Porsche has cancelled its planned all-electric SUV series above the Cayenne, choosing instead to launch the new model line with combustion engines and plug-in hybrids. Company and financial disclosures point to a tougher EV market backdrop and shifting regional demand as Porsche and parent Volkswagen Group reassess product planning, a move Volkswagen said would have a roughly €5.1 billion impact on its 2025 operating result. Rather than doubling down on battery power for its largest and most expensive SUV yet, Porsche is leaning on combustion and plug-in hybrid powertrains while it recalibrates the pace of electrification.
Why Porsche Killed the Electric Mega SUV
Porsche had originally designed its new SUV series, which sits above the Cayenne in both size and price, as a fully electric vehicle line. That plan is now dead. According to Porsche’s own announcement, the new SUV series “will initially launch exclusively with combustion-engine and plug-in hybrid powertrains” due to current market conditions. The automaker also confirmed that existing internal combustion engine models, including the Cayenne and Panamera, will remain available longer than previously planned, effectively stretching the life of its profitable gasoline and hybrid portfolio while it reassesses the pace of electrification.
The shift does not mean Porsche has abandoned electric vehicles entirely. A key distinction, highlighted in financial press coverage, is that Porsche cancelled the EV line above the Cayenne but did not cancel the Cayenne EV itself. That separation matters for buyers who may have been tracking the electric Cayenne as a future purchase and for investors trying to understand which projects have been shelved. The above-Cayenne model, sometimes referred to informally as a “mega SUV,” was the vehicle that lost its all-electric mandate. Porsche’s reasoning centers on a trio of pressures: slowing EV adoption rates globally, trade tariffs that have disrupted supply chains and pricing, and a sharp decline in Chinese luxury car demand that has undercut the business case for a battery-only flagship.
A €5.1 Billion Bill for Volkswagen Group
Porsche’s strategy reversal has landed squarely on Volkswagen’s balance sheet. In an ad-hoc regulatory disclosure, Volkswagen AG detailed a total impact of roughly €5.1 billion on its 2025 operating result. That figure breaks down into two components: a goodwill impairment of approximately €3 billion tied to Porsche’s reduced medium-term outlook, and a separate one-off charge of about €2.1 billion reflecting the direct costs of scrapping and restructuring product plans. Porsche has also lowered its 2025 operating return-on-sales forecast, acknowledging that profitability targets premised on rapid EV growth are no longer realistic in the near term.
Volkswagen’s interim report for the first nine months of 2025 provides additional detail on the accounting mechanics. The group performed a discounted cash flow impairment test on Porsche’s assets, which yielded a €2.7 billion impairment charge against a targeted return on sales of 10 to 15 percent. The slight difference between the €2.7 billion interim report number and the €3 billion cited in the ad-hoc disclosure may reflect timing and scope differences between the two filings, including changes in assumptions about future margins and volumes. For investors who track the group’s valuation through equity and bond market data, the write-down underscores how deeply the EV pivot had been embedded in Porsche’s forward planning before the reversal, and how sensitive projected earnings were to optimistic electrification scenarios.
Tariffs, China, and the EV Slowdown
Three forces converged to make Porsche’s original electric-only plan untenable. Trade tariffs have raised the cost of sourcing battery components and shipping finished vehicles across borders, squeezing margins on EVs that already carry higher production costs than their combustion counterparts. In China, which had been a critical growth market for European luxury brands, demand has softened considerably as domestic competitors offer capable electric SUVs at far lower price points. And across Western markets, the initial wave of early-adopter EV enthusiasm has plateaued, leaving automakers with slower-than-expected sales curves for high-priced electric models and growing inventories of premium EVs that require discounts to move.
These factors, outlined alongside Volkswagen’s profit warning, created a scenario where launching a flagship electric SUV above the Cayenne carried unacceptable financial risk. Porsche’s decision to launch the new model line with combustion-engine and plug-in hybrid powertrains is less a rejection of electrification and more a concession that the economics do not yet support a battery-only ultra-luxury SUV at scale. By keeping the Cayenne and Panamera on sale with their current mix of engines and hybrids, Porsche effectively buys time: it can continue to earn strong margins on familiar technology while monitoring how quickly infrastructure, regulation, and consumer sentiment evolve toward higher EV adoption in the top price brackets.
The Audi Connection and Platform Sharing
Porsche does not operate in isolation within the Volkswagen Group, and its product strategy shifts ripple across shared platforms, engineering budgets, and supplier contracts. Audi, which shares VW Group architecture and development resources with Porsche, stands to be directly affected by this recalibration. When Porsche commits to combustion-engine and plug-in hybrid powertrains for a new model line, it can reinforce demand for shared components and engineering resources within the group that Audi also draws on across its range. That shared investment can help both brands spread development costs more efficiently at a time when pure-EV programs are proving expensive and slow to generate returns, particularly in segments where customers still value long range, rapid refueling, and towing capacity.
The practical effect is that Porsche’s retreat from an all-electric mega SUV strengthens the business case for keeping high-performance combustion platforms alive across the VW Group’s luxury brands. Rather than each brand racing independently toward electrification, the group can sequence its rollout, prioritizing EVs in segments where regulatory pressure is highest and customer acceptance strongest, while relying on hybrids and efficient gasoline engines elsewhere. For Audi, that may mean a more gradual transition for its largest SUVs and performance models, with plug-in hybrids serving as a bridge technology that leverages existing hardware while the group balances investment, demand, and regulatory requirements across regions.
What It Means for Porsche’s Future Line-Up
For Porsche’s customers, the cancellation of the all-electric mega SUV has two immediate implications. First, buyers who want the brand’s largest and most luxurious utility vehicle will, at least initially, be choosing between combustion and plug-in hybrid versions rather than a battery-only flagship. That aligns with current purchasing patterns, where many high-end SUV customers still prioritize long-distance usability and towing-friendly powertrains over the environmental and tax advantages of a pure EV. Second, the continued availability of the Cayenne and Panamera with traditional engines suggests that Porsche will keep offering a familiar driving experience for longer than some rivals that have announced hard deadlines for ending combustion sales.
Strategically, Porsche is repositioning itself as a brand that will electrify where it makes commercial sense rather than chasing EV volume at any cost. The company is still investing heavily in electric technology, including the forthcoming Cayenne EV and other battery-powered models lower in the range, but it is no longer forcing its most expensive SUV project to carry the burden of proving that ultra-luxury EVs can be both technically flawless and reliably profitable. By stepping back from an all-electric mandate for the mega SUV, Porsche is signaling a more cautious, data-driven approach: one that weighs regional demand, regulatory timelines, and group-wide capital allocation before committing to battery-only flagships at the very top of its line-up.
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*This article was researched with the help of AI, with human editors creating the final content.
