From the Le Mans circuit to the battlefield: a strategic shift for the Porsche family

LondonWhen Ferdinand Porsche presented The first 911 at the 1963 Frankfurt Motor Show, no one would have imagined that, decades later, the name that has thrilled some of the world's most famous circuits would appear associated with drones, satellites, and cybersecurity. The unmistakable silhouette of the 911, with its round headlights and drooping tail, has become an icon of the 20th century: a symbol of freedom on the motorway, of victories at Le Mans, and of German industrial pride. perhaps now somewhat in decline.

But the history of Porsche goes far beyond the scent of gasoline and burnt rubber on the great asphalt of competition. It has a dark chapter: the hidden and blurred collaboration of its founder, the aforementioned and crazy Ferdinand Porsche, with Nazi Germany and the military industry of the Third Reich.

After rejecting a contract for the mass production of a vehicle for Stalin's Russia in 1933, as David de Jong records in his book Nazi Billionaires (2022), at the end of June 1934 Ferdinand signed one with the reluctant and skeptical German Automobile Association to develop in ten months the so-called Volkswagen, literally "people's car", which was to cost only 1,000 Reichsmarks [about $8,200 today]. Finally, Porsche would need $1.75 million Reichsmarks [about $14 million], two years, three versions of the design, and a lot of political collusion with Hitler to complete a suitable prototype.

Later, the car manufacturer – which took advantage of the persecution of Jews in Nazi Germany to underpay the company's co-founder and capital partner, former Mercedes racing driver Adolf Rosenberger, for his shares, and which never compensated him after the war – would end up designing tanks – and briefly participated in the V-2 missile project.

This is an uncomfortable legacy that, for decades, the family has tried to keep in the background, focusing on the automotive industry and avoiding any relationship with the military industry. But now, that taboo is beginning to fade. The holding company Porsche SE, which controls 31.9% of Volkswagen shares, but 53.3% of the voting rights, and which also controls Porsche AG, the automotive company that actually manufactures the legendary cars, wants to invest up to 2 billion euros. in the renewed and flourishing European defense industry.

And it will do so with a capital fund for whose establishment it is seeking partners throughout Europe. Hans Dieter Pötsch, Chairman of the Executive Board of Porsche SE and Chairman of the Supervisory Board of Volkswagen since 2015, said last week in a statement that the company's mission is to "defend our values, democracy and freedom [in a world] where security is no longer guaranteed." However, as De Jong has attested, the Porsche family has not always been on the most democratic side of history.

The Other European Race

The group's decision comes at a time of military turmoil on the continent. In the wake of the war in Ukraine, tensions in Asia, growing cyberattacks, doubts about its Atlanticist commitment generated by Donald Trump's presidency, and his tariffs, which threaten the German automobile industry, both Brussels and Berlin under the new Chancellor Friedrich Merz They have become convinced that it is necessary to strengthen their defensive capabilities.

Thus, Germany has approved a month and a half ago a 500 billion euro investment plan, with military spending exempt from the usual fiscal restrictions. In this scenario, Porsche SE is betting on sectors such as satellite surveillance, sensor systems, cybersecurity, and logistics. The group, in fact, had already invested in so-called dual-use technologies (civil and military), with its contributions to the German startup Isar Aerospace and the drone manufacturer Quantum Systems. And it wants to go further with the preparation of the Defense Day to connect emerging companies in the sector with large family fortunes from both Germany and Europe.

Beyond the economic strategy, the movement has a highly symbolic and reputational charge. Porsche is much more than a sports car manufacturer: it is an element of popular culture. From Steve McQueen driving a 917K to Le Mans (1971) to its constant presence in video games and miniature collections, the company has managed to transform each model into an object of desire and a kind of mechanical legend. It remains to be seen whether this aura of glamour, which has tiptoed around the Nazi past, can coexist with a new identity linked to security and the arms industry.

The markets seem well-disposed to take on the challenge: defense industry stocks are enjoying a golden moment, with spectacular gains such as those of Rheinmetall (+161% year-to-date) and BAE Systems (+52%). The automotive sector, on the other hand, is suffering from the transition to electric vehicles and falling demand in key markets such as China. Porsche AG shares have lost 30% in a year, while Volkswagen is reporting weaker-than-expected profits.

Perhaps that's why the Porsche family has decided it's time to diversify its investments. And they're doing so with a move steeped in memory: nine decades after their founder worked for the Nazi war machine, his descendants are once again setting foot in the defense industry. But this time they present it as a commitment to European peace, security, and resilience. Whether it will be as successful as it was on the Le Mans track or the Alpine roads, only time—and the markets—will tell.