Why Porsche's future might not be electric

Newly minted shares in Porsche have performed very well since the automaker's recent IPO.

Investors have benefitted from a 36 percent rise in the share price to 112.30 euros. The listing, according to parent Volkswagen Group, will allow Porsche to reach its full potential.

Will that mean more electric cars, faster?

Hopes were high that Porsche's first modern full-electric car, the Porsche Taycan, would eclipse the iconic, very profitable and very traditional Porsche 911, but 2022 was a disappointment.

Market retail prices for the Taycan have plummeted in the last 12 months.

In the all important U.S. market, Taycan prices have fallen more than 8 percent to $132,417.

In contrast, the 911 rose more than 27 percent to $177,342.

In Germany prices for the Taycan have fared better, down just 1.8 percent over the last 12 months to 127,550 euros, however, the 911 has risen more than 14 percent to 174,875 euros during the same period.

The gap is expanding.

The market has spoken, despite heavy subsidies and tax benefits in many jurisdictions and apparent supply shortages, the pricing power of the Porsche Taycan is significantly lower than the 911.

What's going on?

This problem is not unique to the Taycan. Price decreases for electric cars are accelerating.

In January, market leader Tesla announced between 6 percent and 20 percent price cuts to top-selling models. Others will follow.

With so many luxury brands betting huge sums of capital on electric powertrains, we now have evidence that hopes for prices and margins are not likely to be realized. That is unless brands are able to package EV powertrains to outperform the value of analog luxury options.

Porsche's new IPO freedom could pay off, witness Porsche's decision to take a $95 million investment position at the forefront of e-fuels.

This move looks like a great hedge against the possible adverse revenue economics of EVs, at least for the luxury brands.

For the moment, long live the 911.