Porsche Halts In-House Battery Production Plans Amidst Evolving EV Market
Porsche has announced the cessation of its ambitious program for proprietary high-performance battery cell manufacturing. This decision comes amidst a reevaluation of the global electric vehicle market's growth trajectory, which has proven to be more sluggish than initially projected, particularly within key markets like the United States and China. The luxury automotive manufacturer’s subsidiary, Cellforce, will now redirect its focus entirely toward battery research and development, moving away from large-scale production. This strategic pivot highlights the intense capital demands and the immense scale required to compete effectively in the burgeoning but highly competitive battery industry, where economic viability has become a significant hurdle for specialized ventures.
The company confirmed this shift on a recent Monday, explaining that Cellforce's operations would be significantly curtailed, with an emphasis now placed on innovative research and development initiatives. Producing batteries, especially at the high-performance level Porsche envisioned, necessitates substantial upfront capital and the achievement of significant economies of scale, both of which proved challenging given the current market conditions. Oliver Blume, the CEO of both Porsche and the broader Volkswagen Group, articulated that the decision was driven by volume considerations and the inability to achieve the necessary scale for self-produced cells to be economically sound.
Despite this retraction from in-house production, Porsche's electric vehicle sales continue to show robust growth. In the first half of 2025, electric vehicles and hybrids collectively constituted 36% of the automaker's worldwide sales. Notably, the all-electric variants of the Macan accounted for approximately 60% of its global sales of 45,137 units in the initial two quarters of 2025, totaling nearly 26,000 units. Furthermore, the Taycan saw a substantial 31% year-over-year sales increase in the U.S. during the second quarter of this year, climbing from 807 to 1,064 units. This sustained demand for their electric models underscores Porsche's ongoing commitment to electrification, even as their battery production strategy evolves.
However, Porsche's assessment of a decelerating EV market is not an isolated viewpoint within the automotive sector. Regulatory shifts and policy changes in critical markets, such as the United States, are influencing the broader EV industry landscape. Concerns over the future of EV tax credits and a potential easing of fuel economy standards under different administrations suggest that traditional gasoline-powered vehicles might retain their market presence longer than previously anticipated. Michael Steiner, Porsche’s Executive Board Member for Research and Development, explicitly stated, "The market for electric vehicles worldwide has not developed as originally thought. The framework conditions have changed fundamentally, and we have to react to them. We have to conclude that the planned business model is not economically viable."
Cellforce had previously progressed to developing battery cells and even commenced pilot production, with initial plans for a factory in southern Germany to produce one gigawatt-hour of batteries annually, sufficient for roughly 10,000 Taycan sedans. A larger secondary facility was also on the horizon. Now, Cellforce’s R&D endeavors will provide support to the wider Volkswagen Group and V4Smart, a battery company recently acquired by Porsche, which supplies the high-performance cells for the 911 GTS hybrid sports car. Reports indicate that around 200 of Cellforce’s nearly 300 employees might be affected, with remaining personnel potentially finding opportunities within Volkswagen Group’s PowerCo battery subsidiary, which will also utilize Cellforce’s R&D infrastructure.
The current climate poses significant challenges for European battery manufacturers. Chinese battery companies wield considerable influence over supply chains, boasting mature production capabilities and the ability to offer advanced batteries at competitive prices to Western brands. The cautionary tale of Swedish battery maker Northvolt, which sought to challenge Chinese dominance but faced bankruptcy in the U.S. after substantial investment, illustrates the harsh realities of this market. Consequently, smaller, in-house battery initiatives like Porsche’s are being scaled back, while larger entities are compelled to adapt. For instance, LG Energy Solution is expanding its focus on grid-scale energy storage solutions, responding to the uneven growth patterns in EV sales.
While Porsche's Macan Electric utilizes batteries from CATL, and the Taycan is powered by LG Energy Solution cells, Porsche remains committed to its electric future with upcoming models like the Cayenne Electric and an all-electric sports car in the 718 series. Global and U.S. EV battery production continues to expand, but this growth is increasingly concentrated among a select group of powerful players, including CATL, BYD, and LG Energy Solution. Smaller battery enterprises are facing intense economic pressures within this demanding sector. Meanwhile, the Volkswagen Group is vigorously pursuing its own battery initiatives, investing billions in raw material sourcing, next-generation solid-state batteries, and constructing three major battery plants in Spain, Germany, and Canada.