VW in talks to share electric vehicle technology

Volkswagen AG

Volkswagen AG is in talks with other manufacturers on sharing the key technology underpinning its future Porsche and Audi electric car models, part of an effort to build scale and spread development costs.

“There’s definitely interest,” Ulrich Widmann, head of development at Audi for the joint engineering project, said at a press briefing in Munich. “We’re having conversations. Sharing technology to generate scale effects is the only way to achieve the turnaround in electric cars, both economically and ecologically.”

Widmann declined to identify manufacturers who have expressed interest in adopting the so-called PPE platform, which is being developed by Porsche and Audi as the basis for their purely battery-powered models starting in 2021.

VW is making an unprecedented push to dethrone Tesla Inc. as the leader of premium electric cars while at the same time keeping at bay traditional rivals spanning Toyota Motor Corp. to General Motors Co. VW’s mass-market electric technology will debut with the VW ID. 3 hatchback in November.

Deals to share electric know-how are already advancing, with Ford Motor Co. agreeing earlier this year to use VW’s main electric-car platform for a high-volume car in Europe. The pact is worth between $10 billion and $20 billion over six years and the manufacturers are in talks over adding a second model that would be based on VW technology.

Tesla Challenger

Audi plans to launch 30 battery-powered cars by 2025, two-thirds of them all-electric. The timeline is part of the effort by VW group’s largest profit contributor to electrify its entire lineup, including compact models like the A3.

Following the delayed start of Audi’s E-Tron, based on tweaked technology from the brand’s combustion-engine underpinnings, the manufacturer will tap the Porsche Taycan’s J1 platform to introduce the high-performance E-Tron GT toward the end of 2020. Audi’s Q4 E-Tron will be based on another platform, the MEB, and produced from 2021 in Zwickau, Germany, along VW’s ID. 3.

Audi’s presentation included a thinly-veiled challenge to Tesla in the form of a futuristic design concept for a mid-sized sedan that could be launched “after 2021,” according to design chief Marc Lichte. He declined to comment on the exact timing and price, but the presentation left little doubt about the strategic importance of the project and that Tesla’s Model 3 is the prime target.

Sales Slide

Still, Audi is struggling to reverse declining sales and risks falling further behind German rivals Mercedes-Benz and BMW AG if it doesn’t turn the corner soon. Talks with labor unions over cost cuts and the location of future car production have been dragging on for months.

The difficulties of complying with more complex emission tests that took effect last year have weighed on the manufacturer and labor officials have sharpened rhetoric against Chief Executive Officer Bram Schot. Parent VW could ill-afford a decline in Audi — a cash cow within the group — pledging to revive profits through 15 billion euros ($16.4 billion) in savings by 2022.

Earlier this year, Schot mapped out plans to cease making Audi’s iconic TT coupe and replace it with a battery-powered model. The next version of its flagship A8 sedan could also go emission free.

Audi is also mulling an end to the $170,000 R8 sports car as it funnels spending into the rollout of 20 fully-electric cars by 2025. Sales of electrified vehicles, including hybrids, are forecast to account for 40% of deliveries by then.

Audi is targeting slightly higher deliveries and revenue this year, and an operating profit margin between 7% and 8.5%. That should shift to between 9% and 11% as early as next year, helped by a sales reorganization.

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