00:00Porsche is considering whether or not they're going to move forward with this model as part of the realignment of their entire electric vehicle strategy.
00:08So are they bringing back, have they brought back the ICE versions already?
00:12Because I still see on the website, I can still configure a Boxster or a Cayman for purchase.
00:19But I know that they had stopped making the gas versions of these last year.
00:25That's correct. So the 718 Boxster and Cayman models were being made actually in Osnabrück.
00:30And they ended production of those last year.
00:33So in terms of the combustion variants, those, I think, are still available on the market.
00:39But in terms of future 2026, 2027 iterations, those don't exist.
00:44Monica, what did go wrong? Why was this taking longer?
00:47Why was it more expensive to get some of these EV models developed?
00:52Right. So Porsche was sort of already in the process of developing the electric variant of the 718 line.
00:58And that's sort of been ongoing while Porsche was facing a lot of these issues that have cropped up over the past year or two.
01:05So you have the tariffs in the United States that are hitting them quite hard.
01:09And then you recently also had the collapse of the Chinese market.
01:12We're seeing that a lot of luxury consumers aren't really there for Porsche.
01:17And they've lost something like 40 percent of their volumes there.
01:20And they're really having to downsize their expectations and their volumes in their dealer network in China as well.
01:27And with all of these scenarios playing out, Porsche has decided to step back from their aggressive EV strategy.
01:36And they're trying to balance out their portfolio with more combustion engines and more hybrids.
01:42That is getting pretty expensive.
01:43And that leaves new CEO Michael Leiters in a position where he's got a tighter budget and he has to pick and choose what he's going to invest in
01:52and where it makes sense for Porsche to spend its money on its upcoming products.
01:56Now, the issue with the electric 718 line is that Porsche really wants to come forward with some hybrids on this line.
02:05But to do that, they're basically going to have to develop completely new underpinnings for the hybrid models.
02:11And that's essentially like investing in two different models.
02:14And that gets really expensive.
02:16And they've already had to delay it in some way, shape or form.
02:19And the more you delay that model, which was already in development for the past year or two, the more you delay that model,
02:26the more you risk putting something on the market that's old and that isn't really going to impress consumers.
02:30One of the older things that they make, luckily for them, that does still impress consumers is the 911, right?
02:36You can't really get one for under 150.
02:39And the Cayenne and Macan must be cash cows as well.
02:44So I wonder why this doesn't give investors at least a little bit of confidence that they have time to turn it around.
02:51The shares just go down and to the right, Monica.
02:54Since the IPO, they've lost half of their value.
02:58Why isn't anyone buying the dip here?
03:03That's a really good question, Matt.
03:04I think there is a narrative to be seen here that Porsche has really hit the trough in 2025
03:09and that they're steadily going to sort of see some improvement over the coming years.
03:14I know that since Michael Leiters has taken over as CEO on January 1st, that the shares have sort of seen a slight increase.
03:22They've increased a couple of percentage points.
03:24And I think there is a lot of chance for Porsche to sort of come out of this trough and slowly build itself back up.
03:33We've heard the CFO talk on previous analyst calls that it's going to take a couple of years potentially to get back into single or double-digit margins, excuse me.
03:44But they really have to focus on what their product strategy is.
03:47And Michael Leiters is, you know, he's known for being at Porsche.
03:51Previously, he worked on the Macan.
03:52He worked on the Cayenne line.
03:54And then he was at Ferrari.
03:55He worked in research and development there.
03:58And then he went on to become the chief of McLaren.
04:00He has a reputation for being good with hybrids.
04:03And there's some thoughts that maybe he's going to help Porsche with its pivot more in the hybrid direction, more in this balanced-out portfolio direction.
04:12The big question is, is he going to take the company more into, like, a luxury direction to try to reduce volumes?
04:19Can you really do that when you need economies of scale to really increase your profit margins?
04:25There are a lot of open questions for sure.
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