Plug-in hybrids – transitional technology or new mainstream?
Talking Business – Key Facts
- Plug-in hybrids (PHEV) are a key element of Audi’s electrification strategy.
- Audi is affirming its commitment to the systematic electrification of its portfolio and investing EUR 12 billion in electric mobility.
- The excellent customer response confirms Audi’s approach: PHEVs currently account for 35 to 50 percent of incoming orders for available models in Europe.
Audi is investing heavily in electric mobility – in which fields specifically?
“In the next five years, we are investing 12 billion euros in electric mobility, and thus at the same time marking our contribution to climate protection and reducing CO₂ emissions.”
Audi has set itself ambitious goals for electric mobility: Plug-in hybrids and fully electric models will constitute around one third of our product volume by 2025. We have defined a clear roadmap for this: By 2025, Audi will introduce 30 electrified vehicles to the market. When making product decisions, we prioritize on the basis of CO₂ contribution and profitability.
We are convinced that battery power is the best solution for reducing CO₂ quickly, sustainably and efficiently. That’s why we will be investing 12 billion euros by 2024. The majority of this will flow into the further development of the technology and the systematic expansion of Group synergies. An example of this is the Premium Platform Electric (PPE), a vehicle platform designed and developed jointly by Audi and Porsche on which different mid-size, high-end and luxury class models will be developed. The high development costs and investments are being shared by the two companies, enabling the creation of synergies and their distribution across a large number of vehicles.
By delivering emotional cars for customers and consistently optimizing costs and revenue from a business perspective, we not only want to contribute meaningfully to sustainable mobility, but also achieve premium returns in the medium term.
Are PHEV vehicles just a transitional technology until electric cars become significantly less expensive or have a range that makes them suitable for everyday use?
Plug-in hybrids are a key element of the electrification strategy: They are not a transitional technology, but a useful complement to the model portfolio and a meaningful contribution to improving CO₂ emissions in the fleet. The combination of a conventional internal combustion engine and an electric motor supplied with energy from a lithium-ion battery at the rear of the vehicle enables locally emission-free driving and low overall consumption. In short: electric mobility suitable for the everyday driving needs of customers.
For many commuters, PHEV models can be the ideal solution, because many daily routes can be covered in fully electric mode and thus with zero local emissions. Thanks to external charging points at home or at work, customers can travel many of their weekly routes powered purely by electricity. In addition, PHEV models are also ideal for long-distance driving owing to their gasoline engines.
Which plug-in hybrids does Audi currently have in its model range?
Audi is affirming its commitment to electrification with a model initiative. We are offering our customers a broad range of PHEV models from compact to luxury class. In addition to the A6, A7, A8, Q5 and Q7 model series, we will announce additional vehicles in the coming months. The plan is to offer plug-in hybrid models in a total of eight model series, including plug-in hybrid models for the new Audi A3, the Q8 and the Audi Q3 compact SUV.
Overall, Audi will triple PHEV production capacities compared with last year – despite the pressures resulting from the coronavirus crisis. The reason for this is the excellent customer response: PHEVs currently account for 35 to 50 percent of incoming orders in Europe – naturally depending on market and model.
How much does Audi earn from PHEVs? Aren’t they a loss-making business?
Audi is aiming for an operating return on sales of between 9 and 11 percent. Some models will clearly contribute more to this target than others. Yet we view profitability not only at the level of the individual vehicle, but holistically in terms of the entire portfolio, the total life cycle of the vehicles and all aspects of their use, such as charging. Audi uses a number of levers on both the cost and revenue sides.
Even if our electric fleet does not have the same profitability as our conventional internal combustion models yet, it still makes a substantial contribution to profit overall. At the same time, it contributes meaningfully to achieving our Group-wide decarbonization targets.
Are very high-performance PHEV models designed for maximum sportiness also conceivable?
Audi is adopting a consistently electric focus even in the high-performance segment and thus leveraging extra market potential. Electric powertrains offer new dimensions for a sporty driving experience.
Even today, the Audi RS 6 and RS 7 models are available as mild hybrids and the Q5TFSI e as a plug-in hybrid. They are thus partly electrified.
The advantages of a PHEV drive train in future RS model generations are obvious: electric, locally emission-free driving, enhanced efficiency and reduced fuel consumption as well as higher performance thanks to an electrical boost function.
This will provide our customers with a new driving experience in the future: the combination of an emotional, high-performance internal combustion engine with a hybrid drive train that also allows electric driving locally.