Are Luxury Performance EVs Dead in 2025?

2024 was a complex year for the automotive industry, with legacy automakers losing significant ground either in EV market shares, financial results, or both. This is due to several factors affecting the industry. Geopolitical, technological, and trends among consumers. While there is no doubt that the future of automotive is electric (at least in large part if not completely), the same might not be completely true for the luxury performance niche for the foreseeable future.

EVs are “young”. While cars have been around for well over a century, the true development of consumer-ready electric cars is barely around 15 years, and there are still countless areas of significant improvements that can completely change the product and user experience in years to come. Going from batteries to software, and more.

After early adopters jumped on the bandwagon and the excitement “died down”, it left space to critics and doubters. This, particularly in 2024, is reflected in a significant drop in EV sales in the West. China is the great exception, with EVs not only growing but reaching around 65-70% of the global share.

Luxury Automotive OEMs review their electrification strategies

It is throughout this difficult period for the industry with many OEMs committing significant investments in EV-related technology, like Ford's $14 billion for the EV expansion in the US, that some started going back on their development strategies.

The latest of which is none other than Porsche. The German automaker has been a strong and early promoter of the new powertrain technology, with its Taycan, initially named Mission E, and many more in between from concepts like the Mission R, or Mission X, to actual all-electric production version of its “traditional” lineup like the latest Macan.

It has to be said that Porsche never fully went in only one direction. A while back they made the headlines with their big investment in E-fuel development for their legacy models and classic cars (Link E-fuel article here), but an estimate of their investment in EV technology just in the last 3 years is around $25 billion.

Only a few months ago Porsche announced it was reviewing its EV strategy stating they are reducing their EV development targets. Key reasons for this have been sluggish sales of its EV models due to low demand, the significant investment required to continually develop software and technology for its new models, and, not to be underestimated in the luxury sector, the drastic depreciation hitting EVs in general, trend for which the Taycan has unfortunately become a symbol.

Porsche Taycan Depreciation over 1 and 4 years

A quick look at the Taycan (Coupé) current rate of depreciation shows a quite worrying situation, that any buyer in this segment would seriously consider before the purchase. Compared to 2024’s prices for the different trim levels as new starting at £86,000, and topping at £161,000 (excluding the Turbo GT version that was not available in the previous generation Taycan), models purchased earlier in the same year depreciate by an average of 31% on starting prices that do not include options yet, and over 51% in 4 years. If options were included in original sales prices these percentages would increase even more.

A first announcement by the German automaker stated that the previous target of 80% of BEV sales by 2030 might not be achieved due to factors previously stated. Chairman Lutz Meschke said: “We will refresh our combustion engine cars, including the Panamera and the Cayenne, and of course, we will continue to rely on plug-in hybrids”. He continued “When it comes to research and development, you’ll see more flexibility in the upcoming years. We will develop new combustion-engined derivatives in order to give the right answer to customer demand”. This could, for example, be reflected in the decision of releasing an ICE version of the upcoming 718 that was notoriously set to become a BEV only, announced by the Mission R concept a few years ago, to try and renew the product line and revive its sales that has been somewhat slow over quite a few years.

*Mercedes-Benz BEV CLA Concept

Right before the German automaker, compatriots at Mercedes-Benz went through a similar process. Initially the development of the MB.EA-Large EV platform planned for 2028 was halted, then came the delay of the target of 50% sales of electrified models (BEVs and PHEVs) from 2025 to 2030, and it’s a few days ago the announcement that the production of the CLA concept unveiled a while back has also been delayed due to development issues.

In Great Britain too, automotive OEMs follow the trend. Aston Martin, amid a slowly and very gradually recovering financial situation, delayed the announcement of its first EV to 2026 which was initially set to come this year. Geely-owned Lotus has reportedly abandoned the plans to go 100% electric and Bentley too, which was set to reach the same target by 2030 confirmed that hybrids will likely remain on sale even after that date.

Is there more to this trend?

As mentioned previously, China is going strong and its EV market is in constant evolution with serious competitors coming to the global stage and making the headlines with important achievements. These days in the Western media the peak of this wave has surely been Xiaomi’s SU7 which in its “Ultra Prototype” iteration (which is not road legal) managed to attract everyone’s attention with a lap time of 6:46.874 at the Nürburgring Nordschleife becoming the fastest EV on the track. It comfortably outpaced the £1.8 million Rimac Nevera (7:05.29) and the new £186,000 Porsche Taycan Turbo GT with Weissach Package (7:07.55) with a prototype that is said to cost just around £94,000.

While this is working well for the mass market though in China, luxury automakers have a different and much smaller customer base, and on top of that for several of these brands the largest markets are still in the West (usually the USA) and currently made on average in larger part of people around 50+year-old or older. This demographic, grown up with specific expectations about the performance and sensations that a performance luxury car can and should offer seems fairly opposed to electrification and its added value proposition compared to combustion-engined cars. So, this is the obvious and most likely factor due to which the market niche is highly likely to remain mostly ICE-driven in the short to medium term, with hybrids decisively taking their place.

There are potential alternatives with the likes of Ferrari attempting a new approach to BEVs as discussed previously, or a new developing trend of Extended-range Electric Vehicles (EREV) which is mostly aimed at solving range-anxiety and thus not likely to make luxury car buyers fall in love with performance EVs.

*Xiaomi sets lap time at the Nordschleife

The most emblematic example of this change happening over the last year or so is the statement released by Rimac’s CEO Mate Rimac confirming that luxury car buyers simply do not want performance EVs. According to some, this could be hinting that upcoming models by the Croatian brand will get some sort of internal combustion powertrain component. In terms of sales the only exception in the year just passed has been the Rolls-Royce Spectre, which is naturally not focused on performance and thus (as founder Charles Rolls said over 100 years ago) takes advantage of the silent and smooth powertrain enhancing all the characteristics that brand’s clients look for.

What could be next?

As the market composition, especially for traditional luxury automakers seems unlikely to drastically change in the short term, a significant change could be once more driven by forward-looking markets like China.

With the offering of sporty BEVs increasing in China, customers more used to, or growing up in a market dominated by EVs may first start trends that define new value propositions more suited to the electric powertrain that go beyond straight-line acceleration (already proven not sufficient to convince sceptics) and would probably fall in technology applications and EV-specific driving-related use-cases.

Last but not least, a determinant factor that could change traditional performance car buyers’ mind is a revolution in EV battery technology. If new chemistries bring a significant improvement not much in power density, but in volume and weight reduction like some such as solid-state promise, they could help OEMs bringing down the overall cars' weight to the 1,500 kg average of current performance cars and thus significantly benefit dynamics and driving capabilities.