Delays in capital infusion in Audi’s tech projects could undermine VW’s long term competitiveness

With Audi being VW’s profit engine, delays in implementing technological projects are likely to weigh down its competiveness in the burgeoning EV market. The diesel emission scandal is now casting its long dark shadows on its very future.

 

Sources at Volkswagen have revealed that technology projects in Audi will get delayed as a result of cost cuttings. With VW grappling with the ramifications of its diesel emission scandal, its multi-million euro investments in autonomous and electric cars have taken a beating.

Audi, Volkswagen’s profit engine, has stated it will scale back its strategic shift to digital services and green vehicles through 2025, as competition with its German rivals, including Mercedes-Benz and BMW, heats up.

According to two sources at Audi, these cutbacks are likely to have an impact on next-generation technology projects which are intended to help Audi clean up its image in the wake of the scandal.

As an outcome, Audi will also postpone the creation of a test-track for self-driving cars as well as facilities for concept cars and batteries, a key driver for tomorrow’s electric vehicles.

Audi’s spokesman, in a short curt note said, projects pertaining to a planned technology park at Audi’s home in Ingolstadt, dubbed “IN-Campus” would be postponed for the foreseeable future.

Analysts have pointed out that although Audi benefits from VW’s scale of operations, it still injects more cash into plant & machinery and property than its competitors, including BMW and Daimler Mercedes-Benz.

As per Arndt Ellinghorst, an analyst at Evercore ISI, there is “room for improvement” in Audi’s cost cutting exercise as it can further trim the cost of its physical assets. “We welcome the fact that all parts of VW are looking to lower their excessively high costs.”

Audi workers however disagree with this approach. Its workers at its works council, who hold half the seats on the supervisory board council, said the company should build more electric cars in Ingolstadt, Germany instead of outsourcing their production from Brussels.

Audi’s works council spokesman said, investment delays in Ingolstadt could undermine employment at Audi’s base. Currently, the plant is losing the production of its top-selling Q5 SUV to a new factory being sprung up in Mexico.

“That’s why IN-Campus must not be adjourned indefinitely,” said Audi’s works council spokesman.

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Categories: Entrepreneurship, HR & Organization, Regulations & Legal, Strategy

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