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Shifting gears: Audi’s new strategy
In a significant announcement during Audi’s annual general meeting, CEO Gernot Döllner revealed that the company is re-evaluating its original plan to launch the last model featuring a gas engine in 2026. This decision reflects broader trends in the automotive market, where the pace of electric vehicle (EV) adoption has not progressed as rapidly as anticipated.
Job cuts and market adjustments
Alongside the reassessment of its gas engine strategy, Döllner disclosed that Audi intends to eliminate approximately 7,500 jobs by 2029, primarily in Germany. Such measures are deemed necessary as the company navigates a challenging sales landscape. “We will manage the production of our last combustion engine vehicles depending on the various developments in the world markets,” he stated, indicating that flexibility is key as Audi adapts to changing consumer demands.
Value of the electric transition
Initially, Audi had aimed to cease offering gas-powered models in most markets by 2033, focusing solely on electric vehicles beyond 2026. However, due to the slower-than-expected uptake of EVs, these timelines are now under reconsideration. The decision comes on the heels of disappointing sales figures, including an 11.8% drop in global sales for 2024 and a staggering 38% decline in operating profits, closing the year at 3.9 billion euros (about $4.3 billion).
Market challenges and strategic responses
The automotive industry as a whole is grappling with the pace of EV adoption. Competitors like Mercedes-Benz and Volvo, who had also committed to phasing out gas engines, are now extending their timelines. The slow transition raises questions about the readiness of infrastructure and consumer willingness to embrace electric vehicles. Audi’s announcement to close its Brussels plant, where the Q8 E-Tron is manufactured, underscores the urgency of addressing market dynamics.
Future model launches and innovation
Looking forward, Audi plans to revitalize its lineup with over 20 new or updated models in the next two years. This includes fresh generations of the A6 and Q3 set to debut in 2025, as well as a plug-in hybrid option for the A5. These efforts demonstrate Audi’s commitment to innovation and responding to consumer preferences while navigating a transitional automotive landscape.
Exploring North American production options
During the meeting, Döllner hinted at a potential increase in production capacity within North America, a strategic move to better align with local market needs. While he did not directly reference the Trump administration’s tariff threats, the implication is clear: localization could provide Audi with a buffer against global economic uncertainties. Currently, Audi operates a facility in Mexico that produces the Q5, but the company is also considering leveraging Volkswagen’s plant in Chattanooga, Tennessee, or even the new facility being built for the Scout brand in South Carolina.
Conclusion: A pivotal moment for Audi
Audi stands at a crossroads, needing to balance its ambitious electric vehicle strategy with the realities of market demand for gas-powered vehicles. As the automotive landscape continues to evolve, the decisions made today will shape Audi’s identity for years to come. The company’s ability to adapt and innovate amid uncertainty will be crucial in maintaining its competitive edge.