AUDI IS BECOMING 'VOLKSWAGEN'S BIGGEST PROBLEM'

Audi Q8 e-tron production may end early as the luxury brand considers closing a factory. Plus, Toyota joins America's charging mafia.

When I think of Audi, I imagine its Golden Age. That would probably be the late 1990s into the early 2010s, when the brand transformed from a bit player that barely survived an earlier unintended acceleration scandal in the U.S. to a global power-hitter capable of taking customers from BMW and Mercedes-Benz. With a lineup that included the original TT, the S4, the groundbreaking Q5 and the R8 supercar, Audi had something for everyone—and the designs were absolute fire, too. 

It's safe to say that modern Audi doesn't quite feel like it has the same magic. And worse, it's emerged as the poster child for the Volkswagen Group's wider electric vehicle transition struggles. Can Audi get some of that heat back before it's too late?

That kicks off this midweek edition of Critical Materials, our morning tech and auto industry news roundup. Also on tap today: Toyota joins a promising new U.S. charging network, and General Motors has good news and bad news in China. Let's dig in.

30%: Audi May Close Brussels EV Plant, End Q8 E-Tron Production 'Early'

2024 Audi Q8 e-tron

Audi sales haven't been great as of late, and I mean that across the entire portfolio as well as the electric stuff. I'm genuinely surprised the Q4 e-tron isn't doing better than it is, and the Q8 e-tron—while groundbreaking at the time—is showing its age. The new Q6 e-tron, based on the new Premium Platform Electric, can't come soon enough.

But slowing global demand for EVs, especially in places like China where Western automakers are getting hit hard by the homegrown competition, has been especially tough for Audi. The brand announced yesterday that it's considering an early end to both the Q8 e-tron line and a closure of the Brussels, Belgium plant that makes it. The automaker had this to say: 

The Audi Q8 e-tron model family, which is currently produced at the Audi site in Brussels, is affected by a segment-specific intensified drop in demand. The Q8 e-tron marked the start of electric mobility for Audi in 2018, and it ran very successfully worldwide for many years. With the ramp-up of the new models on the Premium Platform Electric, the company is now seeing a drop in demand for the Q8 e-tron. This has resulted in a sharp drop in incoming orders.

This is accompanied by long-standing structural challenges at the Brussels site: The plant layout is difficult to change due to the production facility's particular location close to the city center. There are also high logistics costs. Overall, this leads to high production costs in Brussels compared to other sites. Following an intensive review of the market situation and the general conditions at the Brussels site, Audi is considering the early end of production of the Q8 e-tron model series.

Volkswagen shares dipped Wednesday after the news. Some investors and analysts who spoke to CNBC praised the potential move as a cost-savings measure; others blamed the continual delays and software problems at the wider VW Group for putting the whole company, Audi in particular, behind competitors in the electric race:

Deutsche Bank analysts qualified the potential Brussels factory shutdown as a “major step in the right direction,” anticipating related costs will not be cash-relevant in the short term. Analysts at brokerage Stifel meanwhile labeled Audi as “Volkswagen’s biggest problem” and “the biggest concern for investors” on a divisional basis.

“The bigger issue is the severe delay in new models in recent years; Audi has been falling behind Mercedes and BMW. We calculate that the average age of Audi’s portfolio is now six years (BMW: three years, Mercedes 3.6 years),” they said.

Our man Kevin Williams, as tough a critic as anyone I know, gave the Q6 e-tron high marks in his recent First Drive review. But it's been delayed for years now, and is just now finally going on sale in time for EV sales to be less hot than they once were. Also, I'd add that the problem of Audi's entire aging lineup is just as much an issue there. 

60%: Toyota Joins Ionna, Making It Into An Eight-Automaker Charging Superpower

Ionna Toyota

When I say that Ionna is "America's EV charging mafia," I mean that in the nicest possible way. Fed up with the lackluster charging experiences offered by most companies, seven automakers have banded together to make their own network, and so far it looks quite promising.

You can make that eight automakers after today, because Toyota is signing up too. From a news release: 

IONNA's focus on the holistic customer experience aligns closely with Toyota in ensuring that charging stations provide visitors with amenities and convenience in addition to vehicle charging. IONNA plans to bring its first batch of DC fast charging stations online in 2024 and will continue the buildout of additional stations throughout the decade.

"We are delighted to welcome Toyota to our growing IONNA family," said Seth Cutler, CEO of IONNA. "Their vision for the future of electric mobility in North America aligns perfectly with our mission to push the boundaries for the highest standards of quality, reliability, and customer experience. This partnership marks another significant achievement of many to come in our joint journey to transform EV charging and spearhead the adoption of sustainable transportation in North America."

Toyota often gets heat from EV fans for its focus on (and sometimes confusing marketing of) hybrid cars, and for its lobbying against global policies designed to push things in an all-electric direction. But it's still quite serious about EVs, reaffirming today that it wants to make 30 EV models globally by 2030 and still plans to build two new three-row electric SUVs in the U.S. soon. 

And as that rollout happens, it'll have the Ionna network as backup. 

90%: General Motors Down In China, But EVs And PHEVs Are Up

Buick Velite 7 all-electric (right) and Velite 6 PHEV (left)

Speaking of Western automakers struggling in China, that's a pain GM knows all too well. Once a dominant player in the world's biggest car market, it has since lost a lot of ground to hometown brands like BYD, Nio, Geely and others. 

Predictably, GM's sales in China were down in Q2. But of those cars that are selling there, EVs and PHEVs take the cake. Here's The Detroit News to elaborate:

General Motors Co. and its joint venture partners delivered 373,000 vehicles in China during the second quarter, some 29% fewer than in the same period a year ago.

Despite the plunge in overall deliveries, the Detroit automaker noted that sales of what it calls "new energy vehicles" in the country — including both fully electric cars and plug-in hybrids — were up by 24% year-over-year. The company said these EVs and hybrids made up a record 38% of GM's overall China deliveries for the quarter.

As for individual models, Buick's GL8 family, as well as its VELITE 6 EV, were the brand's best sellers. Cadillac's CT5 upscale sedan continued to be that brand's most sold in the country. And Chevrolet's Monza sedan was that brand's most popular.

Some examples of GM's PHEV technology will be coming to the U.S. market too, but not until 2027. 

100%: How Does Audi Get Its Fastball Back?

2025 Audi Q6 E-Tron

It's tough, if not outright impossible, to untether Audi's problems from those of the wider Volkswagen Group. But where does it start with a course-correction? The Q6 e-tron is a solid start, but one crossover isn't going to be enough to reverse its fortunes. If you were in charge of Audi, what path would you take?

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