Audi will pursue a broader powertrain strategy spanning battery-electric vehicles, plug-in hybrids and combustion engines, stepping away from its earlier plan to become an all-electric carmaker. Global CEO Gernot Döllner said he reviewed Audi’s all-electric strategy after taking charge and decided that the company needed a more balanced product and powertrain mix to address the varying pace of EV adoption across markets.

“When I joined Audi, there was an all-electric strategy in place, which was one of the first things I reviewed,” Döllner told Autocar India in an exclusive interview. “We found a more balanced strategy between plug-in hybrids, especially important for Europe, combustion engine and electric.”

Global EV sales downturn lent ICE powertrains more time

The slower-than-expected pace of EV adoption in several global markets has extended the relevance of combustion engines and plug-in hybrids. Audi expects to retain a focused combustion-engine and plug-in-hybrid portfolio, particularly for SUVs.

The company has recently completed a major investment cycle covering new petrol and diesel engines, plug-in hybrids and battery-electric vehicles designed to meet Euro 7 and other global regulations.

“For sure, the majority of our investment will be in battery electric. That’s a given,” Döllner said.

Audi will continue to invest selectively in combustion engines, including efficiency improvements and transmission technology, but Döllner expects the pace of innovation to be much faster in EVs.

“The combustion engine is fairly mature. It’s at the very end of a 100-year innovation cycle, and battery electric is still at the very beginning, to be honest,” he said. “The dominant part of our investment will definitely be on the battery-electric side.”

Electric remains Audi’s leading technology

Audi’s decision to retain combustion engines and plug-in hybrids does not alter its long-term direction towards electric vehicles.

“Electric is, for Audi, still the leading technology,” Döllner said. “It’s our main priority to step by step become more electric.”

Audi currently has four battery-electric model lines globally and expects to increase this to five by the end of the year, with some available in more than one body style. The company will, however, tailor the powertrain mix to individual regions. Plug-in hybrids will be particularly important in Europe, while the requirements of the US market will influence Audi’s future combustion-engine and PHEV portfolio, especially for SUVs.

In India, Audi’s immediate focus remains on petrol and electric vehicles. Diesel is not part of its current plan. The case for plug-in hybrids will depend partly on whether they receive any benefit under the India-EU FTA. New electric products are also planned for India.

“From what I know, we also have decided to enter with new products in the electric segment in India,” Döllner said.

Audi has decided to assemble an electric vehicle in India, Autocar India learns, although the model and launch timing are still being worked out. The move from fully imported EVs to local assembly is now a question of when, rather than if.

The company was among the first luxury carmakers to enter India’s EV market with models such as the e-tron, e-tron Sportback, e-tron GT and Q8 e-tron. High import duties, however, restricted their reach and affected their resale-value proposition.

The Q6 e-tron is among the products being studied, but Audi has not decided which EV will be assembled in India. The selected model will need to offer the right combination of volume, pricing and suitability for local conditions.

Audi believes electric SUVs make more practical sense in India because their ground clearance is better suited to local road conditions. Sedans have not been ruled out, but SUVs offer a more practical proposition for battery-electric vehicles in the country.

Regional focus to shape future products

The broader powertrain approach is part of Döllner’s effort to make Audi more responsive to the requirements of individual regions.

“Audi has to act much more regional,” he said. “The times where we had a one size fits all, and we then bring it to China, just extend the wheelbase and do the same car, that doesn’t work anymore. We have to listen carefully to the markets.”

The Q9 is the first clear example of that approach. Conceived around the requirements of American customers, it will be the first Audi to make its market debut in the US.

“The Q9 is a perfect proof point of a car. The biggest Audi we’ve ever built,” Döllner said. “That car would not be there without the American market.”

India does not yet generate the volumes required for Audi to develop country-specific models. Local requirements covering ground clearance, suspension, tyres, weather, dust and fuel quality are, however, fed into its global development process. The introduction of new models in India is also expected to move closer to their global launches, helping Audi benefit from the interest created when a vehicle is revealed internationally.

Döllner said the improvement in India’s manufacturing and automotive technology has changed how the country is viewed within the global industry.

“India is also an excellent proof point. It’s really unbelievable what the car industry has developed in India and what level of perfection and technology products are delivered,” he said.

“In the past, there has been this strong European automotive industry, and the world has turned around. Now we have a very dynamic Chinese market, a growing and rising Indian automotive industry. The US is a story of its own.”

“What keeps me awake at night is if we are able to change fast enough,” Döllner said. “We have to speed up.”