In a letter to employees, the manufacturer of the iconic 911 sports car informed its 36,700 domestic workforce it would enter negotiations with the IG Metall trade union over a second package of cost cuts designed to protect profit margins.

The latest reductions are expected to come on top of the already 3,900 job cuts planned in Germany through 2029, designed to shrink the company’s cost base to reflect a world where the brand sells only 250,000 cars annually instead of the 311,000 achieved last year.

Chief executive Oliver Blume, who splits his time running both Porsche and its majority owner Volkswagen Group, warned staff that they would have to gird themselves for difficult times to come. 

“Our business model that sustained us over many decades no longer is functioning today in its current form. Business conditions have deteriorated massively within a short period of time,” Blume warned his employees in comments obtained by Fortune. They were first reported on Friday by the German media.

He cited a pair of related contributing factors, starting with China, where first-half vehicle sales plunged 28% to their lowest level in eleven years amid a brutal price war, particularly for EVs. The brand had once sold 95,700 cars there in 2021, an all-time record—at its current pace, it would be lucky to get half that result this year.

This bled into another issue: a slowdown in the adoption rate of its EVs. Now it no longer expects an 80% share of its volumes to come from fully-electric cars by 2030 as realistic, preferring not to give a forecast any longer.

This, however, heavily impacts Porsche and its supplier base, given the investments already made in new products like the electric Macan.

“On the one hand we need EVs to fulfil regional CO2 regulations,” Blume wrote, “but on the other the profit margins are far below those of our combustion engine cars.” 

Trump a double disaster for Porsche — weak dollar, high tariffs

He didn’t stop there, though: without actually mentioning Trump by name, the Porsche CEO said the U.S. poses its third major problem. 

Demand there ironically has never been better, and yet it is suffering under the combined weight of the current administration’s economic policies.

These have sparked a sharp decline in the U.S. dollar versus the euro that, together with its punitive regime of tariffs, darkens the outlook for the export-reliant carmaker.

“Despite a delivery record in the first year, we are under enormous financial pressure,” he admitted, referring to the U.S. market. 

The result is a company whose operating margin is currently forecast by management to shrink to between 6.5% and 8.5% from 14.1% in 2024. Even during the dark days of the 2008-09 global financial crisis, Porsche’s sports car business could still maintain an operating return on sales in the double digits. 

“A further profit warning with Q2 results seems likely,” wrote UBS, estimating Porsche’s operating margin could be guided down to 5%-7% given current guidance only includes the effects from U.S. tariffs for the months of April and May.

Once the world’s third most valuable carmaker after Tesla and Toyota, Porsche shares lost 29% so far this year. Anyone who poured money into Porsche’s September 2022 public offering of stock—Europe’s largest in over a decade—is currently sitting on losses short of 50%. 

At the same time that Porsche is facing its biggest crisis in decades, the company is also in the process of overhauling half its senior management team with four new C-suite executives in charge of finances, sales & marketing, personnel, and procurement.

The company confirmed the tenor of the letter, but declined to comment further.