Porsche Is Ditching Diesel Cars. Will Other Automakers Follow?

September 24, 2018, 9:31 AM UTC

After three years of Dieselgate, Porsche (POAHY) has become the first German automaker to drop diesel cars altogether.

“There won’t be any more Porsche diesels,” CEO Oliver Blume told German newspaper Bild on Sunday, adding that the company will focus its attention on electric and hybrid cars. Porsche is spending $7.4 billion to electrify half of its lineup by 2025.

In a statement, Blume said, “Porsche is not demonizing diesel. It is, and will remain, an important propulsion technology. We as a sports car manufacturer, however, for whom diesel has always played a secondary role, have come to the conclusion that we would like our future to be diesel-free.”

Porsche stopped selling diesel vehicles in February of this year; they accounted for just 12% of its worldwide sales in 2017. In 2019 Porsche is launching its first electric vehicle, the Porsche Taycan, a 600-horsepower sportscar that can travel more than 300 miles on a single charge. Porsche has also shown a concept for an electric crossover.

German automakers are running scared from diesel since driving bans have started to come into effect in their homeland. The Dieselgate scandal shook the industry, as it was revealed car manufacturers including Volkswagen were rigging emissions-testing software in their diesel vehicles to make them seem more environmentally friendly than they actually were.

But so far, none of the other German automakers have been willing to drop diesel altogether yet. Diesel vehicles make up more than 50% of sales for Daimler (DDAIF) and BMW (BMWYY). Diesel cars accounted for more than a third of new registrations in Germany in the second quarter, the first increase since the start of Dieselgate. Diesel remains more fuel-efficient than gasoline for big vehicles such as crossovers and trucks. But executives are hoping a new generation of electric SUVs will get drivers to cross over.

Volkswagen Auto Group (VLKPY), which owns Porsche and Audi, is investing $48 billion in battery technology to equip factories that will produce 27 electric vehicle models in the next five years. Audi just introduced its first electric SUV to great acclaim, the 2019 e-Tron. This month, Mercedes-Benz and BMW also debuted their first electric SUVs, the EQ C and the Vision iNext.