Audi restructures: Ingolstadt and Neckarsulm as electric sites, small cars to be discontinued

Major changes at Audi: By 2025, the brand aims to have more than 20 all-electric models in its portfolio, and by 2028, Ingolstadt is set to assemble only electric vehicles. Therefore, Audi is increasing its total amount of pre-investments to around 37 billion euros by 2026. The electric successor to the A6, the E6, is to be housed at the main plant, followed by the all-electric successors to the current combustion engines A3 and A4 assembled in Ingolstadt by 2029. For this, Neckarsulm will produce the next generation of the A4/A5 as well as the A6/A7 families, which have been designed once more as combustion engines. From the middle of the decade, Neckarsulm will also be transformed into an E-location, including with the second generation of the E6. There have been no concrete announcements yet regarding the successors to the R8 and E-Tron GT, which are also made in Neckarsulm. Nevertheless, the German plants must take a hit: According to Works Council Chairman Mosch, the agreed reduction of approximately 7,500 net jobs in Ingolstadt and Neckarsulm remains. However, layoffs for operational reasons are excluded until 2029.

And as the VW Group is currently redefining its individual brands, Audi is also expected to move up the portfolio ladder. Duesmann specifically stated:

"We will limit the bottom of our model range and expand upwards."

The compact SUV Q2, introduced in 2016, will phase out like the A1 without a successor because it no longer fits into the portfolio planning and development capacities. According to Duesmann, other segments are being prioritized. Audi offered a preview with the three "Sphere" models, which also could include a large luxury van—a specific vehicle category that primarily serves Asia, especially with the Toyota Alphard and others. This could be accompanied by an all-electric luxury sedan with a spacious interior, new on-board network, and new software. Duesmann explained that they are on schedule and that the model will hit the streets in 2025. And:

"After that, there will certainly be more models on the platform, including variants for Bentley and Porsche."

Due to the chip crisis, the VW Group is currently prioritizing more profitable models. Duesmann explained:

"Within the group, we are trying to secure the overall result. Therefore, we are prioritizing models with higher profit margins."

Additionally, people want to "treat themselves" again during the pandemic—having forgone many vacations—by opting for larger and more expensive cars. "There is also a trend towards more equipment. Therefore, revenue is increasing faster than sales volumes," Duesmann explained. He expects an improvement in semiconductor supply over the course of the year.

The high C: China demands connectivity

Looking at the sales figures in China, the Audi chief acknowledged shortcomings in car connectivity:

"We need to catch up in terms of connectivity, as we are not yet meeting the high demands of Chinese customers to the extent we would like."

In China, people will be able to chat or make payments directly from their cars. To better observe the market and fill these gaps, there may be a large joint development center by VW and Audi in China. Additionally, Audi intends to collaborate even more closely with Chinese technology companies in the future in areas like semiconductors, batteries, infotainment, and autonomous driving.

What does this mean?

Behind the scenes, Audi is undergoing massive changes: the classic German locations will become purely electric sites by the end of the decade, and the company plans to withdraw from the A-segment. At the same time, Audi aims to expand the luxury segment around the A8 and Q7/Q8 with several (some even larger) models, thus focusing more than ever on margin over mass. Additionally, China could receive its own infotainment platform. Overall, these are currently sensible steps that are unlikely to significantly contribute to CO2 reduction and resource conservation, as Audi still seems to adhere to the maxim: "More helps more." Truly innovative, intermodal approaches are found rather infrequently.