We have tanks and race cars. Porsche wants to return to the arms industry?

After overshooting electric cars and growing competition (especially from China), and as a result losses for both Porsche SE and the entire VAG group, the car manufacturer from Stuttgart is looking for new sources of income, and not in the automotive industry, or at least not in the automotive market as it might seem. A return to the arms industry is on the table.

We have tanks and race cars. Porsche wants to return to the arms industry?

photo: The Bold Bureau // Shutterstock

There is nothing strange about it. The armaments industry is “in fashion” because the need is urgent. Increasing spending on armaments, pressure from the US, the growing threat from Russia and China, and in addition – and in fact above all – the opening financial window in the form of support from European funds, cannot pass unnoticed in Zuffenhausen.

Especially since Porsche SE Holding, which owns a 31.4% stake in Volkswagen and a 25% stake in Porsche, recorded a huge net loss of 20 billion euros.

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Looking at the Porsche SE Holding share price, it is impossible not to notice that investors are not thrilled. In less than three years, two-thirds of Porsche's market value has evaporated. At the beginning of 2022, the price reached 100 euros per share, before gradually falling to today's levels, around 33.75 euros. This means a brutal drop of 66%.

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A difficult situation forces difficult decisions. Cost cutting is always the first decision and it is visible; for example in the form of abandoning an ambitious plan to electrify the fleet. Porsche first abandoned its goal of 80% of sales by 2030 to be electric, and later also announced, somewhat protectively, that it would refresh the bestselling combustion models, namely the Panamera and especially the Cayenne, which had already saved the manufacturer from bankruptcy once. The 911 sells well, but not on such a scale as its more “civilian” brothers, it is a classic and will remain so.

In addition to cost cutting, managers are looking for new areas of activity. And here, returning to the defense industry seems like a rational move. Especially because of ReArm Europe, a European fund aimed at rebuilding and modernizing the defense industry, which opens up huge opportunities for companies, especially financial ones.

Porsche is therefore looking for opportunities

In 2024, Porsche entered a new phase of cooperation with the defense sector. The company invested several dozen million euros in the startup Quantum-Systems, which develops drones for military use.

Porsche, as reported by Europäische Sicherheit & Technik, plans to continue investing in this sector. The company currently has funds of around two billion euros at its disposal, which are to be used for the development of technology companies and innovative defense systems.

The armaments industry is nothing new for Porsche. Before and during World War II, the German manufacturer not only developed the legendary Beetle, but also produced weapons for the Wehrmacht. After the war, it focused on sports cars, but in the late 1950s it returned to the armaments industry with the Type 814 tank, which eventually evolved into the Leopard 1.

AO.

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