A meeting with Dr. Oliver Blume, CEO Porsche

The automotive industry is undergoing the largest transformation in its history: products, processes and business models are changing. New entrants – especially from China - start with a clean sheet of paper. Established players, however, face a challenging brown field transformation. In doing so, they strive to protect jobs of their workforce and meet expectations of their investors. Porsche is a leader in this respect and last week I had a long conversation with Dr. Blume, CEO of Porsche, about this topic.

Throughout our two hour exchange Dr. Blume repeatedly stressed the importance of Porsche′s employees and its 2030 strategy. For both sustainability plays a crucial role. From our lunch table he pointed to some buildings in Zuffenhausen and explained that they would soon disappear to make room for more BEV production capacity: Porsche′s transition from roaring flat six ICEs to high torque electric motors is in full swing. Back in 2015, when Porsche decided to launch the Taycan, the move came as a big surprise to many observers. At the time Dr. Blume took a bold step by pushing Porsche in that direction. For a company which has built all its heritage on outstanding internal combustion engines this was quite a disruption. Sales numbers for the Taycan, however, show that he was right and the naysayers got it wrong: during the first six months of 2021 almost 20,000 units were sold, significantly more than Porsche expected.

For Porsche the Taycan is a severe change on the product side: a big battery instead of the most sophisticated six cylinder engine. A completely new supply base and an even stronger presence of software and semiconductors than in previous products. During a drive from Stuttgart to Munich I had ample opportunity to test a Taycan Turbo S. Its more than 750hp give it breathtaking acceleration throughout the whole velocity range. The top speed is limited to 260 km/h – but surely the car could go faster. True to Porsche, the handling is impeccable. As was the Ionity fast charger I tested between Augsburg and Munich: with the swipe of a card the charger pumped energy at 240 kW into the battery. A supermarket and a fast food restaurant next to the charging station showed the new normal in Autobahn electric mobility: the drivers of the BEV right next to me took the opportunity to grab a burger and a soda while their car was charged. I didn’t have time for a burger, as the Taycan was ready to go within a few minutes.

Dr. Blume explained that Porsche was fully aware of the crucial role of the charging infrastructure. Apart from its partnership with Ionity it is offering a proprietary “destination charging” network at select premium locations such as hotels, restaurants, golf clubs etc. Porsche drivers can charge their car for free while enjoying a round of golf. He stressed that more than before, in BEV the customer experience is crucial and extends far beyond the car itself.

The Taycan factory, where construction began at the end of 2015 and which went operational on September 9th, 2019, is an example for new processes in the age of e-mobility. The whole factory was planned in virtual reality, enabling Porsche project engineers to walk through and check potential problems between the layers of production, support activities and building technology. This allowed Porsche to start production as planned. This was an achievement, as the factory had to be built without interrupting the production of the 911 and the 718 taking place in close vicinity. Some 2000 new workers were hired, mostly from the region. The electric powertrain required a different knowledge profile. For example, the battery pack arrives charged at 800V, making careful handling obligatory. The factory operates on multiple floors and each floor is separated into a production and a supply section. Use of Porsche′s smart, green & lean production system keeps average inventory at 2 hours. Porsche′s Flexiline system has a driverless transport system – rather than a moving assembly line - as its backbone. It was less costly to install and can quickly be adapted to new product flows. More importantly, its flexibility allows to separate runners from repeaters and strangers – so the highly customized Taycan for a football star from Munich can follow a different, more complex route through the system. Blume pointed out that the factory is CO2 neutral and makes use of Industry 4.0 technologies whenever they help the workers, which are at the core of the Porsche Production System 4.0. A tour through the factory showed me what he meant: not the “all you can imagine” setting one can see in popular magazines, but a thought-through use of data, HMI, robotics and other Industry 4.0 elements.

Porsche′s business model is also changing. Dr. Blume stated that while cars will continue to be the largest contributor to Porsche′s revenue, its ecosystem will extend beyond the typical pipeline to include new elements. Porsche will make sure that from car to app to infrastructure and beyond its customers will continue to have an outstanding customer experience, soon adding more than 10% of revenues to its P&L.

One small but crucial element in this new business landscape is Porsche′s initiative in third generation e-fuels. It is in line with its strategy of offering a product lineup ranging from its iconic 718 and flat-six 911 via its hybrid SUVs to its fully electric Taycan. The recent launch of an e-fuel refinery in southern Chile is a lighthouse project: 100% renewable energy is readily available in this thinly populated region. It can be used to generate H2 from water, remove CO2 from the atmosphere, and then turn the two elements into green fuel. The refinery will ramp up to 550 million liters by 2026 and ensures sustainable driving pleasure to 911 owners for years to come. It reflects Porsche′s smart approach to sustainable mobility: the large fleet of Porsches 911s on the roads today is not forgotten. Green fuel makes them CO2 neutral – and drivers will happily accept the increased costs if it allows them to refuel and enjoy the unique sound and performance. The project also provides valuable insights for other industries: Dr. Blume indicated that the Chile project is watched closely by transportation related sectors, particularly those that are inaccessible to direct electrification.

Eventually Dr. Blume had to return to his office, located in the brick building where the first true Porsche was built, more than 80 years ago. I think Dr. Ferdinand Porsche, were he around today, would be quite happy to see that his company has come full circle: the first car he ever built was electric. 123 years later, more than 150 Taycans leave the factory each day. One thing, however, has stayed the same: the passion to build iconic sportscars by the name of Porsche.

PS: special thanks to Peter Gr?ve, Spokesperson Corporate Strategy and Procurement, Porsche