Article by | Li Ka-shing

Edited by | Cold Zelin

Recently, Audi sued NIO in Europe for reasons that are both laughable and pitiful. Audi claimed that the trademark names ES6 and ES8 for NIO’s two car models have infringed upon the trademark rights of Audi’s S6 and S8 car models.

Even more puzzling is that there are also trademark names in the traditional gasoline car industry similar to NIO’s ES6 and ES8, such as Volvo S60 and even Mercedes-Benz AMG S63. Why hasn’t Audi sued these car companies?

Perhaps it is NIO’s overseas expansion plan that has made Audi feel a little bit of crisis.

In May 2021, NIO entered the Norwegian market and established a self-owned system, and within less than a year, it planned to include markets such as Germany, Denmark, the Netherlands, and Sweden in its target scope, and launched new car models.

Audi’s headquarters Ingolstadt is located in Bavaria, southern Germany.

What does Audi fear?

In the era of gasoline cars, there was a saying that “there is always a car suitable for you once you step into an Audi 4S store.”

As the earliest German automaker to enter the Chinese market, Audi can always guess the minds of Chinese consumers in product development and production, and with its own brand strength, it fully exploits the dividends of the Chinese market.

However, with the advent of the new energy era, Audi’s days have also begun to become “tight.”

Let’s take a look at some data. In the first five months of 2022, Audi has delivered 1316 electric vehicles in China, including 401 e-tron models, 159 Q5 e-tron models, and 756 Q2 e-tron models. During the same period, Tesla sold 21,851 vehicles domestically, relying on the sales of the Model 3/Y.

Audi’s total sales of new energy vehicle models in China are still much smaller than Tesla’s, and even lag behind Li Xiaolai’s NIO.

Among them, from the data of individual products, Q2 e-tron is Audi’s best-selling model in China, and also the cheapest one among its new energy vehicles. This seems to indicate that Audi’s brand power still has a “blessing” in the Chinese new energy market.

However, how long can this “blessing” last? As the competitiveness of domestic brands becomes stronger and stronger, relying on the weak sales volume generated by fame will obviously continue to decline.# In 2018, NIO, also a newcomer to the new energy market, released its new car, the ES8. However, due to production capacity issues, the new car was only delivered to some employees in the early stage. After experiencing difficulties in delivery, insufficient funds, and insufficient brand power, NIO eventually delivered 11,348 new cars that year, winning the “ten thousand vehicles” bet with He XPeng.

In September of the same year, Audi also released its new energy product, the e-tron model, but it did not seize the weakest stage of the new forces.

In the era of fuel vehicles, Audi could always increase its sales by leveraging its four-ring logo, supplemented by price cuts or creating a “special (castrated) edition” for China. However, in the new energy era, Audi has obviously not realized the changes in the Chinese new energy market. Its first new energy model entered the domestic market slowly, one year after its debut in the United States.

Accompanying this is Audi’s own “pride”. At that time, the selling price of the e-tron was 692,800 RMB, while the top version of the same level product NIO ES8 was only a little over 540,000 RMB.

In the early days, new energy users were mostly in the mindset of “playing for fun”. Although NIO’s large screen, social, queen’s co-driver, and other elements did not enhance the performance of the vehicle, it is obvious that the product with more “oil smell” is difficult to become the first choice for high-end players between the ES8 and e-tron.

After going through the baptism of the Chinese new energy market, Audi found in 2022 that things are not as simple as imagined. The rise of domestic new forces has brought about the continuous increase of the market share of domestic brands in the domestic market and changes in consumer awareness.

The most direct change is that the “brand” of BBA is not as good as before.

According to statistics, the total sales volume of domestic brands was 620,000 in May 2022, a year-on-year increase of 5%. In contrast, joint venture brands sold only 560,000 vehicles in the Chinese market in May, a year-on-year decrease of 28%.

In this environment, Audi, which is busy, also fell into a “plagiarism” incident in May this year. At first glance, the copywriting of the advertising company involved plagiarism, but the actual problem encountered was that, under the rapid “attack” of the new self-owned forces, Audi faced bottlenecks and deviations in establishing its own brand image.

Audi is also very “headache” overseas.

The boundary of domestic new forces is obviously not limited to the Chinese market. Car companies like NIO and XPeng also regard the European market as an important battlefield for globalization strategy.Although there is a huge gap in sales volume between the European market and the domestic market, their ultimate goal is to output a comprehensive value system, including brand concepts, management mechanisms, commercial models, and lifestyles, just like changing the values of domestic consumers.

What Audi is afraid of is not the monthly sales volume of several hundred for NIO in Norway, but the loss of value of the Audi brand in the minds of consumers.

Audi’s “Internal Trouble”

In the era of fuel-powered vehicles, Chinese consumers were easily immersed in the pleasure brought by brand power, and many joint venture car companies seized the pain points of Chinese consumers, relying on their own luxury attributes and some “tricks” to earn full pots of gold in the Chinese market.

For example, Audi shares the MQB platform with Volkswagen and Skoda. Although there are some differences in design and materials between Volkswagen and Audi, such as both using EA888 engines, Volkswagen’s engine is transverse while Audi’s engine is longitudinal, and the advantage is that the car weight balance is more balanced and the handling is better. However, in essence, the purpose of using the same platform to build cars is to reduce costs.

In the era of new energy, when the sales of e-tron and Q2e-teron models did not improve, Audi released Q5e-tron and Q4e-tron. Although they made a distinction within the brand, they are somewhat competing within the Volkswagen system.

As a model on the same platform as the Volkswagen ID series, the positioning of the Q5e-tron also overlaps with that of the Volkswagen ID.6. For example, in terms of size, the length and wheelbase of the two cars are exactly the same. Moreover, the two cars have the same front McPherson and rear multi-link chassis configurations, and the same L2 level driving assistance systems.

In terms of range, the CLTC range of the top-equipped ID.6 is 540 kilometers, while the CLTC range of the Q5e-tron is only 520 kilometers. It should be noted that the latter’s price is nearly 150,000 yuan more expensive than the former.

In May 2022, the total sales volume of the North-South Volkswagen ID.6 reached 2354, while the Audi Q5e-tron was only 97. Obviously, it seems that if consumers have to choose between the two cars, they are more willing to choose the more affordable Volkswagen ID.6.

If Audi cannot come up with something that can impress current consumers, the consequences are likely to be the loss of loyal “followers” of their brand and the departure of Audi owners who want to upgrade their products.

Just like in the era of gasoline cars, traditional car companies establish brand concepts for consumers. In the era of new energy, consumers will also be brainwashed. If traditional car companies do not innovate and transform in time, in a few years, even if the technology reaches the top, they will inevitably be questioned by consumers, just like the story of “the boy who cried wolf”.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.