Porsche CFO says the EU might push back its ban on fuel-burning cars

The backstory: In 2020, the EU set a goal of becoming the world’s first climate-neutral continent by 2050, with plans to decrease car emissions by 55% from 2021 and phase out the sale of new combustion-engine cars by 2035. But, the high upfront cost of electric vehicles (EVs) is one of the reasons many were discouraged from making the change. To counter this, several European countries’ governments have introduced subsidies to lower the cost of EVs. 

As far as EV production goes, Chinese car manufacturers have been dominating the market compared to their Western competitors, selling 27 million cars in 2022 – 15% more than the US and EU combined. China also holds 75% of the world’s battery cell production capacity, according to BloombergNEF, which lowers costs for domestic car manufacturers. 

More recently: On Thursday, at an event in Singapore, German carmaker Porsche introduced its second EV, the Macan, about two years late after dealing with software issues. But this comes just as the EV market is cooling off. For example, Elon Musk’s Tesla has recently been cutting its prices and indicated slower growth for this year. Other manufacturers are also scaling back their EV output.

Porsche also saw deliveries in one of its key markets, China, drop by 15% last year due to the slow growth of the country’s economy. But, the luxury car giant’s North American chief, Timo Resch, is still optimistic about demand for a Porsche EV. 

The development: On the sidelines of Thursday’s event, Porsche CFO Lutz Meschke said that Europe’s plan to phase out the sale of new combustion-engine cars by 2035 could be pushed back, as there’s lots of talk surrounding the topic because of a decline in EV orders. EU consumers have been turned off by consistently high EV prices, a lack of reliable charging networks and the pullback of EV incentives, like subsidies. 

Last year, the EU also launched a probe into some Chinese EV makers over state subsidies to decide if it should take measures to protect European EV producers. Chinese ambassador to the EU, Fu Cong, said to Bloomberg that the EU’s investigation into Chinese EV makers is “unfair” as the bloc is not probing companies like Tesla or other European car brands that have their EVs made in China through joint ventures. But, China is cooperating with the EU’s investigation and says it doesn’t want tensions to lead to taking trade measures against one another. 

Key comments:

“We see there is demand from customers that are looking for an electric Porsche offering,” said Timo Resch, Porsche’s North America chief. “It’s the perfect timing to bring such a car.”

“We have to see how steep the ramp-up curve is in coming years,” said Porsche CFO Lutz Meschke. “If we have a situation like now, with certain reluctance to buy electric cars in Europe, then maybe the subsidies will come back.”