Porsche (POAHF, Financial) may expand its growing lineage with an electric vehicle in line with an increasing clamor for cleaner energy lovers, and to also counter the rise of Tesla Motors (TSLA, Financial). According to Porsche chief Matthias Mueller, Tesla's new cars are exceptional, and their pragmatic approach towards making clean and energy efficient cars, will help set a standard that others will have to follow. He made these claims at Porsche's annual conference held at Stuttgart, Germany.
The electric cars run up
Porsche may add a battery-powered vehicle to its line ups to feed the rising demand of eco-friendly sports luxury cars. This new car may hit the market by 2020. Volkswagen (VLKAY, Financial) is also planning to launch an electric car with features complying with environmental regulations. These two German auto giants feel that the near future would probably be fueled by the demands of electric cars. However, currently, this premium segment is dominated by Tesla. Before, commenting on future advancements, we have to wait for another five years.
Porsche would reportedly target presenting an electric car with a range of more than 500 km. Currently, Tesla’s top model Model S comes with a battery of 85 kWh, runs 502 km without charging, and its top speed is 225km/h. Porsche also has three plug-in hybrid models in the premium segment: 918 Spyder, Cayenne S E-Hybrid, and the Panamera S E-Hybrid. Among these, the latest model Panamera S E-Hybrid could run up to a maximum of 20 miles on e-power. This is where Porsche has to work to provide more efficiency.
Rising sales volumes and decreasing profit margins
Porsche is expected to sell more than 200,000 vehicles in the current year due to rising demand of luxury cars. Audi (AUDVF, Financial), DaimlerAG (DDAIF, Financial) and Bayerische Motoren Werke (BMW, Financial) have also reported a rise in their sales volumes. This rising demand can be attributed to the strengthening of the U.S. economy and also to considerable increase in demands from emerging economies such as China and India. Rising sales volume doesn’t guarantee a rise in profit, too. The profit margin for Porsche has shrunk from 18% last year to 15.8% this year. The advancing technologies force auto companies to invest a large sum on changing the production lineups and including new features in their vehicles. Last year, it added Macan to its lineup, and added new features to its best-selling Cayenne SUV.
Concluding thoughts
Now, it is projected that Porsche will focus more on developing the engines and handling, instead of including the latest advances in car-internet or automated driving. As Muller once said that “Porsche's customers do not want a smart car, that works like a smart phone on wheels; they do not care about having large touchscreens on the center console.” The message from the auto giant is clear: “Porsche will not relent and resort to any kind of window dressing.”
As we know that the European Union has one of the strongest environmental regulations. If Porsche includes an electric car in its luxury segment, it would help the brand to comply with the environmental regulations successfully.
However, Porsche's development head Wolfgang Hatz said, “When someone buys a Porsche, they expect to be able to travel quickly from one place to another, irrespective of the terrain or distance between the originating point and destination, or else the concept of these high speed luxury cars just won’t work.” It would be interesting to watch how Porsche combines power, efficiency and electric energy into their luxury sports cars giving equal importance to all of them.
