Audi and the Era of Electrification

The automotive industry is currently in the midst of the greatest transformation in its history. For the first time since the dawn of the 20th century, the value associated with internal combustion engines (ICE) is being challenged as governments around the world introduce laws that will make it impossible to buy new petrol vehicles.Norway will ban the sale of all fossil fuel-based cars by 2025; the UK will follow suit by 2030, with hybrids added to the list in 2035 (second-hand petrol and diesel sales have been granted a stay of execution).“The switch to electric vehicles is a once in a generation shift”, says Audi Head of Brand, Henrik Wenders. “The automotive industry has never seen anything like it.” The revolution is sending ripples through car manufacturers, some of the most profitable and established brands on the planet (Audi's operating profit amounted to between 2.5 and 2.6 billion euros in 2020), forcing them to move away from the relatively simple world of selling cars and rethink the mobility system in its entirety.From charging experiences and capabilities, digital ecosystems, and the seamless integration of software into vehicles, this shift presents an interesting case study of how a brand is fundamentally changing its entire business model while still staying true to its DNA. A fledgling and developing market provides an opportunity to define market standards and consumer expectations.“Every part of our business is being overhauled from the sales teams, suppliers, research and development, marketing and PR,” says Wenders. “No corner of the business will be left untouched in this shift – that’s a challenge, but one we are all committed to.”Brought to life in Audi’s new global brand campaign ‘Future is an Attitude’, the foundation for the new strategy is uniting the brand character with the digital customer experience, the retail experience and the products themselves.“With this approach, we are aiming to create a holistic and fascinating premium customer journey – one that offers a consistent brand experience throughout. We’re harnessing the ideas and feedback of our customers through interviews, cultural surveys, expert talks and ideation sessions. The key: co-creating this brand experience together with our customers.” Audi is no stranger to successful evolution. Part of Volkswagen Group since 1965, from the 1980s to the late 2010s, the brand went from being an also-ran among German luxury car brands to a serious rival to BMW and Mercedes-Benz. Today it is transforming itself for the new era of electrification.By 2025, the brand will launch 30 electrified vehicles, 20 of which will be fully electric. In the short term, it hopes to achieve one-third of its EV sales locally as early as this date. From 2026, Audi will focus exclusively on the development of electric vehicles, a colossal task for a brand of Audi’s scale and reach.With 56% of true-luxury consumers attuned to luxury brands’ stance on social responsibility, with this forced opportunity to rethink and reshape premium mobility a new focus on sustainability is inevitable.Each year, the global automotive industry uses around 150 million tons of iron, steel and aluminium, releasing large amounts of greenhouse gas emissions. Only around 10% of the iron and steel from old vehicles is recycled and used again in cars. With a heightened awareness around climate issues, consumers are no longer willing to accept unsustainable practices, and will actively disassociate from brands that do not share their values.Audi has pledged to be a complete climate-neutral company as soon as 2050. Sustainable initiatives in the supply chain include a switch to renewable energy and the repurposing of secondary materials: aluminium scraps from the press plant are recycled into new aluminium coils.“When we look at sustainability, we don’t just view it from the powertrain,” says Wenders. "It’s the factory the car is built-in, the suppliers we work with and the materials that are used to build the car. By 2025 all of our factories around the world will be carbon neutral but even today we try to use as many sustainable materials in our cars as possible. In the Q4 e-tron, for example, recycled plastic bottles and fishing nets are used to create some of the fabrics for the interior.”Part of Audi’s first all-electric sports car range, the Q4 e-tron, along with the e-tron GT and RS e-tron GT, launched this year to critical acclaim with four and five-star reviews across the board. We are aiming to create a holistic and fascinating premium customer journey - one that offers a consistent brand experience throughout. But while the experts are impressed with the latest EVs, is anyone actually buying them? According to the Society of Motor Manufacturers and Traders, nearly one in seven (13.6%) of new cars sold in the past four months were pure battery electric or plug-in hybrids. Electric and hybrid cars made up more than one in 10 sales last year, up from one in 30 the year before.20 percent of all new cars sold globally will be electric by 2025, says UBS. That figure will leap to 40 per cent by 2030; by 2040 virtually every new car sold globally will be electric.Some countries are offering financial incentives to support the sales of EVs – Germany currently sweetens the deal with a subsidy of around £8,000, meanwhile New Zealand offers £4,400 off the purchase of every new EV, or £1,700 off on used models.But despite the obvious benefits of EVs, the drawbacks cannot be ignored.Not only are EVs currently more expensive than ICE models by an average of £10k (research from BloombergNEF shows that the cost of producing electric cars and vans is likely to come down by 2027; they will be cheaper to buy than petrol cars by 2030), as the number of electric models grows, the requirements for charging infrastructure will grow in tandem. It’s this essential process that presents the major pitfall in the acceleration of the EV revolution. At present, charging points in the UK are sporadic, come in varying degrees of efficiency and cost and are not always well maintained. Additionally, unlike petrol stations, in the vast majority of cases you can’t just park up and charge.Further complications are far-reaching and include brand-specific restricted network use, confusing charges (some charge points and networks charge per minute, rather than by kWh) and no standardised sockets.Audi aims to combat this issue via charging hub, a pilot project consisting of high-powered charging stations designed to be booked in advance to enhance efficiency and security. The mobile hub can be transported, installed and adapted to the individual location quickly – largely independent of local network capacities.These sites will also offer a lounge area offering a range of amenities, where customers can relax and have a coffee while their vehicle is charging (the Audi e-tron GT12, for example, will charge from 5 to 80 percent in around 23 minutes under ideal conditions). “This is premium electromobility,” says Wenders.The plan for the pilot phase also calls for drivers of other brand cars to be able to use the charging stations as well as parts of the lounge, joining Tesla in its promise to open its network of rapid chargers to electric cars produced by other manufacturers later this year. But if you think electric cars are the future, you’re wrong. The real disruption is yet to come and the key to this is “digitalisation”.Mobility doesn’t start in the vehicle. It begins with a consistent, seamless and emotional premium experience at all brand touchpoints – online as well as offline – plus enhanced software and IT solutions across all fields – from digital sales structures, e-commerce platforms and interfaces to smart cities’ infrastructures all the way to production and logistics.A classic case of Vorsprung durch Technik? That’s ‘Progress through Technology’, Audi’s world famous slogan that marks its 50th anniversary this year, an expression of the company’s future-oriented approach now more apparent than ever.To discuss how we partner with companies to provide strategic brand, design and tech services, please get in touch via hello@matterofform.com to arrange a time to speak with our team of consultants. With the UK ban on the sale of new petrol and diesel vehicles less than a decade away, Matter Of Form speaks to Audi Head of Brand, Henrik Wenders, about what this means for both luxury brands and consumers – and how Audi is adapting to the biggest motoring revolution since Henry Ford rolled out the Model T.

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Audi and the Era of Electrification