Porsche halts electric car battery plans as demand dwindles

Porsche has announced it will abandon its ambition to produce its own electric vehicle batteries, citing a sudden fall in demand among drivers. The German marque is set to wind down operations at Cellforce, its production subsidiary, and shift the division’s focus toward research and development.

The move comes as Oliver Blume, chief executive of Porsche and the Volkswagen Group, pointed to a lack of production volume and scale as key deciding factors. Porsche has confirmed that job losses will occur, though some workers will be offered positions at PowerCo, the Volkswagen-backed battery start-up. Reports from IG Metall union indicate up to 200 of Cellforce’s near 300-strong workforce could be affected.

Batteries remain the single most expensive component of an electric vehicle and a flashpoint for competition between manufacturers. Yet, Western automakers are struggling to keep pace with their Chinese rivals. Northvolt, once seen as a great hope for European EV batteries, filed for bankruptcy earlier this year in a setback for the continent’s ambitions in the sector.

Data shows EVs and plug-in hybrids made up just over a third of Porsche’s sales during the first half of the year, with interest in models like the Macan SUV on the rise. Expectations, however, have not been matched, with a particular slump in the US where relaxed regulations threaten wider adoption. Earlier, the company abandoned plans to expand Cellforce production, again referencing insufficient global volume. Other major players including MercedesBenz Ford and Honda have similarly reduced or postponed their aims in the electric space.

Chinese brands, led by BYD, are increasingly visible on UK roads. China now accounts for a tenth of all new cars sold in Britain. This emergence has stoked concern that Western carmakers could cede the affordable end of the market to their Chinese competitors, as luxury-focused brands such as Jaguar and Range Rover double down on premium offerings.

The latest developments pose searching questions for Europe’s ambition to compete in the electric car era while highlighting the challenges faced by legacy manufacturers as the market’s momentum changes direction.