Luxury carmakers struggle behind in the race to electrify

Feature

The luxury car market has long been associated with speed, extravagance, and above all, the ‘roar’ of combustion engines. Dominated by automakers with legacies in high-end manufacturing, it is an area of the industry that has historically been slow to embrace innovation, favouring tradition and brand integrity over pioneering technological advancement. Now, in 2025, with many automakers embracing the transition to electric, the high-end car market is almost universally struggling to keep pace. While Tesla capitalised on a niche of environmentally conscious luxury buyers, many high-end nameplates have struggled to strike the right chord with a consumer base that still prefers the roaring power of the internal combustion engine over the environmental bragging rights of an electric equivalent. Car enthusiast Graham Royle, owner of several supercars including a Lamborghini, a Mclaren and a Ferrari, captured the sentiment of many high-end car drivers saying,

“There is no pleasure from a whining electric motor compared to a throbbing V12 or V8 [engines] with gorgeous exhaust notes. Unless Ferrari keeps petrol in their line-up, they will lose my business.”

For many, it seems the link between supercars and petrol is a non-negotiable.  

Responding to fluctuations in the global EV market

  Back in 2023, the global EV market witnessed a period of rapid growth as investors scrambled to fund the next big mobility trend. But after weathering the initial EV hype cycle, enthusiasm for electrification has waned. The reversal of the EV tax credit in the U.S., combined with disruption to global battery supply chains caused by trade disputes, has plunged the EV market into uncertainty. While global appetite for electric vehicles remains relatively stable, the explosive growth once projected has not materialised. It’s clear that the road to electrification may not be as smooth as once hoped. Now, in 2025, the EV market is a different story. For many automakers, the push to electrify has eroded profit margins and forced a partial retreat to internal combustion and hybrid models. Porsche, for instance, has repeatedly delayed several electric releases. Whilst some high-end automakers steam ahead with an electric transition, others have been forced to roll back on the ambitious and idealistic goals laid out during the EV “golden age”.  

Porsche U-turns on ambitious EV strategy

  Porsche has rolled back its ambitious EV policy following heavy losses from an overly zealous electrification strategy, which led to a profit margin forecast of only 2%, down from the previously guided 5% to 7% for 2025. Now, under new leadership, Porsche is scaling back its EV plans, scrapping the development of a battery-powered flagship SUV positioned above the Cayenne.     The company has appointed Michael Leiters, a seasoned engineer with experience at McLaren and Ferrari, as its next CEO. Leiters, who takes over in January from Oliver Blume, has long advocated for hybrid models and was instrumental in the success of the Cayenne SUV during his earlier tenure at Porsche. To restore profitability and brand confidence, Leiters is expected to focus on hybrid and ICE models to strengthen Porsche’s line-up. While the company won’t abandon electrification altogether, continuing to promote models like the Taycan and Macan Electric, its new EV strategy is markedly more conservative than previously imagined.  

Ferrari treads cautiously into an electric future

  For iconic Italian luxury automaker Ferrari, the path to full electrification has faced similar roadblocks. The company may have pledged three years ago that fully electric vehicles would make up 40% of its line up by 2030, however they have since rolled back on this commitment, promising a revised figure of 20%.   Despite this apparent U-turn, Ferrari isn’t shelving its electric ambitions. The company has announced plans to deliver its first all-electric model, the Ferrari Elettrica, as early as this spring. Although the vehicle has yet to be unveiled, rumours suggest it will take the form of an SUV-style model rather than a traditional sports car- pointing to a lower price tag and higher volume strategy. Chief marketing officer Enrico Galliera, praised the new model for maintaining Ferrari’s unique identity:

“This is not an electric car developed by Ferrari. This is a Ferrari powered with an electric power train.”

Ferrari’s comparatively strident strategy follows strong profit margins in recent years. Even after its shares plummeted a record 15% in New York last week, the company remains a front-runner in the luxury car sector, with order books filled through 2026- demonstrating that, despite market turbulence, demand continues to outstrip supply.  

Lamborghini reconsiders its EV future

  Another luxury carmaker putting its electric strategy into reverse is Italian automaker, Lamborghini, who announced their intention to use internal combustion engines in their vehicles for at least the next ten years. Chairman and CEO Stephan Winkelmann cited customer sentiment and market demand as reason for rethinking the company’s EV strategy and refocusing on hybrid powertrains. Winkelmann maintained that its loyal customer base still wanted “the sound and the emotion” of an internal combustion engine and were not ready for a fully-electric transition.   When Lamborghini first announced its new model, the Lanzador, back in August 2023, the grand tourer was marketed as the first fully-electric vehicle under the Lamborghini brand. However, by December 2024, Winkelmann had revised the plan, stating that the car’s 2029 launch would depend on pervading trends. Now in 2025, as demand for EVs falters, Lamborghini has walked back its initial commitment, saying it has yet to decide whether the Lanzador will be electric or a plug-in hybrid. Speaking with Autocar, Winkelmann said,

“With Lanzador, we need to decide whether it will be a PHEV or electric in the next few weeks.”

Responding to environmental criticism, Lamborghini has argued that its limited production volumes make its environmental footprint comparatively small in the face of the multibillion-dollar automotive industry. “We are selling 10,000 cars in a world that is producing 80 million cars a year, so our impact in terms of CO2 emissions is not that important”.  

What’s next for the luxury car market?

  Europe and the UK have announced their intentions to ban the sale of new petrol and diesel vehicles by 2035, including plug-in hybrids. The decision has sparked backlash in the EU, where lobbyists in the manufacturing sector have pushed for a relaxation of the deadline to reflect current geopolitical trends. Some automakers will be exempt under the “low-volume” exclusion, allowing manufacturers that register fewer than 2,500 vehicles per year to continue producing petrol and diesel cars after the ban takes effect. For brands like Lamborghini, which operate on a scarcity-based business model, this loophole provides at least another decade of combustion-engine production. For larger automakers, however, the looming regulatory deadlines will force an accelerated transition, whether they’re ready or not. Certainly, most luxury automakers now accept that an electric future may be commercially divisive but remains, ultimately, inevitable. Whilst the current market may have slowed the charge to electrify, luxury automakers must race to adapt or risk losing relevance in an increasingly electric world.   Keep up-to-date with the latest mobility news by subscribing to MOVEMNT’s free newsletter