Porsche Is Building a Tesla Competitor (BusinessWeek)

• Board approves production of battery-powered sports car
• First purely electric Porsche to come out at end of decade

Porsche committed to making its first all-electric vehicle, taking on Tesla Motors Inc. with a model that’s set to accelerate faster than the German company’s 911 sports car and recharge in 15 minutes.

Porsche green-lighted a 1 billion-euro ($1.09 billion) project to produce the battery-powered sports car, which will be manufactured near division headquarters in Stuttgart and create 1,000 jobs, the Volkswagen AG unit said Friday in a statement. The model, based on the low-slung Mission E concept unveiled in September at the Frankfurt auto show, will enter showrooms at the end of the decade, it said.

“With Mission E, we are making a clear statement about the future of the brand,” Chairman Wolfgang Porsche said in the statement. “Even in a greatly changing motoring world, Porsche will maintain its front-row position with this fascinating sports car.”

The step is part of efforts by Volkswagen, Europe’s largest automaker, to move beyond a scandal over rigged car-emissions tests. Chief Executive Officer Matthias Mueller, who ran Porsche until late September, has vowed to accelerate and widen development of electric cars amid a reorganization that delegates more decision-making to the Volkswagen group’s brands and regional units.

While global sales of all-electric vehicles have yet to take off, manufacturers are positioning themselves for any growth in demand stemming from tighter environmental rules. Tesla CEO Elon Musk said in a presentation at a Paris conference on climate change this week that regulators need to take action to discourage carbon emissions.

Porsche caused a stir at the Frankfurt show with the four-seat Mission E electric sports-car concept, whose acceleration to 100 kilometers (62 miles) per hour in less than 3.5 seconds beats the 911’s 4.2 seconds to reach that speed. The new electric vehicle will complement a lineup comprising the 911, the smaller Cayman sports car, the Boxster roadster, the four-door Panamera coupe and the Cayenne and Macan sport utility vehicles. Porsche’s high-performance 918 Spyder, a plug-in hybrid supercar, has been sold out as production was limited to safeguard exclusivity.

The division is set to sell more than 200,000 vehicles for the first time this year, driven by demand for the $52,600 compact Macan. Palo Alto, California-based Tesla, maker of the battery-powered Model S sedan and Model X SUV, is targeting 50,000 to 55,000 deliveries in 2015.

The 600-horsepower Mission E will be designed to drive more than 500 kilometers before needing a recharge, Porsche said. The battery can reach 80 percent of capacity in about 15 minutes, about half the time needed to recharge Tesla’s Model S, which has a version capable of traveling as far as 528 kilometers.