Porsche’s EV Pullback Highlights Cracks in German Auto Empire

Porsche AG is hitting the brakes on electric vehicles, correcting an expensive strategy that’s depressed the luxury-car maker’s margins and is dragging down parent Volkswagen AG.

The 911 maker shelved a future battery-powered luxury SUV and said it would add more combustion-engine and hybrid models to bolster its portfolio. The pivot is causing a €1.8 billion ($2.1 billion) hit to operating profit and forced Porsche and Volkswagen to slash their outlook for the year. It’s yet another setback for Germany’s auto industry, which is contending with high costs and muted sales.

The Germans — like their European peers ...