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Porsche admits EV investment to take on Tesla is an “enormous burden”

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7 years ago

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It’s no secret that Porsche is looking to soak up market share away from Tesla when the automaker releases its long range, all-electric Mission E in 2019. Arguably one of Tesla’s strongest potential competitors, with decades of  manufacturing expertise and support from parent company Volkswagen AG, the German automaker specializing in high performance vehicles is preparing to face financial headwinds as it aims to electrify its fleet.

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.

“Today Porsche packs 8,000 to 10,000 euros in added content into an electrified vehicle, but those costs cannot be passed on via the price. The customer won’t accept it, just the opposite, in some parts of the world there’s a certain hesitation,” said Meschke in his interview with Automotive News Europe.

As Porsche looks to invest more than 3 billion euros ($3.5 billion USD) into the development of EVs and plug-ins, the automaker will continue to build internal combustion engine vehicles in parallel and implement company-wide cost-cutting measures to retain its profit margin. “That’s an enormous burden for a company of our size.” says Meschke.

“To protect your margin, you have to look at substantial fixed cost cuts, but there’s only so much potential since the biggest chunks are personnel and development. As sales shift toward EVs, a temporary drop in profitability in the midterm may be expected.”

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For context, Porsche’s investment into its EV program amounts to roughly 70% of what Tesla’s Gigafactory will cost when complete. It’s a massive undertaking that Porsche admits will require company restructuring along with financial incentives to its workforce. “We need to structure the company so that it is in position to sustainably achieve that. 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.” says Porsche’s CFO. “There’s even a pension component.”

By setting a fixed margin target of 15% on a company-wide basis, Porsche’s entire workforce is able to work towards a single goal as looks to maintain a steady CapEx and R&D ratio. “It’s better for Porsche to work with a fixed margin target. It’s really an internal steering instrument. That’s why everyone in the company from the manager to the assembly line worker knows the goal is 15 percent. If we work with a range, that effect is diluted.”

Porsche Mission E concept rendering

When asked by Automotive News Europe on whether Porsche will need to implement a deep cost-cutting program to maintain the company’s high margins, Meschke responded “Under our Porsche Improvement Process, we aim for annual savings of at least 3 percent in indirect areas and 6 percent in direct ones.” Moreover, Porsche’s exec notes that the company performs a cross-department review each year to see if they were able to maintain a 10% savings. “There can always be a time when we need to pull on all levers, but identifying and extracting efficiencies is our everyday business. That way we don’t have to resort to major savings programs at the slightest headwind.”

Maximizing efficiencies across the organization is something Tesla CEO Elon Musk has long talked about. By “building the machine that builds the machine“, Tesla looks to utilize an army of manufacturing robots to achieve mass volume production of its product line that consists of vehicles, solar products and battery storage solutions. It’s the company’s key differentiator over other manufacturers that largely have robots augmenting human personnel as opposed to replacing them.

The goal to achieve full automation is Tesla’s biggest strength, yet also the company’s weakest link, as made evident when Musk announced that production of its mass market-intent Model 3 vehicle was facing issues. The downside to implementing a highly automated production line is the need to have robots that work in perfect harmony with one another. Any misconfiguration or general issue around a specific machine in the process becomes amplified across all other machines that rely on it. There’s less tolerance for errors in an automated process, explained Musk during the company’s third-quarter earnings call.

Porsche’s strategic entry into a market that’s been largely dominated by Tesla is an interesting match up that pits David versus Goliath. With two very different approaches to reaching mass volume production from two very distinct companies, it’s anyone’s guess who’ll come out ahead in the race to electric mobility. Regardless, competition helps stimulate innovation, productivity and growth prospects in the electric car sector, and that can only be a good thing.

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Tesla doubles down on Robotaxi launch date, putting a big bet on its timeline

Tesla continues to double down on its June goal to launch the Robotaxi ride-hailing platform.

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1 day ago

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April 18, 2025

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Credit: Tesla

Tesla has doubled down on its potential launch date for the Robotaxi ride-hailing platform, which will utilize the Cybercab and other vehicles in its lineup to offer driverless rides in Austin, Texas.

Tesla said earlier this year that it was in talks with the City of Austin to launch its first Robotaxi rides, and it planned to launch the platform in June.

This has been a widely discussed timeline in the community, with some confident in the company’s ability to offer it based on the progress of the Full Self-Driving suite.

However, others are skeptical of it based on Tesla’s history of meeting timelines, especially regarding its rollout of FSD.

Nevertheless, Tesla was asked when it would be able to offer Robotaxi rides and where, and it clearly is not backing down from that June date:

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It is getting to a point where Tesla is showing incredible confidence regarding the rollout of the Robotaxi in June. We have not seen this kind of reiteration regarding the rollout of something regarding autonomy from Tesla at any point in the past.

CEO Elon Musk has even been increasingly confident that Tesla will meet its target. Earlier this week, he said the vehicles will be able to roll off production lines and drive themselves straight to a customer’s house:

Elon Musk continues to push optimistic goal for Tesla Full Self-Driving

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There could be some discussion of an acceptable grace period, as the timeline for the Robotaxi rollout could still be considered a success, even if it were a month or two late. However, if it were pushed back further into 2025 or even 2026, skepticism regarding these timelines would continue to persist.

As of right now, it seems Tesla is extremely confident it will meet its goal.

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Tesla Semi fleet from Frito-Lay gets more charging at Bakersfield factory

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1 day ago

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April 18, 2025

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Tesla Semis showcased at Frito-Lay plant in Modesto, CA
Frito-Lay transformed its Modesto, Calif., site by replacing diesel fleet assets with ZE and NZE alternatives and installing fueling and charging infrastructure for the new fleet as well as on-site renewable energy generation and storage.

Among the several companies that have had the opportunity to add Tesla Semi all-electric Class 8 trucks to their fleets earlier than others, the most notable is arguably Frito-Lay, which has utilized the vehicle for a couple of years now.

However, as their fleet is making more local runs and there are undoubtedly plans to expand to more Semi units, the company has recognized it needs additional Megachargers to give juice to their trucks.

As a result, Frit-Lay decided to build more chargers at their Bakersfield, California facility, according to new permits filed by Tesla:

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There are already chargers at the company’s Modesto, California, factory, but Bakersfield is roughly three hours south of Modesto.

Interestingly, Tesla is calling the chargers “Semi Chargers” in the filing, potentially hinting that it is no longer referring to them as “Megachargers,” as they have been in the past. This is a relatively minor detail, but it is worth taking note of.

In 2022, Frito-Lay began installing these chargers in preparation for the Semi to become one of the company’s main logistics tools for deliveries in California and surrounding states.

Frito-Lay is not the only company that has chosen to utilize the Tesla Semi for these early “pilot” runs. PepsiCo has also been a company that has used the Semi very publicly over the past two years.

Additionally, the Tesla Semi participated in the Run on Less EV trucking study back in late 2023, where it managed to complete a 1,000-mile run in a single day:

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Tesla Semi logs 1,000-mile day in Run on Less EV trucking study

Tesla is planning to ramp production of the Semi late this year. On the Q4 2024 Earnings Call, VP of Vehicle Engineering Lars Moravy said the company would be focusing on the first builds of the Semi’s high-volume design late this year before ramping production in the early portion of 2026:

“We just closed out the Semi factory roof and walls last week in Reno, a schedule which is great with the weather. In Reno, you never know what’s going to happen. But we’re prepping for mechanical installation of all the equipment in the coming months. The first builds of the high-volume Semi design will come late this year in 2025 and begin ramping early in 2026.”

Tesla will build these units at a new Semi production facility located in Reno near its Gigafactory. The company is getting closer to finishing construction, as a drone video from this morning showed the facility is coming along at a good pace:

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Tesla Cybercab no longer using chase vehicles in Giga Texas

Elon Musk expects Tesla to produce about 2 million Cybercab units per year.

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1 day ago

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April 18, 2025

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Credit: Joe Tegtmeyer/X

The Tesla Cybercab is the company’s first vehicle that is designed solely for autonomous driving. And while the spacious two-seater is expected to start volume production in 2026, the vehicle’s development seems to be moving at a steady pace.

This was hinted at in recent images taken by a longtime Tesla watcher at the Giga Texas complex.

Tesla Cybercab Production

The Cybercab will likely be Tesla’s highest volume vehicle, with CEO Elon Musk stating during the company’s Q1 2025 All-Hands meeting that the robotaxi’s production line will resemble a high-speed consumer electronics line. Part of this is due to Tesla’s unboxed process, which should make the Cybercab easy to produce.

Elon Musk expects Tesla to produce about 2 million Cybercabs per year. And while the vehicle is expected to see volume production at Giga Texas next year, the CEO noted that the vehicle will be manufactured in more than one facility when it is fully ramped.

No More Chase Cars

While the Cybercab is not yet being produced, Tesla is evidently busy testing the vehicle’s fully autonomous driving system. This could be hinted at by the Cybercabs that have been spotted around the Giga Texas complex over the past months. Following last year’s We, Robot event, drone operators such as longtime Tesla watcher Joe Tegtmeyer have spotted Cybercabs being tested around the Giga Texas complex.

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At the time, videos from Giga Texas showed that the driverless Cybercabs were always accompanied by a manually driven Model 3 validation chase car. This was understandable considering that the Giga Texas complex features pedestrians, other cars, and construction areas. As per the drone operator in a recent post on social media platform X, however, Tesla seems to have stopped using chase cars for its Cybercab tests a few weeks ago.

Aggressive Tints

The reasons behind this alleged update are up for speculation, though it would not be surprising if the Cybercab’s autonomous driving system could now safely navigate the Gigafactory Texas complex on its own. Interestingly enough, the Cybercabs that were recently photographed by the drone operator featured very aggressive tint, making it almost impossible to make out the interior of the robotaxi.

This is quite interesting as other Cybercabs that have been spotted around Giga Texas were only equipped with semi-dark tints. One such vehicle that was spotted in February was even speculated to be fitted with an apparent steering wheel.

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