Porsche AG just posted the most humiliating quarter in its 77-year history—a €967 million ($1.1 billion) operating loss that marks the luxury automaker’s first quarterly loss since going public in 2022. According to Bloomberg, the sports car manufacturer is hemorrhaging cash as it scrambles to unwind an expensive electric vehicle strategy that spectacularly backfired against brutal market realities including 15% U.S. import tariffs, collapsing China demand, and a €2.7 billion ($3.1 billion) writedown for scrapping its battery production dreams.

The Q3 2025 results represent a catastrophic reversal from the €974 million profit Porsche posted in the same quarter last year. The loss significantly exceeded analyst expectations of a €611 million shortfall, according to Reuters, sending yet another shockwave through an auto industry already reeling from the failed promises of luxury EV profitability.

Historic Loss Marks Strategic Failure

Porsche’s third-quarter disaster stems directly from what CFO Jochen Breckner called “extraordinary expenses” totaling €2.7 billion ($3.1 billion) for the company’s strategic realignment. Translation: admitting the premium EV playbook doesn’t work when Chinese competitors build better electric cars for half the price while American tariffs kneecap your profit margins.

The company’s operating return on sales—a key profitability metric—has collapsed from a healthy 14.1% in 2024 to barely 2% for 2025. That’s not luxury car economics. That’s struggling to break even territory. Porsche’s official financial report shows sales revenue for the first nine months plummeted to €26.86 billion ($31.22 billion), down 6% year-over-year, while operating profit cratered 99% to just €40 million ($46.50 million).

For context: when Porsche went public in September 2022, it pitched investors on 15-18% operating margins and a glowing EV future. Today, those margins have evaporated, the stock has lost more than half its value, and the company got booted from Germany’s benchmark DAX index in September—a massive reputational blow for a brand built on performance and prestige.

The core strategic failure? Porsche bet big on in-house battery production through partnerships like the V4Smart deal with VARTA, invested billions in all-electric product development, and assumed customers would pay massive premiums for electric 911s and Taycans. Instead, the all-electric Taycan saw deliveries fall 6% in the first half of 2025, and the company is now scrambling to add combustion engines and plug-in hybrids back into vehicles originally planned as pure EVs.

Tariffs and China Collapse Accelerate Crisis

Porsche’s timing couldn’t be worse. The company imports every single vehicle it sells in the United States—now its largest market—from European factories, making it uniquely exposed to the 15% tariffs President Trump implemented on European auto imports. CFO Breckner disclosed that U.S. tariffs have already cost Porsche $581 million through the first nine months of 2025, with the full-year hit projected at roughly €700 million ($813 million).

Meanwhile, China—formerly Porsche’s most lucrative market—is in freefall. The company has watched Chinese buyers abandon six-figure German EVs in favor of domestic brands like BYD that offer comparable or superior technology at dramatically lower prices. Porsche’s China deliveries plunged 26% through the first nine months of 2025 compared to the same period last year.

“We have to assume that the general market conditions will not improve in the foreseeable future,” Breckner warned during the earnings presentation, adding that “large-scale solutions” are needed in current restructuring talks with labor representatives—corporate speak for significant job cuts ahead.

The company is now exploring U.S. assembly to dodge tariffs, according to Bloomberg’s previous reporting, though building a Porsche factory in America would take years and cost billions more the company can’t currently afford.

Leadership Shakeup and Cost-Cutting Push

In a dramatic acknowledgment that new management is needed to dig out of this mess, Porsche announced that Michael Leiters will take over as CEO on January 1, 2026, replacing Oliver Blume. According to Porsche’s official announcement, Leiters spent 13 years at Porsche from 2000-2013 working on the Cayenne and Macan SUV programs before becoming Ferrari’s Chief Technology Officer and later CEO of McLaren Automotive.

Leiters inherits what automotive analysts are calling “a poisoned chalice”—a luxury brand in crisis with collapsing margins, mounting losses, and fierce pressure from both budget Chinese EVs and America’s tariff regime. Blume, who also serves as CEO of parent company Volkswagen AG, faced growing investor criticism for trying to simultaneously run both companies while Porsche’s profitability imploded.

The incoming CEO’s immediate priorities: slash costs through the “Push to Pass” efficiency program, negotiate job cuts with labor unions, and somehow restore profitability without destroying the brand’s premium positioning. Porsche also announced it will propose a “significantly lower dividend” for 2025 compared to the €2.31 per preferred share paid for 2024—another painful admission for shareholders who’ve watched their investment collapse.

Product Strategy U-Turn: From EV Champion to Hybrid Reality

Perhaps the most telling sign of Porsche’s strategic failure is the complete reversal on its product lineup. The company has:

Scrapped in-house battery production plans it claimed were essential for EV competitiveness
Shelved plans for an all-electric SUV positioned above the Cayenne, now adding combustion and plug-in hybrid options instead
Extended the life of combustion-engine models despite previously announcing they’d be phased out
Slashed its goal of 80% EV sales by 2030 to a vague “customer-driven” approach

The combustion-engine Macan is still being phased out next year, but rather than going pure electric as originally planned, Porsche is now hedging with hybrid options across the range. The message to investors: we overestimated how quickly wealthy buyers would abandon internal combustion for battery-electric, and we’re paying the price.

“This year’s results reflect the impact of our strategic realignment,” Breckner said, attempting to spin the disaster as necessary medicine. “However, these measures are essential.”

Essential because the alternative is worse: continuing to pour billions into an EV strategy that’s demonstrably not working while competitors with lower cost structures and no legacy brand baggage eat your lunch.

EVXL’s Take

We’ve been tracking Porsche’s painful EV recalibration since July, when CEO Oliver Blume admitted "our business model, which has served us well for many decades, no longer works in its current form.” At the time, Porsche was cutting its 80% EV target as Taycan sales tanked and tariffs crushed profitability. Today’s Q3 results confirm what we suspected: the luxury EV emperor has no clothes.

Here’s the brutal reality Porsche is confronting: premium pricing only works if customers perceive premium value. When a €150,000 ($165,000) Porsche Taycan loses performance comparisons to a $40,000 BYD Seal, gets crushed on range by Tesla’s Model S, and offers clunkier software than a $50,000 Hyundai Ioniq 6, buyers start questioning what they’re paying for. Strip away the heritage and the badge, and Porsche’s EVs are expensive legacy-brand entries in a market dominated by companies that treat software and batteries as core competencies rather than expensive outsourced problems.

The Michael Leiters appointment signals the Porsche-Piëch families want fresh blood after Blume’s decade-long tenure ended in disaster—at least for Porsche shareholders. Leiters knows the Cayenne and Macan programs that saved Porsche in the 2000s, which is probably why he’s getting the job: those SUVs proved premium buyers will pay extra for a crest on the hood when the vehicle underneath is exceptional. The question now is whether he can pull off that magic again in an era where Chinese EVs are eating 30% of Europe’s market and American tariffs make every import a margin killer.

The broader industry implication? If Porsche—with its premium pricing power, loyal customer base, and motorsports pedigree—can’t make luxury EVs profitable, what does that say about Mercedes, BMW, and Audi’s similar pivots? We’re likely watching the beginning of a broader reckoning where legacy automakers admit the “race to electrification” was really a race to see who could lose the most money fastest.

Breckner’s claim that 2025 is the “trough” before improvement might be corporate optimism, but the fundamentals suggest otherwise. Tariffs aren’t disappearing, Chinese competition is intensifying, and the global EV market has shifted from subsidy-driven growth to competitive price warfare. Porsche’s path forward requires either massive cost cuts that risk brand damage, or premium pricing that current EVs don’t justify. Neither option looks good.

What do you think? Can Porsche’s new CEO turn this ship around, or is the luxury EV dream dead? Share your thoughts in the comments below.