Porsche may ditch diesel engine

NUERBURGRING, Germany -- Porsche will decide at the end of the decade whether its latest generation of diesel engines will be its last, CEO Oliver Blume told Reuters, the first time a German carmaker has said in public it could discontinue diesel.

Volkswagen's widespread diesel emissions violations have cast a shadow over its Porsche division and the sports car brand, which first introduced diesel in its Cayenne SUV in 2009, is considering its options.

"Of course we are looking into this issue," CEO Blume said in an interview at the Nuerburgring motorsports complex in western Germany. "We have not made a decision on it."

Blume said Porsche would offer a mix of combustion engines, plug-in hybrid vehicles and purely battery-powered cars over the next 10-15 years and would decide at the end of the decade whether diesel had a future at Porsche.

German prosecutors last month started investigating Porsche staff to see whether they were involved in designing illicit engine-control software and regulators are examining whether the Cayenne was fitted with such a device.

A redesign of the Cayenne will be launched in September and it will still offer a diesel version, Blume said, just like the Panamera saloon that hit dealerships last November.

"For the generations that will follow there are different scenarios," Blume said. One scenario has Porsche backing out of diesel altogether, sources at the carmaker said.

Porsche still relies on diesels, which account for about 15 percent of its global sales, to help it bring down emissions of carbon dioxide as they are more fuel-efficient than gasoline engines.

At rival BMW, diesel cars make up 35 percent of new registrations while Audi's European diesel sales alone account for two-thirds of deliveries.

Electric cities

But diesel's image has been badly tarnished by the emissions scandal and revelations that some engines pump dangerously high levels of poisonous nitrogen oxides into the air, prompting many carmakers to review their strategies.

To tap into growing demand for electric cars, Porsche is spending $1.2 billion(1 billion euro) to overhaul its main Stuttgart plant and build its first battery-only model -- the four-door Mission E saloon which is due on the market in 2019.

Battery-only vehicles could account for a quarter of Porsche's sales by 2025, give or take 5 to 10 percentage points, Blume said, contradicting a media report that said up to half of its output by 2023-24 could be electric.

Earlier this month, Geely's Volvo said all its cars launched after 2019 would be electric or hybrids, making it the first major traditional carmaker to set a date for phasing out vehicles power solely by combustion engines.

Porsche and Audi, which together contribute 60 percent of VW's profits, are targeting "significant savings" in development and material costs for their electric-car programs by sharing a new production platform code-named PPE, Blume said.

The new architecture will allow both brands to save money by sharing components and modules, helping Porsche with a goal of keeping its return on sales at about 15 percent a year, he said.

"Further platforms are conceivable, for instance with SUVs."

Porsche sales rose 6 percent to a record 238,000 cars in 2016 and Blume said the carmaker had a guideline for increasing its sales about 5 percent per year through 2025.

Counting on growing demand for high-end electric cars, Porsche may spawn another zero-emission model off the Mission E platform, for which it plans an initial capacity of about 20,000 cars at its Zuffenhausen factory, Blume said. An electrified version of the top-selling Macan SUV is also possible.

"We expect the metropolises in China and Asia will switch to pure electric mobility very fast," the CEO said. "I believe there will be few pure combustion engines to be seen in the large cities there in five years time. The development in rural areas will, however, proceed much more slowly."