German sports and high-performance automaker Porsche has revealed that it is shelving plans to manufacture its own electric vehicle batteries due to cost concerns.
In a statement published on Monday, Porsche said it would scale down its high-performance EV battery division, Cellforce, and focus on research and development (R&D) amid weaker than expected electric vehicle demand and difficult conditions in two of the largest electric vehicle markets on the globe: China and the United States. According to Porsche, its plan to develop EV batteries internally proved to be uneconomical.
The automaker’s unsuccessful attempt to build its own EV battery supply chain underscores one of the main challenges facing the Western electric vehicle market; it is heavily reliant on EV battery imports from China.
The East Asian economic powerhouse has monopolized nearly every stage of the worldwide EV battery supply chain, and more than 70% of all electric vehicle batteries ever produced were manufactured in China. As the transition to battery electric vehicles (BEVs) accelerates, China’s dominance in the EV battery segment has become a sore point for leaders and stakeholders in the West.
Porsche notes that slower electric vehicle adoption in the U.S., the third-largest EV market in the world and Porsche’s largest market, was partly responsible for its decision to pivot away from EV battery production.
Western-made electric cars are still prohibitively expensive, and with the impending loss of federal tax incentives for EV purchases, the North American EV market didn’t develop as Porsche expected when it focused on electric vehicle battery development. This made internal EV battery manufacturing, which is incredibly costly, economically unviable for the German carmaker famous for its high-performance luxury vehicles.
Volkswagen Group and Porsche CEO Oliver Blume says that the company is giving up its pursuit of EV battery cell production due to limited economies of scale and volume-related reasons.
Presumably, the Stuttgart, Germany-based carmaker will use imports to fulfill its demand for EV batteries. Battery electric cars and hybrids accounted for 36% of its global vehicle sales in H1 2025, with electric trims of the Macan selling close to 26,000 units in the first half of the year, and the Taycan selling 1,064 units in Q2 2025, up from 807 units in Q2 2024.
Porsche’s decision shows how unforgiving the EV market has become, even for luxury players with deep pockets. Executives conceded the market hasn’t grown as expected, forcing them to shelve what was supposed to be a key advantage. Cellforce will now pivot to R&D for Volkswagen, leaving about 200 of 300 staff without jobs. It’s a blunt reminder that EV battery production looks good on paper, but the economics collapse when demand falls short.
Other manufacturers like Massimo Group (NASDAQ: MAMO) are also probably thinking of innovative ways to keep reducing the sticker price of their offerings amid the increasing headwinds facing the EV industry.
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