Sibling rivalry Audi's problems through technology

Audi was once seen as an innovation hothouse within the Volkswagen group. But technology glitches are now denting the brand’s image, and sales have slumped badly. 
Quelle: dpa
It's getting old.

It seemed like such a marvelous idea. Volkswagen would compel subsidiaries Audi and Porsche to collaborate on electric and autonomous vehicles. They could leverage their technology and know-how, and accelerate away from the competition.  

But just a year after the cooperation began, Porsche developers are complaining bitterly about Audi’s incompetence. The dispute focuses on the Porsche Taycan, a partially self-driving electric car meant to take on US rival Tesla on its home soil.

But the Taycan has been plagued with technical problems and now seems certain to launch late, without autopilot capability. When Audi finally has the software ready – perhaps next year – it will be uploaded onto the Porsche cars. 

Unfortunately for Audi, this kind of setback is nothing new. The company long prided itself on technical innovation, and was a pioneer of four-wheel drive and aluminum bodywork. Its slogan, “Vorsprung durch Technik” (progress through technology), came to stand for German quality and industrial innovation.

That glory is gone now. Audi sales in Europe have slumped 40 percent, because some diesel engines cannot reach key European emissions targets. And its former CEO is awaiting a criminal trial for manipulating environmental data.

German cars in trouble

Audi’s slump epitomizes the troubles of the German car industry. Having built a reputation as engine-constructors, German carmakers are struggling to keep pace in a world where electric engines are the new normal. Companies like BMW and Daimler, the maker of Mercedes, are having to shift gear.

In November, Volkswagen CEO Herbert Diess put the German car industry’s chances of future success at about 50/50. Audi CEO Bram Schot says his brand definitely “needs improvement”: it has been under pressure since around 2013.

Compare this to Tesla, which now has a market capitalization greater than BMW or Daimler. Fearful of losing out, Audi, Mercedes and BMW all speak of developing a “Tesla fighter,” a high-end electric car with some self-driving capacity.

Audi’s first “Tesla fighter” is to be a new SUV, the e-tron. But after 20,000 e-trons were preordered in the US, software problems emerged, delaying the launch until next year. Even then, the e-tron will largely be an electric version of the Q5, an existing SUV. A completely new electric Audi SUV, built on a chassis specifically designed for electric driving, will not launch for 18 months at least.

There are gnarly problems right across the industry. Tesla can make batteries much more cheaply than the Germans. Google subsidiary Waymo is far ahead on autonomous driving technology.

Audi’s waking nightmare

Volkswagen wanted to change all that. Audi was meant to become a kind of technology hothouse, radiating innovation to all of the group's brands, starting with the Porsche collaboration. Unfortunately, tensions became so bad between the two VW subsidiaries that their CEOs recently had to step in to get the collaboration back on track, say company sources.

Diesel has become a nightmare for Audi. After the humiliations of the Dieselgate scandal, now the company can’t manage to make models compliant with tougher EU emissions testing standards. With sales drying up, production executives are under severe pressure to find solutions.

To make matters worse, EU emissions testing will soon become even tighter. The EU also wants to reduce car companies’ carbon emissions by 37 percent by 2030. This is sure to hit German premium brands the hardest because they tend to sell more heavier cars, which emit more CO2. If they fail to comply, companies could be hit with fines of hundreds of millions of euros.

At Audi, managers are trying to restore the company’s tradition of innovation. “We have to remain as Volkswagen’s technological cutting edge,” said Peter Mosch, the supervisory board member who represents Audi staff.

With major problems wherever he turns, CEO Bram Schot is developing a new strategic plan, due to be presented in the first half of this year, say sources close to Audi senior management.

Whether Schot himself will ever see the plan implemented is another question. Until recently, he was an interim appointment only. Within the company, there are mutterings that Audi needs a technology- and solutions-oriented CEO, not a salesman like Schot.

Only with a engineer in charge, say skeptics, can Audi get back to its old future, and start creating real “progress through technology.”

Martin Seiwert covers the car industry for WirtschaftsWoche. To contact the author: [email protected]