Audi’s CEO says that the brand has never had a stronger product portfolio push.
During the 2017 Geneva autoshow, Asphalte sat down with Audi’s CEO to discuss the brand’s product plans.
Question: What is your state of preparation for your first mass-produced electric vehicle ?
Answer: We will launch an electric vehicle next year, it is based on our own electric platform. It is SUV-looking because the trend of SUVs for us is very clear so we position the car in that segment. I think we learned a lot in the last few years with the plugin hybrids, also with the test bench of the R8 e-tron which was more for competence building, and now we are starting next year (in 2018) with series production. Brussels, as a plant, is taking steps to be prepared, the workforce has to be trained for high voltage technology. I think we have made good progress.
We have to do a lot of re-building without disturbing the A1 production. For the team, it is not an easy job to do. We are using every window during vacation, winter holidays to prepare the factory step-by-step, because we have to do both: produce the A1 as long as possible and switch to the electric vehicle.
Q: What is your assessment of the market readiness in terms of consumer acceptance, charging infrastructure ? Where do you see that things are taken care of, where do you see that ground still needs to be covered ?
A: Year on year, we will see a better business case for pure electric cars. There are step-by-step improvements in user experience, much more acceptance. Of course we see also Tesla with their products are working well, with one obstacle that they did not earn a single dollar. Nevertheless we see progress in America, California, the New York area, the Boston area. There are areas where people have a certain feeling for this technology. We see big discussions in China because the political framework is getting absolutely prepared. China wants to move toward battery electric vehicle technology. We also see good preparation in Europe. With regards to infrastructure development, there will be a big Volkswagen Group investment in the United States with the Electrify America initiative. We also have cooperations now starting in Europe with a clear plan as to how many high power charging stations we need in which area in 2018, 2019, 2020. Of course, we have seen an increase in the availability of power charging stations, but not high power charging stations. In China, there will be power charging stations every 30 kms on the highways. The field is getting prepared.
Q: Do you have a better picture as to how many electric SUVs you can sell down the road ?
A: We have not decided until now. We have decided to come to the market with a second derivative because we believe that there is more business potential. Our production capacity in Brussels will have to adapt to demand, one shift, two shifts, three shifts. We have organized for that kind of flexibility. We are taking this step-by-step. It is a high tech product, its quality has to be perfect, this is a must. We will ramp up slowly, but our production capacity will be very flexible.
Q: You have announced that you will have a hybrid version in every product line, will these be plugin hybrids ? Light hybrids ?
A: Could be one or the other. Of course we decided already a lot of of plugin hybrids e-tron versions which are coming in the next few years, but we are very flexible in the decision-making process. The platform structure is prepared, we can adapt depending on demand. What I stated publicly yesterday is that mild hybrids will have to follow. Within our 2025 strategy, we see a mix of pure battery electric vehicles of around 25 to 30%, possibly including plugin hybrids, and then there will be a natural demand for combustion engines – gasoline or diesel – for the remaining 70%. It is very clear for me that combustion engines will somehow benefit from smart electric boost functions, or energy recovery. This is a must because we will have to bring fuel consumption and C02 emissions down.
Q: Turning to Audi Sport: Stephan Winkelmann (read our interview) has announced an ambitious plan with 8 new cars by 2018. Are you going for volume with Audi Sport (RS & R models) now ?
A: Volume is a relative term, but for Audi Sport, it is a big jump. With additional models, we aim for further growth. Why shouldn’t we, in the course of 10 years, double our business ? The new models which are coming in 2018 (we will not stop then, there will be more in 2019 and onwards) will bring additional business, including in the Q segment.
Q: is there somewhere that Audi Sport will not go ? Where you think it would contradict the essence of the brand and the positioning of the products ? Electric or hybrid ?
A: I think that Audi Sport will also reinvent their own future. And somehow will be electrified. I cannot tell you now about the content, this is too premature, but why shouldn’t an electrified car be perceived as a very sporty car ? There is no reason. We are involved in Formula E, this is also part of the Audi Sport story. There is a combustion world, there will be a smart electrified world, maybe there will be a purely electrified world, who knows ? It is Stephan Winkelmann’s job now to dream about the future of Audi Sport and he is a good brand builder.
Q: What are your biggest current challenges ?
A: We are executing according to our plans, but it does not mean that there isn’t sometimes a sweaty face. This is normal. We are coming now with the Audi A8 with piloted driving, the most ambitious technology involved into that product range. We are launching the A7, then the A6 sedan, the A6 Avant, the A6 Allroad, then comes the Q3, then the pure battery electric vehicle and the Q8, and all of this is during 2018. So believe me, somehow you have to sweat a little bit, but Audi has never pushed such a product portfolio in such a short time.
Q: Are products the missing link to compete for the #1 spot in premium luxury with BMW and Mercedes-Benz and outpace them in terms of total volume ?
A: You know, volume is always the result of a good work. If the product is right, if the level of innovation is right, the branding is right, then you have the ability to grow. If you want to overtake your competitors and they take the option to buy marketshare, I would resist, I would not do it.
Q: But out of the 4 pillars of your marketing mix, where do you think you have most homework left in order to outpace your two other biggest competitors ?
A: I would say that in the last few years, we did a lot in terms of pricing, but this goes hand-in-hand with top quality products. I think that there is still room for prestige and image in the C & D segment, but with the Q8, I think we fill a very big gap. We know what we have to do and we made the right decisions. We will enhance our Q product portfolio to participate in these growing segments. In marketing, I think that our team is doing a very good job, and then it is all about product, product, product. Technology and innovation drive the brand of the company.
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