In FY2021, Porsche Worldwide once again consolidated its position as "one of the most profitable car manufacturers in the world" with outstanding results. The Stuttgart-based sports car manufacturer has hit record highs in both operating income and sales profit. Operating income climbed to EUR 33.1 billion in 2021, an increase of EUR 4.4 billion from the previous fiscal year and an increase of 15% year-on-year (operating income of EUR 28.7 billion in FY2020). Profit from sales of €5.3 billion increased by €1.1 billion (up 27 percent) from the previous fiscal year. As a result, Porsche achieved a return on sales of 16.0% in FY2021 (14.6% in the previous fiscal year).
Mr. Obermou, Chairman of the Porsche Global Executive Board (left) and Mr. Maxig, Vice Chairman and Member of the Porsche Global Executive Board, Responsible for Finance and Information Technology (right)
Oliver Blume, Chairman of the Executive Board of Porsche Worldwide, said: "Our excellent performance is based on bold, innovative and forward-looking decisions. The automotive industry is undergoing perhaps the greatest transformation in history, and we have developed a strategic approach early on and are steadily moving forward in our operations. All achievements are due to teamwork. Lutz Meschke, Vice Chairman and Member of the Executive Board of Porsche Worldwide and responsible for Finance and Information Technology, believes that in addition to an attractive product portfolio, a healthy cost structure is also the basis for Porsche's excellent performance. "Our business data reflects the company's superior profitability," he said. It proves that even in a difficult market environment such as chip supply shortages, we have achieved value-creating growth and demonstrated the robustness of a successful business model. ”
Guarantee profitability in a complex market environment
In FY2021, Porsche's global net cash flow increased by EUR 1.5 billion to EUR 3.7 billion (previous fiscal year: EUR 2.2 billion). "This indicator is a strong proof of Porsche's profitability," Says Maxig. The company's good development is also due to the ambitious "2025 Profitability Plan", which aims to continuously reap the benefits through innovation and new business models. "Our profitability program has been very effective due to the high motivation of our employees. Porsche further improves profitability and reduces the break-even point. This gives us the ability to make strategic investments in the company's future in a tight economic situation. We are steadfastly advancing our investments in electrification, digitalization and sustainability. I am confident that Porsche will become even stronger after the test of the current global crisis. Maxig added.
The current tense world situation requires restraint and prudence. Obermu said: "Porsche is concerned and concerned about the armed conflict in the Ukrainian region. We hope that both sides will cease hostilities and resolve the dispute diplomatically. The safety of people's lives and the dignity of humanity are essential. "To help people affected by the conflict in Ukraine, Porsche Worldwide has donated 1 million euros. A task force of experts is conducting an ongoing assessment of the impact on Porsche's business activities. The supply chain at Porsche factories has been affected to some extent, which means that in some cases production cannot be carried out as scheduled.
"We will face serious political and economic challenges in the coming months, but we will remain committed to our long-standing strategic goal of achieving a return on sales of at least 15% per year over the long term," CFO Maxger emphasized. "The task force has taken initial steps to safeguard revenue and wants to ensure that the company continues to meet high-yield requirements. Of course, the ultimate extent to which this goal is achieved depends on many external challenges that are not controlled by human beings. Within Porsche, the company has created all the favourable conditions for a successful business model: "Porsche is in an excellent position, both strategically, operationally and financially. We are therefore confident about the future and welcome the Volkswagen Group's study of the possibility of an initial public offering (IPO) of Porsche AG. This initiative can increase brand awareness and increase business freedom. At the same time, Volkswagen and Porsche can still benefit from future collaboration. ”
Accelerate the electrification process across the board
In 2021, Porsche delivered a total of 301,915 new cars to customers worldwide. This marks the first time that Porsche's new car deliveries exceeded the 300,000-unit mark, a record high (272,162 deliveries last year). The best-selling models were the Macan (88,362 units) and the Cayenne (83,071 units). Deliveries of the Taycan more than doubled: 41,296 customers worldwide received their first pure electric Porsche. The Taycan even surpassed the Porsche benchmark sports car 911, although the latter also set a new record with 38,464 units. "The Taycan is an authentic Porsche sports car that inspires passion for a wide range of groups – including our existing customers, new customers, automotive experts and industry media. We will also launch another pure electric sports car to accelerate the electrification process: in the mid-1920s, we planned to present the mid-engined 718 sports car in pure electric form. ”
Last year, the proportion of all new Porsche cars delivered in Europe was close to 40%, including plug-in hybrid models and pure electric models. Porsche has announced plans to become carbon neutral by 2030. "It is expected that by 2025, sales of electric models will account for half of Porsche's overall sales, including pure electric and plug-in hybrid models," Obomus revealed. "By 2030, the proportion of pure electric vehicles in new vehicles is planned to reach more than 80%." To achieve this ambitious goal, Porsche is working with partners to invest in the construction of high-end charging stations, as well as Porsche's own charging infrastructure. In addition, Porsche has invested heavily in core technologies such as battery systems and battery module production. The newly formed Cellforce company is focusing on the development and production of high-performance batteries, with volume production expected in 2024.
In 2021, Porsche's deliveries increased in all sales locations around the world, with China once again becoming the largest single market. Nearly 96,000 units were delivered in the Chinese market, up 8% year-on-year. Porsche's North American market grew significantly, with more than 70,000 units delivered in the U.S., up 22% year-over-year. The European market also saw very positive growth: in Germany alone, Porsche's new car deliveries increased by 9 percent to almost 29,000 units.
In China, Porsche continues to accelerate the electrification process around the product and vehicle ecology, and continues to enrich the electric mobility life of Chinese customers. Two Taycan spin-offs, the Taycan GTS and the Taycan Cross Turismo, will debut in Asia at the 2022 Beijing International Auto Show and pre-orders will kick off. At that time, Porsche's lineup of new energy models in China will be expanded to 21 models. In addition to the increasing offensive of electrification products, Porsche China has been accelerating the construction of a customer-friendly car ecology through fast and safe supercharging technology, continuously expanding the reliable and convenient charging network, and relying on local research and development strength to provide customers with intimate and intelligent services.
Here's what Oliver Blume and Lutz Meschke were interviewed at the launch of porsche annual reports:
Obermus: 2021 was a challenging and brilliant year for Porsche, with record deliveries and new records in terms of operating income and sales profit. At a time when the automotive industry is in a time of great change, Porsche still maintains a high level of profitability, so this is a great achievement and a major feature of Porsche.
Now, there are more important things that keep us focused, and I mean that the people in the Ukrainian region are going through war, and we have been following our colleagues there and looking forward to world peace. We hope that Russia and Ukraine will cease hostilities as soon as possible and resolve the dispute through diplomatic means. We also firmly believe that only by respecting the basic norms of international law can we find a long-term solution to conflicts. Of course, Porsche wants to help in any way it can, and we are helping people affected by the war through relevant organizations. At Porsche, we stand by our values. We always believe that the success of the enterprise means responsibility, both to society and to customers and employees. So next, I want to share with you how Porsche continues to lead Porsche into the future with ambition, robustness and flexibility to meet the challenging situation at hand.
Porsche's future is electrification, so we set very clear goals. By 2025, we aim to account for about half of global new vehicle sales of electrified models, including plug-in hybrid or all-electric models. By 2030, we aim to account for more than 80% of new car sales as pure electric models. In addition, we plan to start in the mid-2020s, the mid-engined 718 sports car will be presented in pure electric form. The 718 has witnessed the constant evolution of mid-engined sports car design while maintaining the classic roadster body form. For the new generation of 718 models, we will adhere to the well-known principle of universal components. This means that future models of the 718 and 911 will still be produced on the assembly line of coupe cars in Zuffenhausen. Our goal is clear: to make the 718 the best pure electric sports car in the B-segment market. In addition, we plan to launch a hybrid model of the 911, which will be close to our hybrid model in the race in a very dynamic way. When it comes to charging, Porsche is investing with partners in high-end charging stations, as well as Porsche's own charging infrastructure. In addition, Porsche has invested heavily in core technologies such as battery systems and battery module production.
A year ago, Porsche set a very clear goal: by 2030, we plan to be carbon neutral across the entire value chain. We are also fully committed to this goal, hoping to be role models and pioneers. Porsche has laid a solid foundation and is taking the necessary action. Achieving carbon neutrality starts with our main production sites, where Zuffenhausen has already achieved carbon neutrality, as well as at the Weissach and Leipzig plants. In addition, we clearly stipulate that Porsche's direct suppliers must use renewable energy.
Porsche has also taken a step further, and most of the carbon emissions of modern internal combustion engine vehicles come from the use phase, so Porsche is also committed to the transformation of electrification. At the same time, we are also looking at the power sources used in the vehicle. As a result, we are also focusing on promoting sustainable energy sources, such as solar and wind power plants. Considering Porsche vehicles already on the road, we believe that the development of synthetic fuels would be an ideal complement to electrification and could not be more appropriate. These synthetic fuels can power internal combustion engine vehicles in a near-carbon neutral manner. Not only that, but we believe that Porsche's involvement and investment in this area will make a pioneering contribution to the maritime and aviation sectors. At the end of 2020, Porsche has announced plans to build a pilot plant for synthetic fuels in Chile in conjunction with several international partners. Today, the construction of the plant has been underway for nearly half a year, and we expect to start production this year. All this shows that for Porsche, sustainability is not only a success factor, but also the core of our strategy.
Next, I want to share some data with you. In 2021, Porsche's global deliveries of new vehicles exceeded 300,000 units for the first time, an increase of 11% year-on-year. For the Chinese market, 2021 is also a brilliant year. Despite the COVID-19 pandemic and chip shortages, we have seen strong growth in the Chinese market. Porsche delivered nearly 96,000 vehicles in the Chinese market, an increase of 8%. This also makes China the world's largest single market for Porsche for the seventh consecutive year. Porsche is already on the fast track of electrification, and in 2021 we delivered more than 7,300 Porsche Taycans to our customers in China. At the same time, Taycan has also developed a new target customer group for Porsche. Still, sales are not Porsche's primary goal, and for us, maintaining the quality and uniqueness of our products is key to building every car.
2021 has confirmed to us that with our business model, we can weather even in a brutal environment, and we have achieved strong results. In view of our very successful development, the Volkswagen Group has decided to study the possibility of listing Porsche AG on the stock exchange. We welcome this decision from the Volkswagen Group, and Porsche and Volkswagen can continue to benefit from synergy. At the same time, we look forward to Porsche's great potential for growth in the future. This will help Porsche take the lead in the future. With a clear strategy, Porsche has always been able to move forward steadily, even in these uncertain times. This strategy also incorporates Porsche's philosophy and propositions: sportiness, innovation, sustainability and profitability.
MESG: We deeply regret the current international situation, and we have been paying attention to the innocent people in the midst of the crisis in Ukraine. But on the other hand, we are proud of our strong business growth in fiscal year 2021. Despite the challenges of 2021, we are still setting new revenue records. Operating income climbed to EUR 33.1 billion, an increase of EUR 4.4 billion compared to fiscal 2020, an increase of 15% year-on-year. Sales profit increased by 27 percent year-on-year to EUR 5.3 billion, an increase of EUR 1.1 billion over the previous fiscal year. This also allowed us to end up with a 16% return on sales, an enviable figure in the global automotive industry.
In addition, net cash flow in the automotive sector grew strongly, rising 67 percent year-on-year to €3.7 billion in fiscal 2021. At the same time, the net liquidity of the new car business increased to 5 billion euros, an increase of 2 billion euros from the previous fiscal year. All of the above indicators show that Porsche has a good brand positioning and that our core business is very positive. Porsche delivered more than 300,000 new vehicles worldwide in 2021, a significant increase of 11% compared to the previous fiscal year, a record high. As you all know, the simple pursuit of sales growth is not our priority, and ensuring product quality and uniqueness is even more important for Porsche.
Looking specifically at the market performance of different models, the Taycan, Porsche's first all-electric sports car, contributed the highest growth in 2021, with more than 41,000 new car deliveries worldwide, more than double that of 2020, a successful market performance that reflects consumer welcome and praise for Porsche's electrification strategy.
Next, let's focus on the Chinese market. Despite the fierce competition in the Chinese auto market, coupled with the uncertainty of the new crown pneumonia epidemic and chip supply shortages, Porsche has concluded its 20th anniversary of Chinese mainland with a new record year. I would like to thank all those who have worked so hard for this! We marvel at the surging wave of digitalization and innovation in the Chinese market. For Porsche itself, we are embracing change and striving to integrate more deeply into Chinese society. All in all, China is one of our most important strategic markets, not only because of its eye-catching sales figures, but also for its excellence and vast space in terms of digitalization and innovation.
In the face of today's serious political and economic challenges, we will continue to work firmly towards our long-term strategic goal of achieving a return on sales of at least 15% per year in the long term.
As a result of the crisis in Ukraine, we have set up a task force within ourselves to constantly study the development of the situation, put in place countermeasures and implement them efficiently. We have taken initial steps to protect our revenue and want to ensure that the company continues to meet our high-yield requirements. The extent to which this goal can be achieved also depends on many external challenges that are not within our human control, but in any case, we are ready internally and have created various favorable conditions for this: strategically, operationally and financially, Porsche is already in a perfect position.
So we are full of confidence in the future, yes, which means that we welcome the Volkswagen Group to study the possibility of an IPO listing of Porsche AG. We believe this will bring a win-win situation for all stakeholders. Because we have a good prerequisite, Porsche maintains a high degree of independence even after integration into the Volkswagen Group. Through an IPO, Porsche can further enhance its brand image and increase the freedom of the company. In the course of the IPO, if Volkswagen were to fully integrate Porsche, the holding and income statement transfer agreement would also be terminated. The Volkswagen Group will also benefit from the listing of Porsche AG, and the IPO will bring more flexibility to the group and help further accelerate corporate transformation. The Volkswagen Group also said that the industrial cooperation between the two sides will continue, which will also ensure that both Volkswagen and Porsche can continue to benefit from synergy.
In principle, the capital market values homogeneous and more focused business units, and the value of large companies is often underestimated, because the individual value of their business units, or the value of sub-brands, has never been reflected 1:1 in the capital markets. The higher the company's rating, the greater the space for financing options and the scope of operations. Alliances with tech companies, for example, are helping to increase our speed and agility, and such alliances are becoming increasingly important.
The decision on the listing of Porsche AG is entirely up to the Volkswagen Group, so we cannot provide more information today.
How has Porsche been affected by the complex international political situation and supply problems such as raw materials caused by the Crisis in Ukraine? What initiatives have been taken? We know that Porsche's production is all in Germany, so are there plans to establish production facilities and supporting supply chains in other countries in the future to hedge the risks of politics and supply chain systems?
Obermu: Obviously, the Ukraine crisis has really had an impact on us because we have some Tier 1 suppliers right in Ukraine. In addition to paying close attention to the lives of Ukrainians, we also maintain close contact with many partners and continue to communicate with the situation on the ground. Most of our Ukrainian suppliers are in the western region, and at the moment they have not been very seriously affected. On the one hand, we try to maintain normal production as much as possible. On the other hand, we are also thinking about what alternatives there are to move the production of some parts to other regions, but it is too early to speculate on this. In any case, what we most hope for now is for the two sides to resolve the conflict as soon as possible through diplomatic channels and in accordance with the basic norms of international law.
In the future, we will maintain cooperative relations with Ukrainian suppliers, because their product quality has always been reliably guaranteed, so in the next period of time, we will work closely with them and pay close attention to the development of the situation in Ukraine.
Maxig: Let me add that the global geopolitical crisis has had a huge impact on our automotive industry, forcing us to think about how we can change the overall procurement structure. If there is only a single or a small number of supply sources, it will bring us some risks, and now the new global situation prompts us to consider expanding the source of procurement globally, which is our strategic direction for the future. Porsche's business model has maintained a solid growth trend, and despite the outbreak of the new crown epidemic in 2020, we still achieved positive results, especially achieving good profitability, and in 2021, although we experienced the challenge of chip shortage, we once again set a new record. So we hope that 2022 can continue to maintain a positive growth momentum, of course, first of all, hope that the Conflict in Ukraine can be properly resolved as soon as possible.
Q By 2025, 50% of Porsche's new cars will be electrified, can you share the release plan of the specific electric model? Another question, what is Porsche's sales target in China this year? In the current complex market environment (such as chip supply shortages, tense international situations and the impact of the epidemic), what are the predictions for the performance of China's luxury car market this year?
Obermu: First of all, let's talk about the electrification strategy. Following the successful launch of the Taycan, we have also launched its spin-off models, all of which have received positive feedback from the market, which has also helped us achieve strong growth in fiscal 2021. As Porsche's first all-electric sports car, the Taycan achieved a very impressive result last year, with more than 40,000 new car deliveries worldwide, more than 2 times higher than in 2020. So next, we will continue to unswervingly advance the electrification strategy, and now we have begun to prepare a pure electric version of the Macan, which is another pure electric model for Porsche after the Taycan. Just now we also shared with you for the first time that the 718 will be fully electrified, and the two models are scheduled to meet with you around 2025. We expect that by 2025, half of Porsche's new vehicles delivered worldwide will be electrified, both plug-in hybrid and pure electric. By 2030, it is planned that more than 80% of new cars will be pure electric models, which should be said to be a very aggressive, or rather ambitious, goal. Now our electrification process is faster and smoother than expected, especially with the Taycan's successful foundation.
Next, let's talk about the forecast for China's luxury car market. We believe that the luxury car market has a huge space for growth in China in the future, which is also a great opportunity for Porsche to reach more consumer groups. In particular, as the electrification strategy advances, we are reaching out to more new customers. So we believe that through our current rich product lineup and new electric models, as well as the joint efforts of Porsche China CEO Dr. Yan Boyu and his team, Porsche will continue to achieve long-term stable growth in the Chinese market.
Maxig: Let me add a few words, we expect Porsche China to be able to create another brilliant in 2022, because in terms of order volume, it is more optimistic. Of course, we still have to consider geopolitics, that is, the impact of the Ukraine crisis, and also consider the current shortage of chips. So for now, we have to be more cautious when making any predictions, which is what we have to consider in 2022. In addition, we do not know how the future of the new crown epidemic will be, because the epidemic has been repeated, some ports have been forced to close in recent weeks, and some sales outlets have also been suspended, so we must also pay close attention to the changes in the epidemic in the coming weeks.
It is understood that Porsche has suspended its business in Russia, can you tell us about the current situation of local companies and employees, and if Porsche withdraws from Russia, how to ensure this year's profit target? When are you expected to return to Russia?
Obermu: Our position on the conflict between Russia and Ukraine is very clear, and we have decided to suspend the sale of new cars in Russia. The only thing we can do now is to provide a guaranteed supply of spare parts for existing vehicles in Russia. Of course, this depends on the development of the conflict. We hope that the armed conflict will cease as soon as possible and that it will return to the normal diplomatic solution, which is our greatest concern at present.
Q. Is Taycan already profitable? Now that battery costs are rising, what is the profitability plan for the Taycan and Porsche new energy vehicle businesses?
Obermu: Taycan is currently profitable. We have planned this from the beginning, and despite the current increase in raw material prices, I would like to emphasize that every Porsche sports car we produce is profitable. Now our sales roI target is above 15% per year, so every one of our models has to be profitable. Relying on Porsche's electrification strategy, we are also convinced that we are able to sustainably achieve our strategic objectives in the coming years and maintain a high profit of more than 15%.
Maxig: Just now I mentioned that due to the cost of high-performance batteries, the profit margin of pure electric models and internal combustion engine models is not so high, so pure electric models are calculated at a lower margin than that of internal combustion engine models. Mr. Obermu also mentioned that in the era of internal combustion engine vehicles, our goal is to achieve a return on sales of at least 15% per year, and this strategic goal is no exception for Taycan, and it has been proven that we have also done it. In the future, we plan to achieve the same high profit margins as all electrified models as internal combustion engine models.
Q The recent upward trend in the price of raw materials for electric vehicles is obvious, will the rise in raw materials for Porsche adversely affect the 15% return on sales target?
Obermu: We do face the disadvantages of rising raw material prices, so it is important to have a long-term raw material control and procurement strategy. When it comes to partners, we want to find the most suitable supplier. In the short term this year, we will see that the prices of some raw materials are higher than in the past, of course, we can only offset the rise in raw material prices with better cost control, in the long run, we must find more high-quality partners around the world, we can ensure the control of raw material prices.
Ask Porsche to set up a digital company in China, how do you evaluate Porsche China's achievements in digitalization in the past year? What role will China play in promoting or empowering Porsche's global digital transformation in the future?
Maxig: When it comes to the digitalization of Porsche China, it's a very important topic. We all know that the average age of Porsche owners in China is 15-20 years younger than that of car owners in the United States and Europe, and the proportion of female car owners is higher, most of them are young and promising entrepreneurs, so their demand for digitalization and intelligent interconnection of vehicles is the highest in the global market. That's why we decided to set up an independent digital company in China, and we also set up a new R&D branch in China as a strong complement to our existing digital business in China. We hope to be able to get closer to Chinese consumers and better understand their needs, especially in terms of digitalization and intelligent interconnection. We realized that we must cooperate with local Chinese technology companies to better provide Chinese consumers with convenient digital solutions and allow them to have more in-car entertainment experiences. Porsche has many traditional solutions that are not suitable for the special market of China, so we have been constantly exploring in this direction. The satisfaction of Chinese customers with our digital products and services is an important criterion for evaluating the success of our business, and if customers are satisfied with new digital products and services, this will also be reflected in our sales data. Of course, it is obviously a little late to rely on sales data, so we must listen to the voices of Chinese customers in advance.
Q At the press conference, you mentioned that Porsche electric vehicles should maintain the uniqueness of the Porsche brand, so what are the uniqueness of Porsche? How do these uniquenesses manifest themselves?
Obermus: In fact, in the era of electrification, Porsche has a lot of room for differentiation. From a traditional point of view, there is uniqueness in design and uniqueness in quality. But at the same time, the characteristics of Porsche's internal combustion engine models are also applicable to electrified models, such as the uniqueness of performance, and the track will always be the standard for us to design vehicles. In addition, fast charging is also a very important feature. Porsche currently uses an 800V charging system, and we are the first car manufacturer in the industry to use an 800V system. Nowadays, 800V charging systems have gradually become the industry standard. At 800V, the vehicle can be charged quickly, which is much faster than the 400V system. Another feature is the charging power of electrified vehicles, the maximum charging power we can achieve at present is 270KW, and there is still a great prospect of improvement in the future. In addition to this, another uniqueness of Porsche is the driving experience, everything that the user experiences in a Porsche vehicle, even including all the digital ecology that surrounds the car, is of paramount importance to us and will be an advantage for Porsche. So electrification gives us a huge space to differentiate our products and show you what a Porsche really means. As the advent and success of the Taycan demonstrates our unique positioning as an electrified product, Porsche will continue to work hard in the future to produce better electric products.
Q How to evaluate the success of competitor Tesla? What do you think is the difference between Porsche and Tesla?
Obermou: I think Mr. Musk is a very good entrepreneur. Tesla has grown from scratch to become such a car company in the past few years, and Porsche has a deep respect for their achievements. But when Porsche decided to start the electrification process, Tesla hadn't reached the size it is today. Therefore, when we launch the electric model, our yardstick is still to make Porsche's own product, that is, to create a pure Porsche electric sports car, which is very important to us. We want our customers to still feel the same handling experience, acceleration, design and quality when driving Porsche electric vehicles as internal combustion engine models. In addition, the difference is also reflected in the fast charging. Currently, Tesla uses a 400V charging system, while Porsche uses 800V. More importantly, Tesla is paying more attention to the mass production car market, such as the Model 3, which is well known as the Production Base in Shanghai. Porsche, however, focuses on the luxury electric vehicle market. So while both Tesla and Porsche have electrification strategies, you can't directly compare the two brands because the product positioning is completely different.
Q We learned in the data sharing that China is the largest single market in the world for Porsche, so how many investments will land in the Chinese market in Porsche's future-oriented investment plan?
Obermus: As mentioned earlier, China has become The world's largest single market for Porsche for the seventh consecutive year with its solid growth and huge potential. That's why we decided to actively expand our R&D efforts in China, set up an R&D branch, and invest in the digital sector. Porsche expects to invest 15 billion euros globally by 2025 in new technologies and digitalization, some of which will go directly to China. As Mr. Maxig also said, hardware and digital R&D for Chinese consumers is very important to us because the needs of Chinese customers are unique to customers in other parts of the world. At the same time, we are encouraged by the spirit of innovation in the field of new technologies and digitalization in the Chinese market. Many of the emerging technologies started out in China and are gradually being applied to other markets around the world. As a result, China will become a very important innovation and experimentation base for us, which will also have a huge impact on Porsche's investment in innovation, technology and digitalization.
MAXG: In addition, Porsche China has made significant investments with local partners to expand high-performance charging networks. I think that's a very important part of our continuous electrification strategy in China. It's not just about the car itself, it's about the convenience that users can feel during the phase of using electrified products.
QHow does Porsche achieve its sustainability and carbon neutrality goals?
Obermus: Porsche's sustainability goals are very clear and we want to achieve carbon neutrality on the balance sheet across the entire value chain by 2030. To achieve this, we have done very in-depth analytical research. First, achieving carbon neutrality across the value chain must start from engineering. What kind of materials should we consider? What is the level of recycling of materials? What kind of raw materials should we source from our suppliers? What is the energy source for producing these raw materials? Wait a minute... These issues are all within our consideration. Secondly, in terms of production processes, Porsche's plants in Zuffenhausen and Leipzig have become carbon neutral, as has the R&D center in Weissach.
In addition to this, the biggest source of carbon emissions is during the use phase of the vehicle. On the one hand, we have a very clear electrification strategy, that is, by 2030, 80% of the overall new car sales will be pure electric models. But that's not enough, and we're turning our attention to the power sources that users use to drive their vehicles. Therefore, investment in renewable energy is also very important. If we only stop at developing and launching electric models, but still use the traditional energy sources on the market, then the sustainability strategy will not make any sense. As a socially responsible car manufacturer, Porsche invests more than 1 billion euros in sustainability projects, including solar and wind power stations. With the help of these initiatives, Porsche's sustainability strategy will be very clearly and progressively advanced to achieve our goals.
It is worth mentioning that there are also external institutions that evaluate Porsche's sustainable development, such as the ESG (Environmental Environment, Social Society and Gornance Corporate Governance) evaluation published by ISS (the Institutional Shareholder Services group of companies). ISS, an institution focused on measuring sustainability from the environmental and socio-economic dimensions, is one of the authorities on ESG assessment. Last year, Porsche's assessment results have been successfully upgraded from C+ to B-. This achievement makes Porsche one of the best performing companies in the automotive industry. Although we still have a lot of room for improvement, such achievements are already at the leading level of ESG, which is a very big encouragement for both investors and ourselves. Porsche wants to be a model and pioneer in carbon reduction and to inspire more partners to join the ranks. Because this is the most important thing for our time, for our next generation, and even for future generations.