Volkswagen’s Audi Plans Electric Car Push To Put Heat On Tesla

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AUDI will aim for electric cars to account for a quarter of its sales by 2025 as part of a strategic overhaul following the emissions scandal at parent Volkswagen, company sources said, in a move that could step up the challenge to U.S. group Tesla.

Audi, which has been slow to embrace battery-powered vehicles, will now invest about a third of its research and development (R&D) budget into electric cars, digital services, and autonomous driving, two company sources told Reuters.

Based on the 1.8 million cars sold by the German automaker last year, that would mean it selling at least 450,000 electric cars a year. Factoring in an expected rise in sales, that could turn Audi into a major competitor to Tesla (TSLA.O), which believes it can sell 500,000 electric cars by 2020 or sooner.

With the exception of BMW (BMWG.DE), Germany’s luxury automakers have been late to develop electric vehicles, a market which is still loss-making. But Audi’s parent Volkswagen (VOWG_p.DE) is under pressure to clean up its image in the wake of its emissions-test cheating scandal.

Audi CEO Rupert Stadler plans to outline details of the new business roadmap to more than 2,000 managers on Wednesday at a closed-door conference in Munich, the sources said.

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An Audi spokesman declined to comment. German business daily Handelsblatt reported late on Monday about Audi’s plans.

Figures compiled for Reuters by LMC Automotive show German trio BMW, Mercedes-Benz (DAIGn.DE) and Audi – the world’s largest producers of luxury cars – rank 12th, 14th and 22nd respectively when it comes to annual sales of electric and hybrid vehicles, trailing Toyota, Honda, Lexus and Nissan.

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