Porsche to close three subsidiaries in strategic overhaul

On Friday, Porsche announced the closure of three of its subsidiaries: battery developer Cellforce Group, e-bike drive systems maker Porsche eBike Performance, and Cetitec, a networking software subsidiary that served both Porsche and its parent company, Volkswagen Group. The closures will result in more than 500 employees losing their jobs as the automaker attempts to stabilize its business.

The decision comes amid declining sales and profits for the German automaker. In the first quarter, Porsche experienced sales drops across its key markets:

• Sales fell 11% in North America.
• Deliveries were off 21% in China.
• Sales were down 18% in Europe.

Following these declines, Porsche is pursuing what it calls a “technology-open powertrain strategy,” indicating that the company will rely more heavily on other companies for its batteries. This marks a shift for Cellforce Group, which underwent a realignment in August to become a research and development arm after Porsche dropped plans to make its own batteries.

Michael Leiters, who became Porsche’s CEO and Executive Chair early this year, announced plans to realign the business in March, stating that he aimed to comprehensively reposition the company to make it leaner, faster, and its products more desirable. Regarding the closures, Leiters stated: “We must refocus on our core business. This is the indispensable foundation for a successful strategic realignment. This forces us to make painful cuts — including our subsidiaries.” The company has already begun divesting from other ventures. In April, Porsche reached an agreement to sell its equity stakes in Bugatti Rimac and Rimac Group to a consortium led by New York-based investment firm HOF Capital.

The restructuring follows previous difficulties in Porsche’s electric vehicle development. While the company’s electrification efforts started with the Taycan launch in 2019, subsequent models faced setbacks. The Macan Electric was delayed by nearly two years due to software development delays within Cariad, the software division of Volkswagen Group. This delay represents a turn from 2022, when Oliver Blume, who then chaired Porsche’s executive board, characterized battery cells as the combustion chambers of the future. Porsche is expected to bring an all-electric version of the Cayenne to market this year, but the company has also shifted focus back toward its internal combustion platforms, which were originally targeted to constitute a minority of sales by 2030.

Why it matters

Porsche’s move highlights the broader struggle legacy automakers face in balancing the transition to electric vehicles with the reality of cooling demand and the need for leaner, more profitable operations.