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Tesla Becomes An "enormous Burden" On Porsche

Posted on May 04, 2017
81 out of 100 based on 794 user ratings

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When Tesla started selling cars, CEO Elon Musk probably didn’t think his little company would eventually cause Porsche to completely restructure itself.

But it’s starting to happen.

As demand for Tesla cars continues to grow, other automakers are wondering how they can grab a piece of the action and divert some of the dollars from that demand into their own bank accounts.

Porsche is discovering just how expensive that effort will be. The electric luxury market is exceptionally small right now, and Tesla has a firm hold on what little market share exists. CNBC, citing data from Moody’s, suggests that the Tesla S and X models account for 45 percent of EV sales in the U.S.

Most automakers see the segment growing, though, and want to make sure they’re not left behind. But the investment required to catch up to Tesla is staggering.

Porsche’s CFO Lutz Meschke recently spoke with Automotive News Europe about the company’s plan to stay profitable as it invests billions into its electric vehicle program.

Specifically, Porsche will be dropping some $3.5 billion into the development of EVs and plug-ins while continuing its dedication to gas and diesel propulsion. To afford it all, the automaker will implement company-wide cost-cutting measures to retain its profit margin of 15 percent.

Meschke said,

That’s an enormous burden for a company of our size… We need to structure the company so that it is in position to sustainably achieve that [margin]. There can always be years when it might drop to below 15 percent due to exchange rates or an economic crisis, but every worker has to know we are not letting up.

It sure is a burden, and we have to wonder if it’s an investment that wouldn’t have happened without Tesla’s entry into the auto world.

Porsche’s answer to Tesla is called the Mission E, a large premium 4-door sedan that will be competing in the same segment as Tesla’s Model S. In fact, Porsche is even aiming for a sub-$100,000 price, maybe even as low as $86,000, which will put it within shouting distance of the Model S.

If early reports hold true, we can expect a driving range of about 250-300 miles and a 0-60 time of about 3.5 seconds. Electrek noted that Porsche has been spotted benchmarking the Mission E against the Model S, so it wouldn’t surprise anyone if the specs are significantly better by the time the car debuts in 2019.

Would you buy an electric Porsche instead of a Tesla?

-tgriffith

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