator on top of the shitty electric lawn mowers people are now allowed to buy so it is actually usable for mowing the lawn. The battery powered ones suck so bad, it’s not something I’d ever try again – they’re literally worse than useless.
Now, a prime power 100kW diesel generator weighs about 2500 lbs, add 55 gallon fuel tank (abour 8 hours of runtime @100%), and a trailer, and you’re looking at maybe 3500 to 4000 lbs.. So all Porsche needs to to to make their shitty electric vehicles actually usable is to include a tow hitch, trailer, 100kW prime power diesel generator, and an extension cord so it can charge the shitty EV while you drive around.
Just like the lawnmowers in California.
Bonus points for using Chinese engines with no emission controls.
Hi AC,
I wonder how much electricity could be generated by one of those old Cox model airplane engines? Maybe you could use one of them to provide power to your electric mower’s battery…?
I have one of the plug-in mowers, now – no batteries, just an extension cord (for you to run over with the mower, trip on, get tangled on everything, and never be long enough, etc.). So, I’m planning to mount a generator on top of the mower to address all the stupid problems nobody asked for which come with banning gas mowers.
As much as the corded electric mower sucks, it’s still better than the battery powered ones.
I don’t think the Cox motors don’t have the power (they’re very small), but a Rotax engine would likely do the job (as noisily as possible, lol), but I’d still need to build my own generator to attach to the engine. Just buying a complete generator set is easier.
Harbor Freight does sell vertical shaft gas engines, so maybe buying an old mower and a new engine is a better choice, but mounting the generator on the electric mower is something of a political statement on the absurdity of banning gas mowers and a middle finger to Sacramento.
I forgot about that gas power tool ban in California. What would happen if you brought gas tools from out of state? What would happen if the legislature and governor in California were hung for treason?
It’s pretty hard to find a place that will ship ‘prohibited’ stuff into California, so it requires driving to Arizona or Nevada, which are both inconviently distant from most of the population in California.
Somebody could put together three or four “repair kits” for lawn mowers and the like, that just happen to have all the parts you need to assembly the complete mower if you buy all three or four of the kits. I’d love to see this happen.
As far as needed poilitical reform, the Bolsheviks flooded California with at least 30 million third world welfare queens over the past 30 or 40 years, who vote Bolshevik in exchange for welfare, etc..
As more white people flee California, there is ever less in the war of tax dollars to provide welfare benefits, so their system is nearing collapse. Short of Hart-Celler being annulled, and at least 30 million deportations (or whatever . . . ) just from California alone, there is no political solution for California.
I sympathize, AC –
My sister and her family live near San Diego. I have tried to get them to consider leaving while they still can. No luck so far. The weather’s nice and there’s the beach…
One thing that tool makers have to differentiate is quality and that typically instills a fairly strong loyalty.
I’m a Makita user and have been for decades, long before things were even cordless, never mind the “ecosystem” of battery devices. Things Makita I’ve bought lately have been somewhat disappointing on the quality question. Moreso because Makita used to be good about warranty and repair parts but they’re trying to keep up with Dewalt and Milwaukee in feature churn rather than sticking to tried-and-true.
So my loyalty is wavering. They’re getting to be like EVs I suppose, different color plastic on the same 3rd world sweat shop crap under the hood.
““intense competition in the Chinese market.””
Funny- Porsche had no competition from the Chinese, before- ’cause the Chinks don’t make anything similar to a Porsche… But now Porsche makes electric transportation appliances which are little different than the ones the Chinese make- so Porsche essentially decided to compete with the Chinese instead of making the unique vehicles they once did. It’d be like The Four Seasons deciding to open fast-food hamburger stands and then complaining that they’re facing competition from McDonald’s.
On the other hand, electric females are looking better than ever. Other than the uncanny valley/creepy factor, that is.
https://www.youtube.com/watch?v=YzVvn8wxj2Y
Correct Eric “want a porche”!
My mom was such. She bought the cheapest gasser model, a Macan.
She is tickled about it.
I drove it, wow……… I was expecting much less for the ‘cheapest porche’. For $60K it blew away any other $60K competition in it’s class for overall fit, finish, package, engine, etc……IMO
I bet the Porche brass had nothing to do with making EV’s, it was VW, or VW gutted real Porche management and installed girly-men and/or yes-men.
Correct Eric “want a porche”!
My mom was such. She bought the cheapest gasser model, a Macan.
She is tickled about it.
And there you have it the real reason Porsche is dying and soon to be dead.
Porsche has been dead to me for over 20 years when they switched to a SUV making lifestyle brand that caters to people that have no understanding of what a Porsche was (ie a sports car) and quite frankly have no ability to actually drive a vehicle anywhere near its limit. Clogging the left lane on their way to Target.
Porsche can’t die soon enough.
Very true Barney.
But it’s only the less than 10%’ers that know how to drive.
The masses will never get it. The ‘drivers’ are fighting a losing battle that will never be won.
An SUV Porsche is pretty silly. The SUV Lamborghini I passed the other day is ridiculous.
“The state – in this case it is chiefly the German state – can of course make Porsche (and other car companies) manufacturer lots of EVs. This is the Soviet-model of manufacturing; i.e., instead of market demand driving the market, demand things be made.”
Channeling “The Dude”, this aggression will not stand, man!
Damn! Now I’m going to have to name my cordless drill.
The car maker’s suicide continues. Making cars that appeal to the state.
Capo Gecko currently owns Duracell.
You can lead a horse to water but you can’t make him drink.
You can force someone to build something but if the customer doesn’t want it, no amount of coercion will create a market for it.
One of the downsides of 7+ billion people is that even a niche market is still a pretty big potential customer base. In the VC world it’s called the total addressable market, or TAM. Most products aren’t considered universally desirable, so you pick your niche.
Hopefully that Venn diagram has enough overlap to get investors interested in your company. Then Cha-ching! you’re funded! Now your goal should be to get into production and start that marketing campaign. Or maybe it’s get into production and start raising more money. Or maybe it’s just raise more money. Doesn’t really matter as long as you can keep investors happy. Selling product is secondary, at least until it isn’t.
That works great for small startups. The investors expect to see 90% of their bets to fail. The 10% that are hits are enough to cover the losses. Much like the Hollywood model during the 1970s and 80s, where blockbuster films and Michael Jackson records were propping up indie films and bands that wouldn’t ever get made otherwise – And REM turned out to be a big payoff even though their fans called them sellouts. But that’s for small startups and Hollywood under the privately held corporations. The big bets and big fails aren’t really all that big when compared to investor portfolios. But when public companies with massive stock valuations do it, that’s a massive risk. You might have a fantastic product, with great marketing and even high praise from the press, but there are still plenty of variables that cannot be accounted for. Betting that China would be a huge market of them only to find that China has their thumb on the scale in favor of the locals. Assuming the “peak oil” people were right only to find the fracking revolution. Misreading the market’s willingness to self-sacrifice themselves in favor of an unseen “existential” threat.
And now much like publicly traded Hollywood, they can’t help but release milquetoast products that no one wants. Add in a government mandate based on fever dreams and junk science and that’s a recipe for a “great reset” in the automobile industry that makes 2008 look like a mild intervention.
Now that the pipelines in the aquaduct box maybe Porsche can transition into spiffy mil spec drones?
Snort snort
“You can lead a horse to water but you can’t make him drink.”
Well, there’s a couple/few states that are trying to do just that by coming up with regulations/laws that won’t allow X-old year cars on the road…………
If these laws pass, and I was in those states, I would drive one out of spite.
Just wait until the power tool companies start building cars.
Perhaps we might see “exciting” new models such as the Milwaukee Torque Steer coming soon to a Milwaukee dealer near you.
Unlikely but so was the idea of a battery powered Porsche 20 years ago.
It’s inevitable. These companies are making electric mowers, job lights, radios and heated jackets. The step to a UTV and then a vehicle doesn’t seem that far fetched. And the flat bill cap fanboy yahoos at Home Depot would buy them.
Porsche could turn to Ferrari’s corrupt insider model, in which customers are vetted for social suitability — and then those allowed to join the club are obliged to buy an electric Luce to qualify for purchasing more desirable models with V8s and V12s.
Just kidding. Ferrari can’t get away with its invidious discrimination any longer. Its idiotic Luce is a fatal misstep that devalues the brand. Engaging Jony Ive as the designer merely emphasized that it’s a lowly cell phone on wheels.
It reminds me of being invited to the Cotton Club in Baton Rouge. At first I balked, unsure of the connotation — are we talkin’ about the plantation owners, or the cotton pickers? Being forced to buy a stinking Luce to qualify for a V12 is a case of joining the cotton pickers club, while Ol’ Massa bosses you around like a field hand.
‘It was his teenage love of cars that made Ive decide to become a designer. When he left school, he checked out a few car-design courses in London, including one at the Royal College. He swiftly changed his mind. “The classes were full of students making vroom! vroom! noises as they drew,” he recalls, still horrified.’
From a Time magazine interview with Jony Ive on March 17, 2014.
https://web.archive.org/web/20190403141431/http://time.com/jonathan-ive-apple-interview/
Thanks for the link, interesting article. Brilliant sail-fawn designer, cars not so much. A true new New Soviet Man.
Hi Eric,
Your reference to the Volga canal is apt…..the more that western governments come to resemble the old U.S.S.R. in implementation the faster the decay. The white pill is that this will all collapse, the black pill is that it will take us all with it. Once the situation gets really dire, expect desperate people to whip out the pitchforks and start taking retribution, a la Mussolini on a meat hook on the implementors of this madness. Oh well, it was great while it lasted….
It won’t take us ALL with it. Make a plan and prepare.