The combustion pivot will kill luxury automakers. They just cannot see it yet.

Twelve global carmakers have scaled back their electric vehicle plans. Porsche wrote off €3.9 billion ($4.5 billion) and watched its operating profit collapse by 98% in 2025. Its new CEO responded with three words: “Leaner, faster, desirable.” The irony of a brand that just wiped out nearly all of its profitability while promising to become more desirable captures the state of the entire industry. Rolls-Royce will keep building V12s beyond 2030. Lamborghini cancelled its first fully electric car. Analysts calculate $75 billion in cancelled EV investment in the past year. The industry is retreating to combustion because the electric alternative, as currently built, does not deserve the premium it demands. That reasoning is sound. The direction is still fatal. Why luxury EVs lack desirability Before condemning the retreat, we should be honest about why it happened. The luxury car industry did not fail at building electric cars. It failed at building desirable ones. Tesla introduced a genuinely new emotional marker: acceleration that redefined what a car could feel like. The established brands responded with more of the same. Often less. The Mercedes EQS arrived with a design language so disconnected from its heritage that it repelled existing clients. Xiaomi’s SU7 destroyed the Porsche Taycan’s value proposition with a car that the market judged as equal or better at a fraction of the price. Customers responded rationally. Why pay a luxury premium for a product that offers nothing the mainstream does not already provide? The old luxury automotive world was built on technical superiority proven at the absolute limit. Formula 1 and rally racing were proof systems. When a customer bought a Ferrari or a Porsche, they were buying technology that had survived conditions that would destroy anything ordinary. Luxury electric vehicles have no equivalent. Formula E does not carry the mythology of Formula 1. There is no electric Le Mans. The credentials that justified the premium for decades do not transfer to the new powertrain. They have to be earned again. And no one is earning them. The hybrid disconnect: Building without the buyer in mind And now the pivot to hybrids is creating a new problem that reveals how disconnected these companies have become from their own clients. On paper, hybrid powertrains offer the best of both worlds: combustion emotion with electric performance. In practice, they introduce a dependency that is fundamentally incompatible with how wealthy collectors use their cars. I was personally considering buying a Porsche 911 GTS with the new hybrid engine. Then I learned that the battery requires regular driving to avoid degradation or failure. For someone who owns one car and drives it daily, this is irrelevant. For the typical buyer of a supercar or a high-performance sports car — someone who owns several vehicles, rotates among them, and may leave any individual car untouched for weeks or months — it is a serious problem. A car that punishes you for not driving it is a product designed for an engineer’s test cycle, not for the reality of how collectors live. This is the pattern that runs through every failure in the luxury industry right now. Products built without understanding how the client actually uses them. Technology adopted without asking whether it creates value or friction. Decisions made in engineering departments and boardrooms that have never consulted the person writing the check. In my work advising luxury brands across categories, this disconnect between product logic and client reality is the single most common source of value destruction. The hybrid battery issue is a small example of a massive problem: an industry making moves without thinking about the people those moves are supposed to serve. An opportunity for Chinese EVs Meanwhile, the technology that could change everything is arriving faster than incumbents admit. Solid-state batteries will make charging faster than filling a petrol tank. Five-minute fast charging already exists in China, something no Western luxury brand currently offers. When degradation is solved and ranges exceed combustion, the Kodak moment arrives. Not gradually. Suddenly. The emotional attachment to the combustion engine is real. So was the attachment to film grain and vinyl warmth. Each was eventually superseded by technology that replicated the emotion and added dimensions the original could not offer. The $75 billion in cancelled EV investment is a competitive gift to Chinese manufacturers who are accelerating into the space Western brands are vacating. BYD, Xiaomi, and NIO are building proprietary battery chemistry, motor architecture, and charging infrastructure. When EVs become mandated, every company that stopped investing will buy commodity components. The Swiss watch industry understood this decades ago. A standard movement inside a $500 watch is acceptable. A standard movement inside a $50,000 watch is a death sentence. Luxury cars at a crossroads The deepest failure is creative. When Ferrari unveiled its first electric car and the story highlighted an austere, iPhone-inspired cockpit, it signaled capitulation, not inspiration. Luxury requires the creation of dreams. Louis Vuitton stands for the thrill of travel. Patek Philippe stands for generational legacy. These brands survived every disruption because their identity transcended the materials of any era. The luxury car brands that survive the electric transition will be the ones that find their equivalent: an emotional identity so powerful it transcends the powertrain. And today, this district identity is what many brands are lacking. The combustion pivot feels safe because the present still rewards it. Order books are full. The V12 still stirs the soul. All of this is true. And all of it is temporary. Solid-state batteries are coming. Five-minute charging is here, and the time will further compress. Chinese competitors are building the future unopposed. As for the incumbent, their craftsmanship is exquisite and their precision extraordinary. But their direction is fatal. The time to act is now. This is an opinion piece, and the views expressed are those of the author and do not necessarily reflect those of the publication.

Sectors

Insights

Company

The combustion pivot will kill luxury automakers. They just cannot see it yet.