Porsche is shutting down its e-bike, battery and software subsidiaries as part of a corporate overhaul

The German automaker announced on Friday that it will close three of its subsidiaries in light of declining sales and declining profits.

The automaker’s Cellforce Group is perhaps the most famous victim. The division had already gone through a “reorganization” in August after Porsche dropped plans to make its own batteries, turning Cellforce into a research and development arm. Now, Porsche says it’s pursuing a “technology open powertrain strategy” — corporate rhetoric that suggests the automaker will rely more heavily on other companies for its batteries.

Porsche eBike Performance, which made e-bike drive systems, and Citetec, a networking software subsidiary that served Porsche and the wider Volkswagen Group, will also close.

More than 500 people working in the three subsidiaries will lose their jobs.

“We must refocus on our core business,” Michael Leiters, CEO and chief executive officer of Porsche, said in a statement. “This is the indispensable foundation for a successful strategic reorganization. This is forcing us to make painful reductions – including in our subsidiaries.”

It’s a message that Leiters, who became CEO early this year, first sent in March when the company announced plans to reorganize its business. “We will reposition Porsche comprehensively, make the company leaner and faster, and make the products more desirable,” he said at the time.

Since then, Porsche has removed itself from several endeavors, including an agreement reached in April to sell its stakes in Bugatti Rimac and the Rimac Group to a consortium led by New York-based investment firm HOF Capital.

Porsche’s electric vehicle efforts got off to a strong start with the Taycan in 2019, but the company quickly ran into trouble developing subsequent electric vehicles. The Macan Electric has been delayed by nearly two years as software development within Volkswagen’s Cariad division lagged behind expectations.

The entire company suffered sales declines in key markets, including North America, where sales fell 11%, and China, where deliveries fell 21% in the first quarter of this year. European sales also fell by 18%, although they were slightly higher in Germany.

Porsche has blamed the adoption of electric vehicles for its problems, although the company’s continued poor performance in China, where electric vehicles have taken more than half the market, suggests that consumer acceptance of electric vehicles may not be the root cause.

The closure of Cellforce exemplifies the change in fortunes for Porsche’s electric vehicle program. The German automaker had originally set up a subsidiary to develop and manufacture batteries that would differentiate its electric cars from other companies.

“The battery cell is the combustion chamber of the future,” Oliver Blume said in 2022 when he chaired the Porsche Executive Board.

After struggling to develop timely electric vehicles, Porsche has shifted much of its new-car efforts to reviving some of its internal combustion platforms, which were originally supposed to make up a minority of sales by 2030. The company still plans to introduce new electric vehicles, and will soon discontinue the gas-powered Porsche Macan. Porsche is expected to bring a fully electric version of the Cayenne, and several different versions, to the market this year.