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PORSCHE’S KLAUS ZELLMER: Taking the plunge into electrification

PORSCHE’S KLAUS ZELLMER: Taking the plunge into electrification

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NEW YORK: This year, Porsche will launch a vehicle that questions the very essence of what makes a Porsche a Porsche.

The full-electric Taycan is Porsche’s near-silent answer to the electrification freight train barreling toward the auto industry. The 600-plus hp sport sedan is at the vanguard of a wave of electrified vehicles. By 2025, Porsche expects about half of all new vehicles it delivers will be full electrics or plug-in hybrids.

That’s a big change for a customer base historically drawn to the guttural growls of a turbocharged flat-six.

“Everybody expects Porsche to enter the battery-electric vehicle market with something that is truly Porsche,” said Klaus Zellmer, Porsche Cars North America CEO. “It has to behave like a real sports car. That’s what people expect, and that’s what we are trying to then match, or exceed.”

Zellmer, 51, describes the Taycan as the “most impressive car” he’s driven in his more than two decades at Porsche.

“The Taycan was just really from a different planet,” Zellmer said of the driving experience.

Zellmer spoke with Staff Reporter Urvaksh Karkaria on the sidelines of the New York auto show about early customer interest in the Taycan, the impact of high-cost electric vehicle development on Porsche’s sacred 15 percent profit margin and the existential threat trade tariffs pose for a low-volume importer. Here are edited excerpts.

Q: What kind of demand is Porsche seeing for the Taycan?

A: Based on the global demand, we are likely to look at 40,000 of production capacity in Zuffenhausen. We have a depositor program, so we have people who show sincere interest. If we can convert that initial interest into real sales, then we don’t have to worry about the first one to two years of selling that car here in the States.

But you shouldn’t count your eggs too early. Pricing is not out yet, the final design of the car, the final specifications. But the initial reaction to the car is incredibly positive. Fifty percent of reservations are from Porsche and the other 50 percent are from outside the brand. So it’s a big conquest, which is very exciting because we don’t want to just substitute what we have. We want to incrementally grow.

Will the Taycan be available nationwide at launch?

Let’s wait and see. Our goal always is to have a nationwide start of sales. We are in a completely new technology, we have a completely new factory and we have completely new teams on the car. We’d much rather have the perfect quality coming out of Zuffenhausen with the Taycan than rushing it into each and every showroom.

Electrification is coming to Porsche’s crossovers, with the Macan being the first to go battery-electric. Why is that vehicle a good fit for an electric powertrain?

The Macan is already the sports car of the compact premium crossover segment, and an electric powertrain suits those characteristics with high efficiency and punchy performance. We’re not just filling the current car with batteries, either.

The fully electric Macan will be based on the Premium Platform Electric, or PPE, so it’s designed as a battery-electric vehicle from the ground up. That allows us to maximize the benefits of a purely electric vehicle when it comes to packaging, wheelbase and space, for instance.

Will selling an electric Macan be harder?

If we were to bring the car today, yes. But given that it’s going to be later in the next decade, it will not be as unusual to drive an EV then. You will have people naturally gravitating towards a Macan EV because the market is ready for it. We consciously made that decision to stay closer to our core of the brand with the first EV. The Taycan is more like a four-door coupe type of car being more associated with a sport car.

How will expensive EV development affect Porsche’s sacred 15 percent margin?

Our business model is designed to keep that 15 percent promise. We all know that battery-electric vehicles and the technology, especially with the battery costs, is currently a burden. If you go into 2022, you are going to see some scale effect in the battery costs. There’s a lot of cost reduction potential if you don’t have any exhaust system, if you don’t have any water cooling system. There are so many things you can leave out.

You have to maintain the margin intelligently. Our transition is not from one day to the other. We need to keep our high-profit cars in the market as long as they are compliant, and as long as we can mitigate their CO2 footprint.

The U.S. is in a trade war that could lead to tariffs on European- and Chinese-made cars. How significant of an impact would that have on Porsche’s U.S. sales?

Tariffs are a threat for the whole industry of bringing imported cars from Europe into the U.S. Nobody will be able to either eat the 25 percent tariff or completely hand that on to customers without losing any volume. You can choose between pest and cholera.

We would have to partly absorb the additional cost to mitigate the real volume hit. We are calculating what that would mean for us. But whatever perspective you take, it’s horrible.

The effect is bigger on us because we don’t have anything to balance with local production. We only produce in Europe. Economically, it doesn’t make sense to produce cars of the small volume we have in the United States. It’s just not feasible.

I am very optimistic that the EU and the U.S. — having been partners for decades — can find a solution. I believe in people being sensible, sensitive. A war only ever produces losers.

Would North American customers accept a Porsche built outside Europe?

“Made in Germany” is an important label to Porsche fans and customers worldwide, no doubt about that. Would people buy a Porsche that is “Made in America”? Who knows. It remains hypothetical since we don’t have any production plans in the U.S. First and foremost, that’s a question of volume. It simply wouldn’t make sense when only three of every 1,000 vehicles on the road are Porsches. We always aim to produce one car less than the market demands and that has proven to be a good approach.

How has Porsche’s U.S. customer demographic changed over the past five to 10 years?

We are fortunate to have very loyal customers, which is naturally reflected in the stability of their demographics. Even so, we have observed a change with some of the people that choose our brand. The Macan, for example, resonates well with female customers and that’s something we are glad to see.

Porsche recently unveiled the prototype of its next-generation dealership design in California. As the world gravitates to online sales, do brick-and-mortar retail stores have a future?

That Destination Porsche architecture is focused on new ways of generating business by creating a central gathering place for the Porsche community.

We know that the product will not be the important differentiator when you want to drive business. Ownership experience is the name of the game.

The differentiator to set yourself from other brands is the buying and ownership experience. Do you feel a real difference being a Porsche customer? That starts with the store. We need to make sure that the overall brand experience — product and ownership — sets itself apart from any other car brand, and you can’t do that online.

How is the Porsche Passport subscription program in Atlanta doing? What has the company learned from it?

Satisfaction with the program is great. Eighty percent of the people in the program, or who have been in the program, have not owned a Porsche before. We have had 130 people go through the program. The split between the $2,000 a month and the $3,000 a month plan is 50-50.

The customers are five years younger than the typical new Porsche car buyer. The question is: How can you make money with the program? That’s the next step. We are expanding the program in four more market areas in North America.

Dealers are playing a bigger role. In the future, dealers will be some kind of mobility provider, not just a facility where you buy a car. They will have to provide access to a brand, be it for three hours, a day, a week, or one month or three years. We are inviting them to provide exactly that type of service.

Source: autonews
Anand Gupta Editor - EQ Int'l Media Network

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