Luxury sports carmaker Porsche has announced plans to cut 1,900 jobs in Germany, citing high manufacturing costs, weak demand, and intense competition—especially in the electric vehicle (EV) market. The job reductions will take place over the next few years at Porsche’s Stuttgart headquarters and its nearby research center, the company confirmed on Thursday.

Germany’s auto sector, once a global leader, is now grappling with mounting challenges. Porsche’s human resources chief, Andreas Haffner, acknowledged the difficult road ahead, attributing the cuts to a sluggish transition to EVs and the broader economic and geopolitical headwinds. However, he assured that none of the job losses would be compulsory redundancies.

Porsche, a key subsidiary of Volkswagen Group, has long been one of its most profitable brands. But in 2024, the company saw a 3% decline in global deliveries, with a particularly steep 28% drop in China—once its most promising growth market. German automakers have been losing ground in China as local brands ramp up competition, particularly in the EV space.

The sports car manufacturer had already taken steps to reduce its workforce last year by not renewing temporary contracts. However, worsening market conditions have forced deeper cuts. Earlier this month, Porsche made headlines with the abrupt departure of two top executives, reportedly due to internal clashes over the company’s strategic direction.

The broader Volkswagen Group is also undergoing major restructuring, with plans to cut 35,000 jobs at its core VW brand. Meanwhile, in a shift from previous EV ambitions, Porsche recently announced it will focus on producing more combustion engine and plug-in hybrid models to maintain profitability.

The job cuts underscore the turbulent times for Germany’s auto industry, as it struggles to balance innovation, economic pressures, and shifting consumer demand.