Recently, Porsche released its latest sales figures, which were astonishing. From January to September this year, Porsche delivered 226,026 vehicles to customers worldwide, a 7% decrease from the same period last year. In the Chinese market, this decline widened to 29%, making China Porsche's largest declining single market this year. This change undoubtedly brings new insights to the market.

Back in the day, Porsche, as a luxury car, was highly sought-after in China. Starting from 2015, China has consistently ranked as Porsche's largest single market globally, surpassing Europe and North America and becoming a favorite among many wealthy Chinese. Dealers scrambled for allocation quotas, creating a scene more lively than grabbing red envelopes during the Lunar New Year. However, since 2022, Porsche's glory has faded, with sales gradually declining. Dealers have been anxiously waiting, and in May this year, they even collectively "pressured" the German headquarters, demanding more incentives. Nevertheless, the situation has not improved, leading to the current predicament.

So, why is Porsche no longer as popular in China?

Rise of new energy vehicles and shifting consumer demand in China

On the one hand, the rise of new energy vehicles is a significant factor. Driven by the dual-carbon trend, the Chinese government has formulated a series of policies and subsidy schemes to vigorously support the development of new energy vehicles. The market response has been enthusiastic. As of September 2024, new energy vehicle sales in China increased by 32.5% year-on-year, while traditional gasoline vehicle sales decreased by approximately 30% year-on-year. This change reflects an increasing acceptance of new energy vehicles and a declining enthusiasm for traditional gasoline vehicles among consumers.

Another factor is the shift in consumer demand. As market and policy trends solidify, Chinese consumers' spending attitudes are subtly changing. As Zhou Hongyi noted during an event hosted by Enterprise Management magazine in July this year, "In the past, people chose luxury cars based on price, size, interior, engine, and prestigious brand names. However, safety and intelligence have become new criteria now, and new energy and intelligent connected vehicles have overturned these traditional luxury car characteristics."

Take new energy vehicles as an example. Firstly, due to the installation of batteries, they are generally not compact. Secondly, the interior of a car needs to be rich, and features like refrigerators, TVs, and large sofas do not require much investment. The world's best sofas are produced in China's supply chain, making it easy to incorporate beautiful and high-quality items into cars. Thirdly, with electric motors, as long as sufficient batteries are installed, the motor performance is excellent. Acceleration and horsepower that were once difficult to achieve in gasoline cars are now easily attainable in electric vehicles.

Although Porsche has launched the Taycan electric vehicle, it has failed to satisfy Chinese consumers in terms of safety and intelligence. Coupled with battery short circuit issues at the beginning of October this year, resulting in a large-scale recall of some batches of vehicles, Porsche's golden reputation has been tarnished.

Meanwhile, due to declining sales, dealers have had to frequently reduce prices, leading to a decrease in Porsche's brand value retention rate. In April, the 3-year value retention rate dropped to 76.7%, a stark contrast to the previously stable rate of over 80%. As a "luxury" in the automotive consumer market, the decline in Porsche's value retention rate has inevitably intensified consumers' wait-and-see attitude. These factors have gradually eroded Porsche's brand premium in the Chinese market, leading to waning consumer interest.

Moreover, data shows that from January to May this year, in addition to Porsche, sales of Mercedes-Benz and Maybach also declined, while BMW sales remained roughly flat compared to last year. The market prospects for these imported luxury cars in China are not optimistic this year.

(Data source: Yiche)

In contrast, China's new energy vehicle industry has experienced remarkable growth in recent years. Companies like Huawei, BYD, Xiaomi, NIO, and Lixiang have introduced high-end models that emphasize technology and innovation, offering consumers a sense of futurism and belonging. Furthermore, these vehicles boast impressive driving ranges. According to the China Association of Automobile Manufacturers, the market penetration rate of high-end new energy vehicles priced above 400,000 yuan in China has exceeded 30%, and that of vehicles priced between 200,000 and 400,000 yuan has reached 40%.

The rise of China's new energy vehicle industry is evident not only in the domestic market but also globally. Data shows that from January to September 2024, China exported 928,000 new energy vehicles, a year-on-year increase of 12.5%, demonstrating strong international competitiveness.

Exporting the 'New Three Samples,' Driving Global Low-Carbon Development

When discussing the rapid development of China's new energy vehicle industry, we must focus on a crucial factor—the rapid progress of lithium-ion battery technology. In today's global automotive landscape, where countries compete fiercely in the new energy vehicle market, a widely accepted view is that whoever controls lithium-ion battery technology will dominate the market.

China's achievements in the field of lithium-ion batteries are remarkable. In terms of production volume and capacity, China leads the world, providing a solid foundation for the global new energy vehicle industry. Globally, 70% of lithium-ion batteries and 99% of lithium iron phosphate cathode materials are produced by Chinese companies. Chinese firms like Contemporary Amperex Technology Co., Limited (CATL) dominate the global power battery market. In the first half of 2024, six Chinese companies ranked among the top ten globally, accounting for 64.9% of the market share.

Speaking of the international prominence of new energy vehicles and lithium-ion batteries, one cannot overlook the closely related solar cell industry. In 2023, these three industries were collectively referred to as China's "New Three Samples for Export," significantly contributing to global low-carbon emission reduction efforts. That year, China produced 80% of the world's solar cells and continued to see an increase in exports.

Throughout the development of new energy, China has undoubtedly been a warm current in the global low-carbon cause. It has collaborated with over 100 countries and regions on extensive green energy projects, addressing electricity access and affordability issues in many nations. Through technological innovation and product exports, China has contributed to reducing global emissions by approximately 2.84 billion tons, fully demonstrating its strong capabilities and responsible leadership in addressing climate change and achieving sustainable development goals.

Moreover, China's technological innovations in lithium-ion batteries and solar energy are noteworthy. For instance, LONGi Green Energy's perovskite-silicon tandem solar cell achieved a conversion efficiency of 34.6%, setting a new world record. CATL's Shenxing PLUS battery boasts an ultra-long driving range of 1,000 kilometers and fast charging capability, replenishing 600 kilometers of range in just 10 minutes, with an energy density exceeding 200Wh/kg for the first time, breaking multiple world records for lithium iron phosphate batteries. These technological breakthroughs have not only propelled China's new energy industry forward but also consolidated its unshakeable position in global new energy technology.

The changing landscape for Porsche in the Chinese market is like a ripple in the surge of the new energy tide, signaling that the times may indeed have changed. Looking ahead, if the new energy boom continues to gain momentum, it remains to be seen whether more overseas brands like Porsche will face difficulties in the Chinese market. In this green revolution, China's new energy industry is writing its own brilliant story as a frontrunner and leading the global low-carbon cause.