A3 E-Tron No Compliance Car, Audi Says

Zero-emission-vehicle requirements in California and nine other U.S. states are pushing more battery-electric and fuel-cell cars into the market, despite continued uncertainty over whether a significant number of consumers will buy them – or automakers will be able to turn a profit on them.

Audi answers the call with its upcoming A3 Sportback e-tron, but a top U.S. executive says no one should consider the new model a “compliance car,” aimed solely at satisfying those regulatory targets.

“We’re not in the business of making a loss vehicle, or a compliance car,” says Audi of America President Scott Keogh. “We believe in a car the customer wants to pay for and we have a business case for.”

The 5-door A3 e-tron plug-in hybrid is slated to hit U.S. showrooms in second-quarter 2015. It is powered by a 1.4L TFSI engine and 75-kW (100-hp) electric motor that combine for output of 204 hp. The powertrain is mated to a 6-speed dual-clutch automatic transmission.

The A3 e-tron’s 8.8-kWh battery allows the car to travel 31 miles (50 km) in all-electric mode, providing a total range of 553 miles (890 km). The battery can be recharged in a little over two hours on a 220V line and about four hours using a standard household outlet. Fuel economy is rated at 156.8 mpg-e (1.5 L/100 km) on the European drive cycle.

U.S. prices haven’t been set, but Keogh says the car will be positioned to sell, and distribution is planned throughout the 50 states. Prices in Germany start at €37,900 ($51,607).

“In our point of view, this is the right solution for the marketplace,” he tells media during a conference call earlier this month to discuss the brand’s first-half sales performance. “If someone is going to make this profound leap into the electric world, this is a perfect bridge-product that basically says you get all of the comfort, range – all the things you expect from a normal car, except you get the added benefit of the electric range from the plug-in.

“It’s packaged like an Audi; it drives like an Audi; it has the characteristics of an Audi. We feel that’s the solution.”

Keogh acknowledges the need to meet the toughening U.S. fleet fuel-economy targets that reach 35.5 mpg (6.6 L/100 km) in ’16, but he says the e-tron model won’t help if it doesn’t strike the right note with Audi buyers.

“Obviously we have challenging targets for CAFE and…ZEV-mandate states, but the customer does not walk into a dealership and say, ‛Oh, that poor company. They have to hit these CAFE targets. I feel really bad for them, I think I’ll go buy this car to help them out,’” he says. “That’s not how it works.

“We need to come up with a product that the consumer desires (and) the consumer wants to pay money for,” Keogh adds. “On top of that, we’d like to have a business case that makes some moderate sense for us and our dealers.”

The A3 e-tron is part of what is expected to be an expansive electrified-vehicle portfolio for Audi. A battery-powered version of its R8 supercar is due in European showrooms next year, and Reuters reports the brand is planning a broad range of electric sedans and SUVs, including an all-electric Q8 model designed to compete with Tesla’s upcoming Model X CUV.

The Volkswagen Group already has a healthy stable of hybrid-electric vehicles in the U.S. that includes the VW Jetta and Touareg, Audi Q5 and Porsche Panamera and Cayenne. The A3 marks the third plug-in model for the group, joining the Panamera and just-bowing Porsche 918 Spyder.

Combined, VW Group has sold just 2,307 of the hybrids in the U.S. through June, down 30% from 3,294 year-ago, so it will be a challenge for Audi to move the needle significantly with the electrified A3.

Keogh promises Audi will put full marketing muscle behind the model in the U.S. to ensure the e-tron is not neglected out on the showroom floor.

“If the car does not get sold, if the car does not get on the road, you don’t have a compliance car; you have a headache on your hands,” he says. “What we want to get (with the A3 e-tron) is the mainstream (customer).

“This (vehicle) will be marketed; it will be promoted. The government doesn’t give you credit if (the car) sits on the showroom floor.”

Retailers will have to make some investment to sell and service the car, but executives don’t believe that will be a huge hurdle. Collectively, dealers have poured more than $1 billion into their franchises in recent years, Audi of America Chief Operating Officer Mark Del Rosso says, adding, “They see a business with an incredibly bright future.”

Keogh suggests that’s true of the A3 e-tron as well.

“I think we have a perfect demographic to make this car work: Young, affluent, with a very strong market share in places like Denver, Portland, Seattle and Austin – and they’re looking for these types of things,” he says.

“We think we’ve got something pretty cool here.”

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