Porsche is changing gears on its electrification strategy, doubling down on combustion engines and hybrids as demand for fully electric vehicles sputters.

The German sports car maker is investing €800 million (P48.57 billion) into its internal-combustion engine (ICE) and plug-in hybrid (PHEV) lineup, a move that signals a significant shift away from its initial full-throttle approach to electrification.

The company has warned that this strategic pivot will dent its bottom line, with profit margins expected to land between 10% and 12% this year, far below its long-term target of 20%. Investors weren’t best pleased by the prospect that the fat years could be over, and Porsche shares took a 6% hit following the announcement.

The firm’s troubles stem largely from its underwhelming EV performance in China. Sales in its biggest market nosedived 28% last year, with the all-electric Taycan failing to gain traction among consumers. The company’s overall global deliveries dipped 3% year-on-year in 2024, further highlighting the struggles of its electric push.

As part of its course correction, Porsche is cutting 1,900 jobs in Germany by 2029, targeting its Zuffenhausen plant—home of the Taycan—and its R&D center in Stuttgart. The job cuts follow a sharp 49% drop in Taycan sales and an earlier move to reduce shifts at the Zuffenhausen factory. Unlike other companies, Porsche manufactures all of its vehicles in Deutschland, which puts further pressure on the company due to the high production and labor costs in the country.

The turmoil isn’t just on the production line. Porsche SE, the holding company of the Porsche-Piëch family, is also feeling the pressure, with a looming debt repayment burden and a revised write-down of its stake in Porsche, now expected to be between €2.5 billion and €3.5 billion (P152 billion and P212 billion), or roughly double previous estimates. The family, which heavily relies on dividends from Porsche and Volkswagen, is growing increasingly concerned about both companies’ direction.

Adding to the drama, internal boardroom battles are intensifying. Reports suggest that a power struggle between Porsche CEO Oliver Blume and chief financial officer Lutz Meschke is playing out behind the scenes. Talks are already underway to terminate Meschke’s contract along with that of Detlev von Platen, Porsche’s head of sales and marketing. While Porsche has not commented on the reasons for these moves, insiders point to differences over the company’s EV strategy and the recent dip in sales.

Porsche is far from alone in facing the EV slowdown. Its parent company, Volkswagen, recently announced plans to slash 35,000 jobs across its flagship brand as it struggles with plummeting demand in both China and Europe. Audi, another VW Group subsidiary, is also under pressure, with reports suggesting that thousands of job cuts are on the table.

Despite these setbacks, analysts are cautiously optimistic about Porsche’s decision to reinvest in combustion engines. Not only does it seem to align with shifting consumer demand, but it also hints at a broader industry recalibration, with carmakers realizing that full electrification might not be the one-size-fits-all solution they once believed it to be. For now, Porsche is embracing a new normal—one where combustion engines aren’t just surviving but thriving alongside hybrids (at least until the EV market finds its footing again).