Introduction
This interview was conducted on 8th December 2020 via telephone with Detlev von Platen addressing the following five questions:
Question 1: How is Porsche planning to expand in the so-called “electric propulsion” market? (Prestige, image, performance,…)
Mr. von Platen describes Porsche as a sports car manufacturer that is offering vehicles with a “soul”. A solid commitment to sustainability is seen as particularly key, with a focus on reducing CO2 emissions. In 2016, a bold decision was made to that effect, to “go electric” as much as possible. It is expected that 50% of all Porsche cars sold in 2025 shall be electrified. For example, a popular model in Porsche’s line up, the Porsche Macan, shall be offered in an electric version from 2022.
In the company’s decision on the timing of when to go electric for one of its models versus to stay with conventional engines, it is paramount for the sportscar brand to let its customers drive this decision. Change is, of course, always needed, i.e. to continue to be heavily committed to innovations. Paradoxically, perhaps for Porsche’s way of not changing its “soul”. The 911 sports car was first introduced nearly 60 years ago but has continually been upgraded. Perhaps the most dramatic upgrade was when Porsche decided to change from air-cooled engine to water-cooling. The engine in the 911 is likely, however, to continue to be petrol-based. The type of fuel is changing though, with relatively less CO2 emissions – more on this later.
The Taycan, introduced in autumn 2019, is the first all-electric car from Porsche. Much of the technology is new, but the Porsche “soul” remains. By the way, Porsche is planning to deliver around 20,000 Taycans in 2020, meeting Porsche’s target. New groups of customers are increasingly becoming important: younger, more women and with a “drive” – the willingness and aspiration to change something. It is key for Porsche to also cater to their emotions.
Question 2: What about the know-how base required for this shift? Can you make these cars up to the traditional high Porsche standard? Is your network of service providers up to speed?
Mr. von Platen highlights five key factors, which are driving the successful adoption to electric cars for Porsche:
The entire “eco-system” of the company has to be changed. All dealerships and servicing facilities must be on top of the new technology. In addition, this emerging revised “eco-system” must be efficient.
Porsche has built an entirely new factory for the Taycan at its facility in Zuffenhausen. This factory is CO2 neutral. It is built as a “factory within the factory” and facilitating full attention to the new electric age.
To have sufficient range is seen as critical, but batteries are heavy – having “forced” Porsche to sacrifice on even longer-range performance so that “sportiness” from being lighter might be maintained. Again, Porsche’s “soul”. Fast charging of batteries are also seen as important. Porsche has adopted an 800-volt standard. By this, in 22.5 minutes, the battery is recharged from five to 80 percent.
To be able to find charging stations with a capability to deliver this quickly is a major issue. Such stations are indicated on the cars’ navigation systems – the function is called: “Porsche Charging Planner”. Moreover, Porsche has invested, along with other car manufacturers, to build 400 “fast” charging stations in Europe within the IONITY network!
Most recharging is done at the customer’s home (80%). In addition, many of Porsche’s dealers are likely equipped with fast recharging capabilities. In addition, Porsche is collaborating with certain hotels, golf courses and restaurants and other premium locations within the “Porsche Destination Charging” program. For Porsche customers, charging is “for free” at these facilities.
But, as noted, a significant fraction of Porsche’s cars shall continue to be powered by combustion engines for a long while still – with the option of hybridization and of using so-called “efuels” in the future. Porsche is heavily committed to the development of these synthetic fuels for these models, which would lead to almost zero local emissions also with internal combustion engines. The CO2 is extracted directly from the air using a process known as direct air capture and hydrogen is derived from water, all to be “combined” in a chemical synthesis process. The first step is to produce eMethanol from hydrogen and CO2. In a further synthesis step, eMethanol is processed into eFuel. This fuel can then be used in conventional gasoline engines. Only renewable electricity is used for the production of eFuels. Porsche will work jointly with industrial partners - among others Siemens Energy - in order to drive forward the industrial expansion of the first integrated plant for the production of climate-neutral fuel in Chile (four to five times more effective than windmills from Germany due to more/steadier winds).
“New” fuel for conventional combustion engines thus is seen as an alternative to el-driven cars.
(A parenthetical remark from Peter Lorange: On 7th December 2020, YARA, the world’s largest manufacturer of fertilizers, headquartered in Oslo, announced that it too is committed to the development of “new” fuels based on ammoniac/hydrogen, building on the so-called Birkeland-Eyde method based on electric catalyzation that was pioneered by the company in the 1920s, but abandoned in 1952. The German I.G. Farben Co. was the then majority owner of Norsk Hydro, YARA’s predecessor.)
Question 3: What about the second-hand market? Who shall be buying the traditional fossil-fueled cars, and at what price? (Porsche has traditionally been known to be linked to strong second-hand prices, with the effect that committed Porsche owners so far have been able to trade in old cars relatively easily!)
The second-hand market is seen as very important, especially since it represents a way for many Porsche users to become introduced to the Porsche brand for the first time through such car purchases. Furthermore, the second-hand value of Porsche cars seems to hold very well:
Quality is high; solid; well made!
Innovativeness, remaining in a category of relatively modern cars for longer.
A well-developed warranty system. For example, the batteries in the Taycan cars have an eight-year or 160.000 km warranty!
Mr. von Platen also points out that older Porsches tend to hold their value very well, in general, and few to none are scrapped. As an example, he cites a 20-25-year old 911. Perhaps there is a position “collectors’ item” effect. It should be kept in mind that Porsche is a relatively small car manufacturer, never driven by volume, but on being exclusive, i.e. thanks to the “soul” of its products.
Question 4: The Chinese market is becoming relatively increasingly important for Porsche. Here a major focus seems to be on prestige, and luxury brand image. How is Porsche strengthening its profile when it comes to this?
Porsche does not see itself as a luxury brand. At the same time, it is part of Porsche’s understanding to behave like a luxury brand, as Mr. von Platen explained. This implies a very strong focus on the customer. With the new corporate strategy, the sportscar brand is placing the customer even more strongly at the center of its activities. Detlev von Platen and his team are also making every effort to maintain the brand's appeal.
China has been Porsche’s largest single market since 2015. Chinese customers appreciate the appeal of the brand, the design of the products, and the credible heritage and tradition of Porsche. In addition, China is a market of young customers; the average age of these customers is 35 years. The sportscar manufacturer sees China therefore as an excellent field for experiencing the further development of the concept of luxury that is currently taking place and deriving global impulses from it.
Question 5: Porsche is closely related to the Volkswagen Group, with its four major brands and one brand in particular, Audi, seems to be featuring characteristics that might be overlapping those of Porsche (advanced technology). Another brand, Volkswagen, shared the same “platform” as Porsche, with their Touareg SUV (and Porsche’s Cayenne). Do you see any problems when it comes to potential “overlaps” with the rest of the Volkswagen Group? Are the customers not confused?
Mr. von Platen sees it as chance that Porsche is part of the Volkswagen Group, with several other car brands focusing on prestige and technological domination (Audi, Bentley) and/or quality (Volkswagen/Skoda/Seat). The main reason is that each brand runs independently of the others, i.e. is entirely on its own when it comes to design, technology and use of materials decisions. Thus, Porsche is indeed able to follow its own strategy of being exclusive, and to be performance driven, as well as to pursue its el-car strategic initiative with curtailment of CO2 emissions.
However, there are of course also many synergistic opportunities within the group, especially when it comes to aspects of the car that a customer cannot “see”, “touch” or “feel”. Air conditioning systems are one example for this; so do the batteries (very expensive to develop entirely on one's own!), connectivity (there are more and more regulations, many of which might be handled more effectively as a group), and digitalization (again, potentially very expensive).
These synergies are not allowed to compromise on Porsche’s image and “soul”:
Drivability
Superior materials
Engine sound
Reliability
Top quality
There are simply no visible impacts from synergies to the typical customer.
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