German automaker Porsche has announced plans to cut more than 500 jobs as the company faces growing financial pressure and slowing demand for electric vehicles. The move is part of a wider restructuring effort aimed at helping the luxury carmaker focus on its main business operations during a difficult period for the global auto industry.
The company said it will shut down three subsidiaries, including a business that develops electric vehicle batteries, a software unit, and a company that makes systems for electric bikes. Most of the layoffs will affect the e-bike business, with around 360 workers expected to lose their jobs in Germany and Croatia.
Porsche’s management says the decision was not easy, but necessary. Chief executive Michael Leiters explained that the company must now refocus on its core operations as market conditions become more challenging. According to the company, the changes are part of a larger effort to improve efficiency and reduce costs after a sharp decline in profits.
Over the past few years, Porsche invested heavily in electric vehicle technology as part of the global shift toward cleaner transport. However, demand for EVs has not grown as quickly as many automakers expected. As a result, Porsche has slowed some of its electric vehicle plans and decided to continue producing combustion engine and hybrid models for longer.
The company has also been affected by falling sales in China, which is one of the world’s biggest car markets. Increased competition from Chinese manufacturers has made it harder for European car brands to maintain strong sales. At the same time, U.S. tariffs and weaker demand in Europe have added more pressure on the business.
Porsche’s latest announcement comes after the company had already revealed plans to cut 1,900 jobs last year. The new layoffs show that challenges in the automotive industry are continuing to grow, especially for companies trying to balance traditional vehicles with the costly transition to electric mobility.
The wider German car industry is also facing difficulties. Major automakers have spent billions of euros developing electric vehicles, but many are now dealing with slower sales and uncertain consumer demand. High production costs and tough global competition have made the transition more complicated than expected.
Despite the difficult news, investors appeared to react positively to Porsche’s restructuring plans. The company’s shares rose slightly after the announcement, suggesting that some investors believe the cost-cutting measures could help stabilize the business in the long term.
Porsche has warned that 2026 is likely to remain a difficult year, with lower sales and tighter profit margins expected. Even so, the company hopes that focusing on its strongest products and reducing unnecessary costs will help it recover and remain competitive in a rapidly changing auto market.
It remains to be seen how EV companies like Lucid Motors (NASDAQ: LCID) are navigating the challenging global market that both EV startups and legacy carmakers have to grapple with.
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