Harold Cunningham, Getty Images; inset: Win McNamee, Getty Images
The Audi and Tesla logos

Audi Races Tesla to Extend Electric Car Power

June 24, 2016
German engineer: “Tesla lacks experience with classical auto manufacturing. We have different experiences.”

Audi is preparing to challenge Elon Musk’s Tesla Motors Inc. in making electric cars, betting that its decades of experience in designing traditional automobiles will help it trump the Silicon Valley startup.

Audi, a division of Volkswagen AG that traces its roots back to 1885, said the expertise of German carmakers will make “exponential” increases in range for electric cars by 2020, making the vehicles more attractive to a wider swath of consumers.

“For over 100 years, automobiles have always gotten better,” Stefan Niemand, the German engineer who is the architect of Audi’s electric-car strategy, said Thursday in Vienna. “Drivers won’t adopt electric cars if they’re seen as smaller, uglier and more expensive.” 

The luxury-car manufacturer is the largest earnings contributor to Volkswagen and plans to start selling its first all-electric vehicle in 2018. With development costs in the range of some “billion-euros,” Niemand said Audi will leverage its experience with automotive mass production to push e-cars into a new era.

While Nissan Motor Co.’s boxy and compact LEAF is the world’s best-selling battery-powered car, the $70,000 Model S made by Tesla has dominated the market for high-performance and fashionable electric cars. Musk’s company has collected $1,000 deposits each from a list of 373,000 drivers waiting to buy its new Model 3. To meet that demand, Tesla will have to ramp up production 10-fold. It expects to produce 500,000 cars annually by 2018. Niemand is charged with preparing a challenge from Audi.

“Tesla lacks experience with classical auto manufacturing,” according to Niemand, who said Audi uses higher safety and material-quality standards. “We have different experiences.”

The Volkswagen group, which sold almost 10 million cars last year, has so far merely dipped its toe into the electric-vehicle market with battery-powered versions of the Golf hatchback and Up! city car. To catch up, the company said earlier this month that it plans to introduce more than 30 electric cars by 2025 and forecasts sales of as many as 3 million of its battery-powered vehicles annually by then.

“Tesla definitely got the jump on the major car companies as demand for the Model S caught many of them by surprise, but by 2020 there will be a much larger number of long-range electric vehicles available,” Bloomberg New Energy Finance analyst Colin McKerracher said in a note. “Audi and the VW Group are well positioned here. Groups like VW, Toyota and others know how to crank out vehicles day-in-day-out on a global scale.”

In Austria, where Niemand met with Wolfgang Anzengruber, the chief executive officer of the utility Verbund AG, electric car drivers can already tap into a nationwide network of charging stations within about 40 miles of one another.

“We started early on this,” Anzengruber said. “But we’re still only beginning to start.”

By Jonathan Tirone

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Licensed content from Bloomberg, copyright 2016.

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