The body shell of an all-electric Porsche Taycan.

Porsche AG will trim its workforce by 1,900 employees by the end of the decade in response to weak electric vehicle demand and “challenging geopolitical and economic conditions.”

The Volkswagen AG-controlled luxury brand plans to reduce headcount at two German sites through voluntary measures like early retirement and severance packages, and will take a “restrictive approach” to new hires, it said Thursday. The goal is to reduce staffing in Zuffenhausen and Weissach by 15% by 2029.

Porsche is grappling with a drop in EV demand, and was among the major automakers to walk back its EV targets last year. Challenges with making the jump to electric cars have cost the 911 maker dearly in China, where deliveries have slumped, piling on pressure to cut costs. The company will take an €800 million ($831 million) hit this year tied to developing products, with more combustion engine and plug-in hybrid models.

A job security agreement remains in force for all German employees until 2030, which means voluntary measures will be employed until then. The cuts, reported earlier by the Stuttgarter Zeitung, follow a decision to stop renewing contracts of temporary workers.

Languishing EV demand has reportedly prompted other Volkswagen-owned brands to consider additional upgrades to their combustion engine lineups. VW could update best-selling models including the Golf hatchback and T-Roc and Tiguan sport utility vehicles in the 2030s, and Audi is having similar discussions regarding the A3 compact model, Handelsblatt reported late Wednesday.

“Volkswagen has not changed its plans to phase out the combustion engine in Europe by the early 2030s and will react flexibly to possible market changes,” the brand said in an emailed statement.

Auto Woes

Porsche is following Volkswagen’s lead in trying to whittle down its production costs in Germany, where labor and energy are expensive. Volkswagen clinched its own deal with labor leaders late last year to slash production capacity and reduce headcount by 35,000 employees over the next five years.

In China, European carmakers are losing out to local brands, which caused their sales in the world’s largest car market to tumble last year. And they face further pressure closer to home, with large fines if they fail to meet stricter EU fleet-emissions rules slated to kick in this year.

The industry’s woes have also taken a toll on Germany’s economy. EV sales plummeted there last year, part of the reason why industrial production in Europe’s largest economy fell the most in five months at the end of 2024.