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BFD Expert Voices - Climate Deals

BFD Expert Voices

It's easy to forget, but in 2019, Audi became the first legacy automaker to begin selling a mass-market, all-electric SUV in the U.S. 

Why it matters: Three years later, Audi offers more EV models than any other automaker — including Tesla. It's now pursuing ambitious plans to cement that lead and grow its customer base.

State of play: Chevy, Nissan, Ford, and VW had to telegraph whether their first EVs were aiming upmarket or downmarket. Audi just stuck to its leather-bound playbook. 

Catch up fast: Audi's first electric SUV, the E-Tron, was a traditional small SUV or crossover.

For two years, it had the U.S. market almost entirely to itself. Its sole direct competitor: the funky Tesla Model X and, in 2020, the Model Y. 

Meanwhile the Jaguar I Pace was squarely a crossover.

"We wanted to be there first, in terms of incumbents," Spencer Reeder, director of government affairs and sustainability, tells Alan.

Between the lines: That's great. But Volkswagen Group's "diesel-gate" scandal — likely also had something to do with it.

The agreement required VW Group to spend $2 billion on EV infrastructure and awareness over 10 years. 

Approved by a judge in 2016, it got VW brands spending big on EVs pretty early, at least compared to other incumbents.

"Our product strategy included EV well before TDI," a spokesperson tells Alan, referring to the emissions scandal. "Audi was one of the first to be all-in on electrification."

The latest: With the E-Tron, Audi blazed the trail that its cousin, VW, would later follow: welcoming potential buyers by sticking with the familiar. 

"We wanted to persuade and invite the traditional Audi customer who was buying the Q5, the Q7, to take a hard look at the Audi E-Tron SUV, because it had all of the features that any of our other SUVs have," Reeder says.

Bottom line: No matter what sparked Audi's early EV push, the automaker hasn't taken its foot off the accelerator. 

Audi plans to go all-electric — no internal-combustion models — as soon as 2033. 

It's currently selling five models in the U.S.: Three versions of its E-Tron SUV, two versions of its smaller Q4 SUV, and the sleek GT sports car. (I've already put in a request.) 

What's next: The E-Tron has posted strong sales, but the question is how Audi broadens beyond its traditional customer base.

1 big thing: Audi was luxury's first mover

A photo of a gray Audi E-Tron Sportback, taken from the rear of the car, in a parking lot.

Audi delivered a fully charged E-Tron to my home outside Boston in a box truck. 

This was my sixth delivery, and the first by truck — a move seemingly meant to underscore how special this car is. (The scene did bring out the neighbors.)

The bottom line: This was a special ride with immense power and a plush interior. It's an EV I wanted to drive for miles and miles. If only it had the range to match.

Price as tested: $88,765 for the top-level Prestige trim.

Charge time: 30 minutes to the recommended 80% charge, about as quick as it gets.

The most thoughtfully designed interior I've experienced. 

The E-tron's gear selector is elegant: a rectangle that bumps forward for drive, backward for reverse or park. It's novel and intuitive.

This compares very favorably to Hyundai and Ford, which offer funky knobs and toggles too easily shifted the wrong way — "twist and shout" indeed.

The cell phone quality. Wow. Whatever Audi is doing to mic its drivers and reduce background noise, other automakers should take note.

Paltry range. We're talking 177 miles at the recommended 80% charge — even less in cold weather or with the A/C blasting. 

The Sportback's sloped roof-line sacrifices cargo space. You may care about this or not, but my folded-up e-bike fits in the back of Hyundai's and Kia's crossovers. It does not fit in the E-tron Sportback.

The car also feels disproportionately big. It's 7 inches longer than Ford's Mustang Mach-E, and as much as 1,000 pounds heavier depending on the trim. That weight makes sudden stops hair-raising. 

Bottom line: The E-tron Sportback sets a benchmark. It inspires any number of fantasy road-trip itineraries. But its low range keeps it chained to being little more than a daily commuter and grocery shuttle.

2. The BFD: Driving the E-Tron

A photo of an Audi E-Tron Sportback, taken from the driver's side.

So maybe millennials aren't the kids in the meme anymore, but we do have disposable income (allegedly). And that cash is tied to a conscience. 

Why it matters: Audi is following the Sportback E-Tron with the Q4, a less expensive SUV explicitly aimed at winning over aspirational buyers who care about sustainability — and converting them to lifelong Audi drivers. 

What's happening: The Q4 E-Tron is nearly 10 inches shorter than the E-Tron Sportback. The 2023 model year starting price is $48,800.

That size and price rival higher-trim versions of the Hyundai Ioniq 5 and the Kia EV6 crossovers — which says a lot about Audi, and might say something about Hyundai and Kia too.

It's considerably cheaper than Tesla's Model Y or X. 

What they're saying: "The Q4 opens up a new demographic for us, potentially," Reeder says. "A younger buyer, somebody who's new to the brand, who's aspired to be an Audi buyer, and that they want to be in the electric space. The Q4 provides that entry point."

Yes, but: Audi doesn't make any of its electric vehicles in North America. That means it's nowhere near eligible for any of the new EV incentives in the Inflation Reduction Act.

Most everyone's batteries rely on overseas materials, so it's unclear whether any EV makers will immediately qualify. 

But other automakers already have robust manufacturing infrastructure in place in acceptable markets. 

Audi does not, and that could put the automaker years behind, as other automakers potentially win over buyers with lucrative tax breaks.

What we're watching: "We were not entirely thrilled with the specifics around the Inflation Reduction Act around credit for the tax credits. Our hope is it is an ongoing conversation," Reeder says.

3. The Q4 E-Tron: How do you do, fellow kids

A photo of the 2022 Audi Q4 E-Tron, taken from the passenger side, on an open stretch of pavement.

The European version of the 2022 Audi Q4 e-tron. Photo: Courtesy of Audi

Data: Automotive News Research & Data Center; Chart: Axios Visuals

Audi sold just over 8,000 E-Tron models through the first half of this year. Tesla's Model Y crossover and Model 3 sedan remain dominant.

👀 What we're watching: Like its cousin VW, and automakers like Polestar and newcomer VinFast, Audi isn't counting out the possibility of separating the price of the battery from the price of the car.

"Whether or not we disaggregate, that's going to be, I think, an industry trend," Reeder says. "If it seems to grab hold and make sense, then I have no doubt that we'll move very nimbly to make sure that we're doing what our customers want."

4. How the E-tron Sportback's sales stack up

This week: The Audi E-Tron Sportback, with a side dish of insight on its smaller sibling, the Q4 E-tron.

Audi has leaned into luxury, but it has its eyes on next generation buyers, too.

Tune in next time, when we'll be sharing our impression of the Hyundai Ioniq 5. That car's full of surprises.

September 24, 2022

1 big thing: Audi was luxury's first mover