Porsche Says Investment in EVs Will Ding Its Profits

Porsche has green-lighted an ostensibly Tesla-competitive electric car’s development, has “many new products in the pipeline” besides, but its CEO says investments in EVs will not be initially healthy to the company’s bottom line.

On the contrary, CEO Oliver Blume told media Porsche will take a hit on profits for an unspecified duration due largely to increased electrification investments – most notably, its production car based on the Mission E, which will be its first all-electric Porsche.

The Mission E project alone will see Porsche investing $1.12 billion and creating 1,000 new jobs at its Zuffenhausen home base to build the car.

“Therefore it’s clear that we can no longer carry out major leaps on results,” Blume told reporters, according to Reuters.

Porsche is the second-most profitable of the various Volkswagen brands, and Blume has hinted that when 2015 numbers come out in March, they will be healthy. The new Macan small SUV almost certainly plays a part in that. Porsche already saw a 16-percent jump in profit from 2014 to 2015.

“Porsche has delivered a great result,” Blume said as the company otherwise braces for a profit hit as it branches beyond its traditional roots.

It might not be surprising however that Porsche would sacrifice profits at this juncture as it seeks to grow its model lineup. Porsche is staking a lot of its reputation on its first all-electric car and does need it to pay off.

The brand has many buyers that would be considered sports-car purists, and to not do it right could dilute a brand that has come to be associated with very high profitability.

Further, Porsche has a strong position within the Volkswagen Auto Group now reeling under Volkswagen’s diesel scandal. Volkswagen and Audi are also making accelerated inroads to electrification, and an elite Porsche EV that’s a hit could help undo damage to public perception.

Naturally also, all these efforts go toward the underlying driving motive of satisfying mpg and emission regulations. European and U.S. standards, as well as those in other markets including China are tightening, so Porsche has said it will lose money for now, in order to hopefully make profits it is accustomed to in due time.

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