Interview with Porsche CEO Blume: "During the war, we don't deliver to Russia"

Porsche withdraws completely from Russia and remains loyal to Ukrainian suppliers.

Interview with Porsche CEO Blume: "During the war, we don't deliver to Russia"

Porsche withdraws completely from Russia and remains loyal to Ukrainian suppliers. That applies indefinitely, says company boss Oliver Blume. In the interview he talks about higher prices, climate neutrality and the sound of electric cars.

Capital: The war in Ukraine put additional strain on the supply chains of German car manufacturers, and there were production stops. How is the situation today?

Oliver Blume: The supply chains have now stabilized - but the feeling is unchanged: We are very worried about the people in the war zone. I am still stunned by the images that I would no longer have thought possible in Europe in our century. We have great partners in Ukraine. The focus is on suppliers who supply us with cable harnesses. Internally, we have set up a tight crisis management system from day one, in which we control all aspects of the company. At the same time, we support the UN refugee aid financially, for example, or offer language courses for refugees.

Have you changed or expanded supply chains?

We also supply ourselves with parts from other countries in order to remain flexible.

Is that at the expense of the locations in Ukraine?

Anything we can get from Ukraine, we will get from there. We stand by our partners, with whom we have been working together in a spirit of trust for many years. We see this as an obligation.

Like other companies, the automakers have put their business with Russia on hold, stopped imports, closed factories. The question is: for how long? What are the scenarios?

That's hard to predict. We continue to hope for a timely ceasefire and a diplomatic solution. As long as this does not exist, we will not supply Russia with vehicles. This applies indefinitely.

How long will no Porsche reach Russian soil?

Yes, we stopped deliveries.

How important was the Russian market for Porsche?

We have many loyal customers and Porsche fans there. With regard to our global sales volume, Russia is of secondary importance.

Above all, there is one realization: You can no longer do business with Putin's Russia - which is why some companies are withdrawing completely. Do we have to be prepared for a new Iron Curtain?

We have a clear regulation: As long as there is war, there will be no deliveries. After that, we will assess how we will deal with Russia in the future.

Now you certainly have to contend with rising production costs. Can you pass those on to your well-heeled customers? Tesla has already raised prices.

We take a very close look at where it is justified to price increased prices for raw materials or materials into the vehicles. However, this is a continuous process in the balance between own increases in efficiency and price pass-on.

The mood on the markets is nervous. How does this event and this conflict affect your IPO?

Our parent company Volkswagen is examining the possibility of listing Porsche AG on the stock exchange. This test process underscores our very successful development. Porsche is a strong brand with a robust business model, forward-looking strategy and a worldwide fan base. Volkswagen AG has announced that it will provide information on the interim status of the tests in late summer.

War turns our energy supply upside down. Are you worried?

There is a clear direction that Economics Minister Robert Habeck has set with the federal government. I support this. We need to become more independent of Russian gas quickly. This applies to the entire industry. At the large sites in Zuffenhausen, Leipzig and Weissach, Porsche is already working with a carbon-neutral balance using renewable electricity. However, where we use gas, it does not come from Russia, but mainly from Scandinavia. Nevertheless, it is our aim to further reduce consumption at Porsche in order to support the overarching goal.

How much is the war changing the conversion of the economy to climate neutrality: does it make this transformation more difficult because we will probably have to burn more coal again - or is it a wake-up call to become less dependent on fossil fuels?

We stick to our sustainability goals. We have the ambition to deliver more than 80 percent of our vehicles with fully electric drive in 2030. In addition, we want to be CO₂-neutral on the balance sheet across the value chain by 2030. To support this, we invest in regenerative energy sources such as wind and solar systems, but also in synthetic fuels. These can be generated from wind power, water and CO₂ extracted from the air. Climate change remains the most important challenge of our generation. At Porsche, this is not called into question by a war.

I would like to delve deeper into the topic of CO₂ neutrality. Was there a moment during this big shift in strategy away from combustion engines when it clicked: everything is changing?

There wasn't that one moment. It was also a process for me, a constant learning process. I've had a lot of conversations, especially with younger people. And I always think in terms of opportunities. I'm an entrepreneur. It takes courage to do the right thing with determination. For us, for example, that was the moment when we said: We're going to pull this off with the first purely electric Porsche. I remember well one of my first supervisory board meetings, in which I presented the project. It was about investing billions, which then have to be implemented consistently.

There was certainly not only applause, but also shaking of heads.

Not everyone immediately said: I'm sure it will be a success. But we managed to convey confidence, to connect the origin of the brand, the great Porsche tradition with the future. I have always emphasized that Porsche has always remained Porsche because Porsche has always evolved.

Four out of five cars will be electric by 2030. Would you have thought five years ago that you would write such sentences in your strategy papers?

Understandably, these figures were probably not that clear for anyone five years ago. The key to any transformation is the vision. When we came together as a newly formed team on the Porsche Executive Board in 2015, we talked about our priorities. What makes Porsche relevant in the future? It quickly became clear to us that sustainability should be anchored in the strategy as a key pillar. The dimensions and dynamics were not defined in detail at the start. But one thing was important to us: It shouldn't be fashion, but a responsibility that is shared by all. And with clear, measurable facts.

But an electric car is blasphemy for Porsche drivers, isn't it?

no way. Porsche sports cars and electric drives - they go together perfectly. I felt this in an early phase of Taycan development; this acceleration, it's like jumping from a ten-meter tower. The nice thing is that our customers reflect back on us: the Taycan is a really cool car, typically Porsche. The response to our innovative technology is also excellent. And the numbers prove us right. We sold twice as many Taycans last year as in 2020 - and with a good 20,000 cars we were already at a high level.

Were you always convinced: This will work?

We were passionate about it right from the start. Our pioneering spirit has been rewarded. The key to this success: For the all-electric Porsche, the benchmark was Porsche itself. 100 percent electric and 100 percent Porsche.

What exactly is important there? That the Taycan roars and vibrates as if you were sitting in a combustion engine?

It's about the characteristics that Porsche embodies: the design, the high quality and the performance. In addition, electric cars have to be charged quickly and the battery has a long service life. And speaking of the sound: it is important to us that a Porsche is authentic. We pick up the sound directly from the e-machine. This authentic e-sound is also known from motorsport.

The fear has always been that electric mobility will become interchangeable because all electric cars accelerate like rubber bands.

There are also many ways to differentiate yourself in electromobility. The fact that vehicles with electric motors can accelerate quickly is of course an advantage that many use. Then comes the differentiation: How dynamically can I actually drive a vehicle? How can I move it around a curve? In addition, the reproducibility of the performance is an important issue for us. The Taycan is just as sporty in the tenth or twentieth sprint as it was in the first. All of this gives us the credibility - and the justification that we need as a sports car brand.

That leaves the 911, the Porsche icon. Will this be the last bastion of the combustion engine?

The 911 continues to be extremely popular around the world. We had more incoming orders in 2020 than ever before. We will further develop the combustion engine of the 911 and drive it for as long as our customers want and as political regulations in the countries allow.

How does that fit with your commitment to electromobility?

That fits very good. It's all about sustainability. At the same time, we are thinking about how combustion engines can drive with reduced CO₂. The 911 is hybridised in a very sporty way - just as you know it from Porsche motorsport. We won Le Mans three times in a row with the 919 Hybrid. In addition, we are investing in synthetic fuels, the e-fuels.

Which are not without controversy...

E-fuels make sense if they are produced in regions of the world where sustainable energy is unlimited. We are involved in a pilot plant in Chile, where there is continuous strong wind. There, the question of the higher energy requirement in the production of these fuels plays no role. The plant is scheduled to go into operation this year. We are planning to use e-fuels, for example in motor sports, in Porsche Experience Centers or for the initial filling in our factories. With production on an industrial scale, we assume that prices could drop below two dollars per liter in the future.

What is your goal with e-fuels?

To use them in addition to e-mobility, for example for the historic fleet. There are more than 1.3 billion combustion vehicles worldwide today - and the trend is rising. Many of these will still be on the market in 30 years. Every percent added to the fuel immediately reduces CO₂ emissions. This could be implemented in a regulatory uncomplicated manner.

The concern of the critics is that investments in e-mobility will be less bold.

That is not true for Porsche. Electromobility will dominate the market, I am convinced of that. Our strategy is coherent and stringent. We are fully committed to electromobility and have the ambition to deliver more than 80 percent of our vehicles with fully electric drives by 2030. Electromobility and e-fuels are not in conflict with each other, but are a useful complement.

2020 and 2021 were a turning point in the electric car market. Have the car manufacturers given up their resistance - or is it now also a conviction?

Everyone understood the potential of the technology. That was a process. For Porsche, I can say that we focused on electromobility very early on. I remember very well that there were many skeptics back then - quite a few smiled at us. Many of them now support electromobility as a matter of course. When it comes to new technologies, you have to get the timing right. Too early is not good, neither is too late. We were there in good time.

What was the driver: regulation with CO₂ limits? The diesel scandal? The subsidies? Or Tesla and Elon Musk?

When we made the necessary decisions, Tesla didn't play a big role. Our most important motivation was the question: What do we have to do to ensure that Porsche continues to play in the Champions League in the future? And the answer was, to stay in the football picture: we have to be able to change the game system. The German national team of 1974 would not have become world champions in 1990 and that of 1990 would not have made it in 2014. Porsche must always be in a position to position itself differently, to be one step ahead of the market.

How did you teach this transformation to your proud engineers?

Communication is elementary for this. Above all, it is about appreciation, motivation and team spirit. The aim is to always strive for the best solution. In the end it is important that the best arguments count. And that the company then goes in the same direction at the same speed. If you succeed in having this transparency, you will get the team behind you in the long term.

Climate neutrality by 2030 - what is important? After all, a large part of the emissions are generated during use.

We are striving to be CO₂-neutral across the value chain by 2030. It starts with the energy they use for production - and with the materials. It's about recyclable materials or the energy for raw materials such as aluminum, steel or batteries. Our production plants in Zuffenhausen and Leipzig as well as our development center in Weissach have a CO₂-neutral balance sheet. And we have a clear roadmap for the next few years.

Do you also have to compensate with certificates?

Yes. However, we want to keep the compensation as low as possible.

Will the German location remain important in the age of e-mobility?

Clear yes! We deliberately produce the first purely electric vehicle in Stuttgart-Zuffenhausen. To show that investments are possible in a high-wage country like Baden-Württemberg. We will produce the forthcoming all-electric Macan in Leipzig. We are investing around 600 million euros in this location. Porsche is firmly committed to Germany as a location.

Above all, the question is: Will the car industry remain a key German industry after this transformation?

A resounding yes. If we continue to show pioneering spirit. This motivation for innovation, which has earned us the reputation as a leading industrial nation over the past decades. It will succeed if we are able to drive at high speed; if we don't over-regulate ourselves, focus on the essential things; when we make quick decisions and implement them. We have highly qualified people in Germany. That's why I'm confident.

Horst von Buttlar spoke to Oliver Blume.

The interview first appeared on "Capital".

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