October 15, 2018 06:01 CET
MONTEREY, California — Porsche is ratcheting up its investment plans as the sports-car brand accelerates toward electrification. And its U.S. dealers will be required to shoulder a significant share.
Porsche bumped up the number of high-speed chargers it would need to more than 700, or about 40 percent more than previously estimated. U.S. dealers will be on the hook for at least 200 of those.
It’s a pricey ask of the 190-store brand. The chargers will cost retailers between $300,000 and $400,000 per store on average, Porsche estimated.
The most urgent motivation for the tool-up is the planned U.S. arrival of the Taycan electric sedan in early 2020.
Zellmer: “Heavy investment”
But for Porsche, the issue is far bigger than that.
The automaker has concluded that the heart of its vehicles — the gasoline-powered engine — faces an existential threat from the electric powertrain. And rather than fight it, Porsche is embracing electrification.
Porsche expects to invest more than €6 billion ($6.9 billion) on vehicle electrification by 2022.
“We expect by 2025, roughly 50 percent of our products to be electrified, either with a fully electric engine or with a plug-in hybrid,” Porsche sales chief Detlev von Platen told Automotive News, a sister publication of Automotive News Europe.
That technology upheaval translates into a U.S. retailing reality: Porsche dealers need to get busy installing EV chargers.
Porsche Cars North America CEO Klaus Zellmer concedes that the financial ask of dealers is “actually quite a heavy investment,” and he is warning retailers that a payoff could take a while.
“It’s typical, if you’re an entrepreneur, that the investment does not pay off within the first one-two-three years,” Zellmer told Automotive News last month at Porsche’s Rennsport Reunion motorsports event here.
“It’s a long-term investment.”
In the game
But it is also a necessary investment. Automakers’ ambitious EV product plans hinge on the availability of robust and fast charging infrastructure, needed to alleviate range anxiety. Fear of running out of juice and the inconvenience of lengthy charge times have been major hurdles to widespread EV adoption.
Porsche increased by at least 40 percent the number of fast chargers it wants in time for the U.S. arrival of the Taycan electric sedan in early 2020.
- Total chargers: 700+
- Third-party network chargers: 500+
- Dealership chargers: 200+
- Average dealer investment: $300,000-$400,000 per store
Dealers must invest to be part of the game, Zellmer said.
“You need to establish the tech prerequisites to show what the car can do, which first for customers is charging,” he said.
The cost of the charger investment will be painful for some lower-volume dealers, said Todd Blue, CEO of IndiGO Auto Group, which has three Porsche stores in St. Louis, Houston and Rancho Mirage, California.
“The industry is changing and we all have to get ready for the future,” Blue said. “There is no mistaking the future will have a significant component of electric by 2025.”
To help offset some of the upfront cost, the automaker could consider letting smaller dealerships lease chargers through Porsche Financial Services, Blue said.
The numbers of chargers dealers must install will be based on sales. Dealers are expected to install at least two fast chargers at each location along with a buffer battery that stores electricity from the grid and is less expensive than charging vehicles directly from the grid. The 350-kilowatt chargers can fill a vehicle battery to 80 percent — or about 250 miles (400 km) — in 15 to 20 minutes.
Robert DiStanislao, president of Porsche of the Main Line in suburban Philadelphia, calls the EV charger investment a necessary cost of doing business.
“More than likely we’ll be subsidizing these ports,” said DiStanislao, a member of the Porsche Dealer Board of Regents.
Having the charging infrastructure at the dealership is also about educating prospective customers on EV ownership. Tesla and Nissan use such an approach, having installed chargers at many stores.
“We have to make sure that these cars are properly charged upon demo,” DiStanislao said. “You don’t get a second chance to make a first impression.”
The on-site chargers could create sales and service opportunities, dealers believe, as EV drivers stroll around the dealership while their vehicles charge. Zellmer left it up to the dealerships to decide whether they will require a fee for the electricity.
“We want customers in our showrooms,” DiStanislao said. “We want them to see all the models.”
Porsche is also in discussions with third-party networks, including Electrify America, ChargePoint and EVgo, to augment the network with additional nondealership chargers. That effort calls for at least 500 chargers along U.S. highways.
“Hopefully, before the end of the year we will have signed the contract with one of them,” Zellmer said of the outside companies.
Blue cautions against racing into electrification, reasoning that customer demand should dictate EV rollout.
“We should walk slowly and allow healthy demand to dictate the future,” Blue said. “Not the government.”
While Porsche develops EVs such as the Taycan and a possible electric hatchback, the automaker is collaborating with Volkswagen Group sibling Audi on a new EV platform.
Porsche’s EV ambitions will put pressure on the company’s goal to maintain a 15 percent profit margin.
“With the new components of the EV, the car becomes more expensive by $10,000 to $12,000, on average,” von Platen said. “So we have to find, through a very strong and intensive cost management, ways to compensate.”
For Porsche, selling odorless, silent EVs to a fan base raised on high-octane, deafening engines puts the brand and its dealers into a new and unfamiliar marketing world.
The electric car must deliver “Porsche values,” Zellmer said. It must “behave” like a real sports car — not just in acceleration, but in the way it brakes and handles corners, he said.
But Porsche executives are confident the Taycan will be worthy of the Porsche crest in design, build quality and driving performance. Von Platen points to the Taycan’s sporty, low-slung design as a clear indicator of its trademark Porsche performance street cred.
“The center of gravity of a Taycan will be lower than the fastest of our 911 models — the GT3,” von Platen boasts. “So that gives you an idea about how the car will behave.”
You can reach Urvaksh Karkaria at email@example.com.