Writing by | Roomy
Editor | Zhou Changxian
“Work hard uphill and be happy downhill.” Chang Chen-yue said, a sentence from his mother that gave him many feelings.
It is unknown whether Chang Chen-yue is happy or not, but Audi, which has been at the top of the Chinese luxury car market for thirty years, certainly does not want to look back in years to come and say, “That was our glorious era.” Then, it will watch the last bit of glory in the era of gasoline cars merge into the rough trend.
The current situation in the automotive market is unexpected for Audi, which can be summed up as “The war is in full swing, and the show is far from over.” The first half of that sentence applies to others, the latter half belongs to Audi.
At the beginning of 2022, An Ji-hao, who would be handing over the baton as Audi China CEO, left China. Before leaving, he said, “The Audi brand is already engraved on my heart, and I can’t rub it off.”
But there is also regret that cannot be erased. Audi, which is forced to confront electrification, has not yet found the “should-have” way. With An Ji-hao leaving, some of the night rains in the arena have become old things, like the glory of Audi in the era of gasoline cars, which has become blurred in the rhythm of electrification.
Jack Ma likes Jin Yong’s novels and gave himself a nickname, Feng Qingyang. When Feng Qingyang retired, the whole arena was commemorating him, but also hoping for a new hero to emerge.
Audi also hopes that Wen Zeyue, who has taken over as CEO, will be able to lead Audi back onto an “uphill road,” just as in the 1990s, when Audi’s leader Hahn shook hands with First Automobile Works President Geng Zhaojie and ignited Audi’s splendid journey in China.
A splendid journey is what Audi has experienced for the past thirty years, and also what they hope to continue experiencing in the future. However, those stories that brewed during the changes in the stormy sea have traversed mountains and rivers, and converge into the current era of high spirits yet chaos.
High spirits, a term that no longer belongs to Audi. It has started to feel inadequate while staying on the road of brilliance. Chaos and confusion have gradually become an adjective for Audi’s electrification journey.
How is the “inertia” mentality formed?
Cai Che, who has been at the helm of Mercedes-Benz for many years, once said when he stepped down that Kang Lin-song’s succession could lead Mercedes-Benz “from one success to another.” However, how to define that “another success” is still something that Kang Lin-song is seeking an answer to. Nevertheless, 25% of cars being electrified during the same period is expected to severely hit profits, which is also a concern for the German automotive industry.
BMW from Munich is just one example.When BMW launched its i3 and i8 with early advantages in electrification, it also tended to develop an exclusive platform. However, it couldn’t determine which would be more popular, internal combustion engine cars or electric ones, in ten years. Since electric cars generate lower profits than gasoline cars, BMW slowed down its exploration and became conservative, failing to expand its advantage further.
Although the short-term profit margin made shareholders happy, BMW had to rethink the feasibility of building a pure electric platform as Tesla repeatedly outstripped BBA. The path of BMW’s story is similar to that of Audi’s. “Where are the young heroes now? And where are the old heroes who used to fight?” They share the same emotions, feel regretful of unfulfilled ambitions.
Audi’s entry into new energy was not counted as late. In 2009, it launched the high-performance R8 e-tron model, and the technology term “e-tron” began to emerge in the public’s view. Looking further back, Audi’s earliest electrified car can be traced back to 1991. But this is just a typical example of the early bird that “the flying bird has gone” because of insufficient determination, worrying about investing too much and lowering profits, and worrying about losing its dominance in gasoline cars. A series of concerns, coupled with the inability to abandon its achievements, led to the sudden tidal wave that forced Audi to face a chaotic situation.
Speaking of Audi’s story in China for more than 30 years, an old saying sums it up: “The essence of the stories of the rivers and lakes is exploring, and the essence of the creation story is subversion.” In 1988, Audi was brewing localization, and the Chinese automobile market began to experience a surge. China’s fledgling automobile market was suddenly thrust into the global spotlight. It is said that Audi came to search for gold at a good time.
In 1990, the assembly line for the FAW-Audi sedan was completed, laying the groundwork for changes in the global luxury car market. As the Audi 100 entered the market, China began to enter the “official car era” led by Audi. The long-standing story has been told many times, and now, it lacks some of the “stirring emotions.” However, the timing was just right, and the spark that was ignited at that time spared Audi the twists and turns that entrepreneurs should have experienced.
With the advantage of being an early entrant, Audi, watching as Mercedes-Benz and BMW also came to search for gold, still arrogantly occupied the luxury car market. In 2007, with An Tiecheng’s leadership, Audi’s sales in the Chinese market exceeded 100,000 units for the first time.# Audi’s Challenging Transition to Electric Vehicles
After dominating the Chinese luxury car market for 30 years from 1988 to 2018 with models such as Q3, Q5, A4L, and A6L, Audi found itself faced with a new challenge. Having become complacent due to its long-standing success, Audi had overlooked the importance of innovation and disruption. It failed to realize that it could be either the disruptor or the disrupted in the rapidly changing automotive landscape. The company was not unaware of this situation, but it lacked the sense of urgency required to transform its business model.
As one expert on the topic noted, “Audi has had it quite easy all along the way. But when you stand on higher ground for a long time, you can easily lose sight of what’s behind the era. Actually, it’s the downhill of gasoline cars. Even if they saw it, they couldn’t face it and wanted to try to preserve it.” This expert traded in his Audi Q5L for a Tesla.
The crisis really hit Audi hard in 2018 when both the Q5L and A6L models failed to make a significant impact in the market. Consumers were shifting their concept of luxury away from traditional gasoline cars towards technology-driven electric vehicles. The pain Audi felt was more severe than in the previous years combined.
At a crossroads, Audi had to decide whether to stick to its legacy as a gasoline car manufacturer or to take the plunge into the new era of electrification. However, before making that decision, Audi needed to ask itself whether it was prepared to go downhill and shed its halo of prestige.
Dependence Leads to Vulnerability
As the tide of change approached, some chose to move forward while others retreated. Audi, however, was not ready to back down. As a young man in the Chinese television series “Battle Through the Heavens” said, “Because I don’t want to accept my fate.”
Audi began to realize that in this market, which had never let it down in the past, it was now under siege from Tesla and NIO. From Volkswagen to Mercedes-Benz and BMW, all luxury car brands were facing the harsh reality that they couldn’t do without China.
What lies behind this dependence is vulnerability.
In 2021, Audi sold 700,000 units in the Chinese market, bringing the total number of vehicles sold in China to over 7 million. China has now become Audi’s largest single market, representing a significant portion of its sales.
Audi’s situation is similar to any other German automaker. The company is committed to full electrification but cannot bring itself to announce the death of traditional gasoline cars. The struggle between radicalism and apprehension creates a dilemma for the company.The industry chain that has been restructured by Tesla has made Audi a follower, which is unacceptable but helpless. Because Audi’s exploration of new energy is much earlier than Tesla’s establishment time, but it hesitates and misses the opportunity.
The “opportunity” that can be seen everywhere on Audi’s electrification journey, and the “hesitation”.
In 1997, Audi put into production the Audi 100 Avant Duo model, which adopts hybrid power assembly. Ultimately, because the market acceptance is too low, and the cost is too high, it was eliminated. In 2009, Audi launched the R8 e-tron model to demonstrate the technology.
In 2013, Mercedes-Benz launched the S-Class hybrid power model, and to keep up with the pace, Audi launched the A8L 40 hybrid model. Two years later, in 2015, the new Audi A3 Sportback e-tron landed in China.
At that time, Li Shufu, the chairman of Geely, was still arguing with Li Bin and He XPeng, who had just entered the car-making industry from the Internet, about whether it was “Internet + car” or “car + Internet” at a forum. The situation was turbulent and everything was undecided. It also means that “anything is possible”.
The Audi A3 Sportback e-tron, which had an impact on this endless argument, eventually became a “flash in the pan” due to its high price. In terms of pace, Audi’s footsteps are not slow, but in those years, the hybrid market did not perform well, which also numbed Audi’s sensitivity to the market to some extent.
In the following years, Audi’s global sales of fuel vehicles exceeded 1.8 million units, and the good times made the pace of transformation hesitant. Audi did not realize that the “new forces of car-making” who were still using car-making concept PPTs would open up narrow and wide doors in the near future.
The impact came suddenly, and the giants realized that the times had really changed.
On September 17, 2018, Audi suddenly changed its plan and released its first mass-produced pure electric vehicle, Audi e-tron, in the San Francisco Bay Area of the United States. This is a model based on the longitudinal modular platform MLB Evo. This place is only a few tens of kilometers away from Tesla’s “hometown”.
At that moment, Audi, who missed the opportunity, began to look back at the starting point of the story. However, the situation that needs to be changed has become very unfavorable.
The wings of the underestimated butterfly had already stirred up the wind and rain in the whole city, and the flag of the city lord on the wall was changing.
To regain the market, one cann’t be face-conscious.”Now, China is the most important market for Mercedes-Benz”, said Kang Linsong, who had just taken the helm of Mercedes-Benz in 2018 and held in his hands the chip of the first pure electric car EQC. Audi’s chip, the e-tron, is also very clear.
Both Mercedes-Benz and Audi believe they can win “overwhelmingly”. After all, whether it is brand influence, market reputation or technical foundation, NIO is obviously not considered a competitor, even not Tesla.
However, awakening and action are always not proportional. Unburdened thinkers like NIO Xiaoli men, began to talk frequently about computing power, chips, cameras, and lidar. The sales volume of Tesla Model 3 has directly established consumers’ cognition of “electrification and intellectualization”.
Even “handling, chassis, engine” and other technologies of more than 100 years have been torn apart. It’s quite cruel.
With the mature e-tron technology and 30 years of luxury car imprint in the hand, Audi still failed to make a beautiful move in 2019, a critical year.
In November 2019, Audi, with its slow execution, imported the e-tron which had been launched globally for more than a year with a starting price of 692,800 yuan, and also brought another vehicle, Q2L e-tron, a China-exclusive electric car.
Both models are converted from gasoline to electric power. There is a significant gap in the level of intelligence and range compared to Tesla and NIO, but the prices are high, and the market performance can be imagined.
This gave Audi, who was complacent, a heavy blow. What did the era become when Audi was complacent?
Li Bin, “the most miserable person in 2019”, led NIO to become the “NIO Xiaoli” and, with the support of the Shanghai Super Factory, surpassed Tesla, which was free from capacity constraints, to become the world’s number one in new energy vehicle sales.
The times did not give Audi face. But Audi has to regain its position.
Under no circumstances, Audi brought An GeometryAuto back. In April 2020, An GeometryAuto became the new President of Audi China, and, as before, he was once again heavily relied upon.
After taking office, An GeometryAuto first released the SAIC Audi project which had been on hold for two years, then launched “Audi FAW” to take on the transformation task, and subsequently formulated the “Golden Ten Years” strategy for Audi in China.After a bold 20 months, An Ji-hao announced his retirement and handed over the baton to Wen Zeyue, who has 17 years of experience at Audi. However, An Ji-hao’s retirement was not a graceful exit. In 2021, Audi’s global new energy vehicle sales came in last among BBA at 81,900 units.
Audi still lacks a card to fight head-on, even though it plays the role of Volkswagen Group’s “technical brain”.
Audi’s strategic height has been raised, but this has also led to increased doubts about the electric vehicle models of Volkswagen and Audi. The Audi Q5 e-tron and the Volkswagen ID.6 are considered “copycats” of each other. The Q4 e-tron, which is viewed as Audi’s most important model in its transformation, has suffered a crisis of public opinion due to its plagiarism of a Small Full Event advertisement.
This all-new model based on Volkswagen Group’s MEB pure electric platform is still considered a rebadged version of the Volkswagen ID.4, although Audi emphasizes that it is the first pure electric vehicle to be brought to the Chinese market.
A harsh reality for Audi is battery life does not compete, autonomous driving is sparse, and prices do not have an advantage. “Why should I buy an Audi electric vehicle?” Similar bewilderment also surrounds Mercedes-Benz and BMW.
To completely solve the problem with the e-tron, Audi has launched the “Artemis Project” with the goal of creating a world-class advanced pure electric vehicle by 2024. Even if they work diligently, the A6 e-tron and Q6 e-tron, born on the all-new PPE platform, cannot go into production until at least 2025.
With the help of Volkswagen’s software capabilities, Audi may still face the question, “Is it new enough?”
Today, Audi, who regards electric vehicles as its core strategy, still most urgently needs the courage and determination to “face reality.”
If they want to make a comeback, they cannot be proud.
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.