Porsche’s stock tumbled by more than 7% on Monday after warning last week that delays in its electric vehicle (EV) rollout will dent the carmaker’s 2025 earnings.

Caught between electrification and its iconic petrol-powered sports cars, the German firm said it will slow its push for EVs as demand weakens.

Shares of its parent Volkswagen also fell by more than 7% on the same day after saying it will spend billions to overhaul Porsche’s line-up of vehicles.

The companies’ struggles reflect the challenges for European manufacturers, who are faced with intense competition from Chinese rivals and a slowing economy that’s dampening demand for luxury cars.

Porsche said in a statement on Friday that it has reduced its projected profit margin from up to 7% to 2% or less.

It cited the “US import tariffs, the decline in the Chinese luxury market, and the slowdown in the ramp-up of electric mobility” among its challenges.

The company also said it would delay the launch of its newest EVs and that it will extend production of combustion engine models, even as the European market faces a 2035 deadline to ban the sale of new petrol and diesel cars.

Industry executives have urged the authorities to relax that target, arguing it is not feasible.

In a strategic shift, Porsche said an upcoming line of sport utility vehicles, originally planned as fully electric, will now launch exclusively with combustion engines and plug-in hybrid options.

Current models like the four-door Panamera and Cayenne will continue to be available with non-electric options well into the 2030s, it added.

Luxury carmakers BMW and Mercedes-Benz have also been slashing costs to keep up with rivals.

European carmakers are facing fierce competition from Chinese brands like BYD and XPeng, which are caught in a price war in the domestic EV market.

Many international carmakers have struggled to compete in China, where average car prices have dropped by an estimated 19% over the past two years to around 165,000 yuan (£17,150; $23,190).