Porsche is one of the most revered names in cars. Asking
car enthusiasts to name the brands that best exemplify
excellence in engineering, racing and design. And Porsche
will be one of the names that comes up. It has a racing
heritage that can't be argued with. It has made at least one
of the most iconic sports cars of all time, the 911 and it has
a large following of deeply devoted fans born like many
German automakers, out of a deeply dark history, Porsche has
become a name respected the world over
Porsche vehicles are one of those examples where the
precision, the craftsmanship that goes into these vehicles,
and then how it's reflected in their performance, and what
they're capable of doing both at at race levels, as well as on
the street perfectly embodies that kind of stereotypical
German engineering,
but it is also a changing company. The once independent
firm devoted entirely to sports cars has become a brand within
the massive Volkswagen Group, a company with which Porsche has a
long history, and it is viewed as a kind of jewel in that
portfolio. Volkswagen has other luxury brands that range from
the high end to the exotic, but Porsche is responsible for about
25% of VW passenger car profits. And while its fans may 1 think
of sports cars what really sell today are its sport utility
vehicles. This comes at Porsche is at another potentially
pivotal juncture, electric vehicles are coming and this
time they usually innovative and groundbreaking Porsche is
playing catch up. The automaker declined a request to be
interviewed for this story. Porsche has heritage loyalty and
a long track record of innovation competitive success
on its side, but it has built its heritage and its cars around
gasoline burning engines, how can it continue to succeed and
set sportscar standards in the electric age? The story of
Porsche begins with Ferdinand Porsche. He was an engineer Born
in 1875. in Bohemia, a region of what was then Austria Hungary,
and today is part of the Czech Republic, Ferdinand Porsche
secured his place in history when he became the designer of a
people's car or Volkswagen for Adolf Hitler. The car he
designed was called the type one but as widely known as the
beetle. The actual Porsche brand didn't form until 1948,
Ferdinand Porsche founded the company with his son also named
Ferdinand but nicknamed fairy, the first production car they
designed was called the 356. It had an engine borrowed from a
beetle and tuned for better performance, the vehicle had one
of the features that Porsche became famous for an engine
placed in the rear of the car. In the 1950s, Porsche began
making its own engines and improved the 356. It also made
the 550 Spyder a road racing car nicknamed the giant killer for
outperforming larger rivals, and the speedster, a stripped down
version of the 356. In 1958, the company built its 10,000 356
then, in 1964, the 911 the impression the 911, made on the
automotive world is tough to overstate. It is one of the most
iconic sports cars of all time. In keeping with Porsches
tradition, the 911 had an air cooled rear engine design, it
didn't have the biggest engine but was small, light and nimble.
Its starting price was $5,500. Today, a mere $46,363 a fraction
of the roughly $100,000 starting price of today's nine elevens.
Though Porsches were long known for their rear engine cars, the
company made front engine vehicles starting in the 1970s.
Porsche continued to make front engine cars until the 1990s when
it finally stopped producing them in order to focus on the
911 and the Boxster. In 1986 Porsches global sales topped out
at about 50,000 units, sales in the US and Canada, which
together were then Porsches largest market had reached
30,471, but they drastically fell to about 14,000 globally in
1993, and just 3713 in the US and Canada. By the early 1990s.
Porsche was in trouble. The company turns to a group of ex
Toyota workers who had formed a consultancy to carry Toyota's
legendary manufacturing principles and techniques to
other companies. Toyota's production system famously
relies on reducing waste. needed parts are kept near workers and
things are only sourced or made as they are needed. The Toyota
engineers helped the German company slimmed down its factory
operations. The result was a car that was all Porsche but
significantly more affordable because of a factory capable of
higher volume production. And sales at Porsche began to climb
again US and Canadian combined sales were 5820 in 1994 6078 and
1995 and 7524 in 1996. By 2000, Porsche was selling 22,412 cars
in the US alone, and a couple of years later, Porsche would
reveal a vehicle that would rock the automotive world. The
Porsche Cayenne. The Porsche Cayenne was a sport utility
vehicle and Porsche was a sports car company. Brand had only made
small roadgoing racecars As might be expected, purists
baulked, the common arguments were that Porsche was diluting
its identity and perhaps even selling out in the American auto
market. SUVs had gone from being purpose built vehicles for off
roading and the great outdoors to book your successors of the
family station wagon and minivan.
Initially, the move to two SUVs was was hotly debated. You know,
Porsche has a legacy of motor sports. It's very much in its
heritage. And certainly in the early 2000s when you think SUV
don't necessarily think Motorsports and the fear was
that, you know, since they share a lot of components with VW and
Audi, specifically, that a Porsche SUV would just be an
Audi with a Porsche logo on it. But that's not what happened.
Porsche very smartly decided to build SUVs that were more
Porsche and less, perhaps outtie. Over time, the
skepticism waned, though the Cayenne was an SUV, it was a
pretty high performing one.
I think it took the traditional Porsche enthusiast by shock.
What are you saying now we're going to build a four door SUV,
they designed it, they put it through rigorous tests, and I
drive a client as well. And I will tell you, it is the
sportiest SUV. If you take a two door versus a Cayenne of the
same year, yes, it's not going to be a 911. But I can tell you
it's going to be the quote unquote 911 of its segment.
In 2006, a Porsche Cayenne placed first in the trans
Siberia rally. It's a long grueling race that starts in
Moscow, Russia and ends in Ulaanbaatar, Mongolia, the
following year, Porsche Cayenne S vehicles placed first, second
and third in the race. In 2008. Cayenne SS took the top six
positions in the race. These vehicles were modified very
little from their stock condition, Porsche was able to
prove that Cayenne was not just a luxury SUV with a Porsche
badge, you could actually perform in challenging
conditions, the Cayenne and its smaller sibling the McCaughan
sold well, and SUVs now make up 60% of Porsche sales. In 2020,
the brand sold 57,294 units in the US alone, almost double the
high of around 30,000. Porsche saw in the 1980s when it was
still a pure sports car company,
early 1990s. They sold about 15,000 cars, you know, their
legacies, the 911 sports cars that's been built off of the
beaten to begin with, but then in the early 2000s, Porsche
found an interesting strategy of diversifying its customer
demographic, namely acquiring more female customers and
penetrating China, probably the most important auto market in
the world with SUVs, and today SUVs are about 70% of all
vehicles Porsche sells, so it's gone from about 15,000 units in
the early 1990s. Today, about 300,000 units, and SUVs are 70%
of those Automotive Industry
analysts say SUVs have not diluted the brand's identity 911
sports cars seem to have only grown more expensive in recent
years, they now start above $100,000,
the nine elevens and the other cars that Porsche sold have
actually maintained their price pretty well. And the reason why
is the SU v customer is a very different person that's buying
the 911.
This ability to weather challenges and overcome skeptics
owes something to the legions of Porsche fans around the world.
Many brands have their enthusiasts but Porsche inspires
a kind of loyalty and devotion that stands apart.
I was one of those Porsche people it was like, Okay, these
are not just incredible cars, but they're incredible.
Everything's You know, they're just incredible on so many
levels.
This can be a fascination that begins in early childhood and
continues all through life.
And so the aspirational car was always to someday have a
Porsche. And I set that goal as a kid. As a four year old on
every Christmas every birthday, it was like by the time I'm
let's say I'm 30 by time I'm 30, I'm going to have a Porsche like
that was the goal. That was the aspiration. And fortunately
enough, you know, at the age of 28, I was able to make that
happen with my 1987 911.
One manifestation of this might be the Porsche Club of America,
a club for Porsche owners that claims to be the largest single
Mark Car Club in the United States, with 140,000 members. So
Porsche club America started in 1955, was 12 individuals that
were just trying to figure out their way of how to maintain
these cars that weren't, there weren't many on the road, there
wasn't a large dealer network. Porsche also gets high marks for
reliability, customer satisfaction, and overall
quality. Consumer Reports named Porsche its top brand and 2020.
Porsche also scores highly on JD powers vehicle dependability
surveys, most recently, the study named the 911, the most
dependable vehicle
for the price that you have to pay for a lot of these high
performance specialized low production vehicles, you should
be able to at the very least expect average or better quality
and reliability. But you don't get that with a lot of brands,
Porsche you do, they have got a history of making cars that just
keep going and going.
These vehicles hold their value remarkably well. I've never
bought my Porsches for investment purposes. That's
never, that's never the point to own a Porsche. But it is nice to
know that many many Porsches after a decade of ownership, the
amount of value it retains, and in some cases, their GT cars. We
have owners that have bought their car, driven it for two
years, and dealers right now are calling out and say can we buy
the car back, and we'll give you the money that you paid for it?
So essentially, they've owned that car for free for two years.
That is unbelievable. The Porsche brand is thought to be
so strong, there are questions among investors over whether
it's placed in the Volkswagen Group portfolio allows the brand
to fully unlock its value.
Some people have even contended that Porsche could be worth all
of the W. And the reason is they're looking at Porsche, and
they're saying, this is kind of like a luxury company like our
Mazda or LVMH, or Rolex, and they ascribe that type of
valuation to Porsche and come up with a really high valuation.
The automotive market is crowded even at the higher end, while
Porsche was an early entrant into the luxury and high
performance SUV segments many others have followed. One reason
that this doesn't worry some analysts is that many of those
new entrants are priced just a bit higher than Porsches
offerings. In terms of both price and reputation. Porsche
seems to occupy a relatively under populated niche between
big and accessible luxury brands like Mercedes Benz and BMW and
the very high end brands like Ferrari, Lamborghini and Aston
Martin even the bass nine elevens, which are by no means
cheap seem to exemplify this they perform like supercars and
reliable daily drivers at the same time. A new kind of vehicle
that first found a true home at the high end of the market is
the Eevee and Porsche has taken notice the brand released its
electric tie icon in 2019. The TT icon is already selling about
as well as the 911 Porsches. production numbers are a decent
proxy for sales and Porsche produced about 29,450 tie cons
in 2020, compared with 28,672, nine elevens. Porsche wants to
bring electrification to other models, on its way is the
electric version of the Porsche makhan Porsches biggest seller
worldwide in 2019, and second biggest in 2020. As of June
2021, Porsche plan for half of the vehicles it sells to be
electric or hybrid by 2025. But Porsche says it cannot and does
not want to fully electrify every vehicle. Some cars have
been designed around internal combustion engines and changing
that would compromise their character. This especially
includes the 911 Porsche has spent decades refining the 911
to perform around its rear mounted internal combustion
engine and placement of the engine and powertrain are part
of what gives the 911 its unique driving experience. Porsche says
the answer to this problem is something called e fuel. ie
fuels are made through a complex process carbon dioxide is pulled
from the atmosphere and mixed with hydrogen and water to make
something chemically resembling methanol. That methanol is then
converted into gasoline. So when the fuel burns, it does release
carbon into the atmosphere, but it is the same carbon that was
pulled from the atmosphere to make the fuel in the first
place. Thus, Porsche says the fuel is carbon neutral and it
doesn't contribute to global warming, if you will, requires
no engine modifications to work. Porsche has already tested the
fuel in racing conditions in 2020, and formed a partnership
with Siemens energy and several other energy companies. To build
the world's first industrial scale factory for making e fuels
in Chile, the project called for an initial investment of 20
million euros or about $24 million and uses technology
developed by Exxon Mobil
using wind power to create synthetic petrol. And
effectively they can maintain their IC engines and still be
carbon neutral. You know VW Group plans on being 50% of all
of its sales by 2030 to be fully electric. We think certainly
Porsche will likely exceed that amount. So it'll probably be by
2030, a combination of full electric and to some extent, e
fuels, powering some of its sports cars like the 911
moves like these are in keeping with the carbon conscious
strategy pushed by Porsches parent Volkswagen Group. The
massive German automaker, which has a neck and neck rivalry with
Toyota for the title of world's top selling car company is
making a big push toward electric vehicle technology and
other carbon reduction measures. The ambitious pivot comes only a
few years after VW Group and other automakers were exposed
for cheating on diesel emissions tests, the bold electrification
plans carmakers are committing to have garnered some skepticism
from those in the auto industry who say consumers are still wary
of Eevee ranges and charging times but some also say that if
a car company can make a big Evie push work, it is a company
like VW Group, which sells a lot of cars all over the world. And
similarly, the Porsche name might be one that can sell e V's
as high performance cars. No doubt newcomers like Tesla might
have some things to say about that.