Looking for the Next "Audi"

Audi rebuilds herself in trouble.

At a time of great change in the automotive industry once in a century, new companies and new species emerge in endlessly. How can traditional automotive companies find opportunities in danger? What kind of new thinking and business opportunities can the technological changes brought about by mobile Internet and artificial intelligence?

The following will give you an explanation of the transformation moment of the automobile company.

The Danube River runs through the German town of Ronstadt. The industrial town 60 kilometers from Munich is the headquarters of Audi Company, also known as Audi City. Workers and engineers in this small town are becoming more and more anxious, fearing that with the transformation of traditional car companies like Audi, they may lose their jobs.

The local media blamed Audi's management loudly, saying that it was a mistake for them to put the production of Audi's first electric car, e-tron, in Brussels, Belgium, because that would damage local employment. However, the outside controversy has made Audi's new management firmer. "We must do our best to transform more quickly." Bola Salt, chairman of Audi's management board, said.

This time, the momentum of change has increased unprecedentedly.

In 2018, Stead, the former chairman of Audi's management board, was arrested for the diesel door incident, which plunged Audi into a short downturn and shocked everyone, but it also gave Audi the opportunity to re-shape itself, because all strategic planning and organizational structure need to be re-examined. A few months after acting as chairman of the management board, Bren Salt was rehabilitated. Together with him is a strong financial director, Saitz, who is also responsible for China's business in the new organizational structure.

Setz raised the cost savings target of the "Audi restructuring and transformation plan" from 10 billion euros to 15 billion euros. At the same time, he has planned a 14 billion euro investment plan for Audi, which will focus on electric travel, digital and automatic driving.

2019 may be the most important year in Audi's history, because it is a new starting point for radical transformation and transformation of Audi.

Control electricity

In Audi's transformation plan, electrification will be the first task.

The launch of e-tron in 2018 is regarded as the first result of Audi's transformation, which is the first pure electric vehicle of the 4th Ring Brand. It will be officially delivered in 2019.

The Audi Electric Vehicle aimed at Tesla has reached 16,000 orders, and the production capacity of the Audi Brussels plant producing e-tron has been booked out.

Following the launch of e-tron in August last year, Audi has released five pure electric vehicles, including e-tron spaceport, e-tron GT, Q2L e-tron and Q4 e-tron. Among them, Q2L e-tron and Q4 e-tron are specially designed for the Chinese market.  

"This means that we will be able to provide electric travel solutions for all customers in the market segments." Salter said.

Audi's plan is to introduce 20 electric vehicles by 2025, most of which will be pure electric vehicles. By then, every Audi will have a plug-in hybrid version. Audi hoped that at that time, for every three Audi cars sold, one would be an electric car. Although this is a radical electric car plan, it still lags behind the old rival BMW in selling 140,000 pure electric cars last year. What's more, there's Tesla, an aggressive new American electric car company. Salter said: "I have great respect for Ameslan's achievements. Without Tesla, we would not have made so much progress in the field of electric vehicles as we do now. However, Audi has different scales and different business models. We have nearly two million cars a year." For electrification, Audi's thinking is very comprehensive. Audi is creating a new ecosystem for electric cars. "In the past, the focus was on cars as products, and everything else revolved around them." Salter talks about the new changes brought about by electric vehicles. "Nowadays, people are creating a new environment for using cars themselves. Although cars are still very important, an ecology for using cars plays an integrated role. It's brand new."

Electric cars are changing people's daily lives. For the automotive industry, what will really matter in the future is the ecological network of electric travel and appropriate partners.

Since 2016, Dr. Stefan Niemand, who has been responsible for the electrification of Audi's product line, is confident that Audi e-tron can change the rules of the game. "For us, Audi e-tron is not just a standard new model, e-tron will bring Audi into the era of electric vehicles." For Audi, electrification is far more than the car itself. It's a system. "In addition to the price and mileage of the vehicle, charging infrastructure and charging time are the key factors to help electric vehicles succeed." Dr. Niemand said, "Even if we are an upscale car manufacturer, we want to play a role in helping build an integrated ecosystem for electric vehicles. Only in this way can our customers fully enjoy the advanced experience. Audi has long been involved in ionITY, a joint venture of Volkswagen, BMW, Ford and Mercedes-Benz to build fast charging stations on major European transport routes, and has extended this model to the United States through Electrify America, as well as working with Amazon Home Services to provide home-based charging solutions. "We hope that all of this will also be recognized quickly among a wider population, so as to help electric vehicles succeed." Under financial pressure, Audi hopes to build a profitable electric car. After all, Tesla pulled the price of high-end electric cars to about 300,000 yuan.

Audi's main cost advantage is relying on the synergy of Volkswagen Group. Obviously, the new technology will involve higher initial costs, but Audi wants to achieve its goals with a competitive cost structure.

Within Volkswagen, Audi is working with Volkswagen and Porsche brands to build compact and high-end electrical architecture platforms.

Premium Architecture Electrification (PPE), a partnership between Audi and Porsche, will begin mass production in 2022. This will help Audi and Porsche increase their efficiency by 30% compared with the independent development of a single brand.

Economies of scale also play an important role, which is where Volkswagen Group obviously occupies an advantage, after all, this is a super-large automobile group with annual sales of more than 10 million vehicles. At the same time, Audi is taking advantage of new revenue sources, such as subscribers who can order supplementary digital services through applications, as well as charging and energy services.

"Soon, the cost of an electric car will be the same as that of an internal combustion engine car." Dr. Demand looks forward to that.

Entering the Digital World

Future travel will be built on people's digital world. As a result, automobile manufacturers are using digital services to find new business models and sources of income.

Audi hopes that cars will become a digital platform that seamlessly connects customers with the Internet, especially in China. Ou yang Ian, president of Audi China, told Cheyenne. com, "In China, Audi users are 20 years younger than Audi owners in Europe. They are all digital generations and hope to be online all the time." Through its digital services, Audi is developing new business models and sales potential. Audi customer portal is the central access point of the digital ecosystem. It can subscribe, manage and use all digital solutions through an intuitive interface.

Today, customers can sit on their sofas and order and pay for their cars, including all Audi models, and deliver them at the time and place they need. At present, the service is being piloted only in Germany, and Audi is gradually expanding its international platform and increasing its services and service products.

Ou yang Ian introduced that Audi China has also established a brand new retail experience team, responsible for online sales optimization and sales hall digital change. The history of used cars will also be presented electronically and transparently in the future. This is designed to make it easier and safer to buy used Audi cars. Audi is also developing and expanding high-end travel solutions: Audi on demand. In more than 20 places around the world, customers have been able to use Audi on demand on smart phones, and they can choose the models they need from many top-class models, book and experience their dream cars.

The service has also been opened in Beijing and Sana, China.

For Audi, what is important is not just to let users experience Audi's various models, but to start a new business model where users can pay by mileage.

China's Most Important

In Audi's world, the importance of China is self-evident.

Chief Financial Officer Saith firmly promotes Audi's business in China, which is Audi's largest single market.

Not only that, but in China, the future world is rising. "China's enthusiasm for technological progress has enabled the country to paint a new blueprint for the automotive world." "Chinese people are enthusiastic about technological innovation, they see smart phones as all-around terminals in every area of life, and they hope that cars will do the same," said Set. Saith hopes that Audi can keep up with the pace of social development in China. "From mobile payment, we can see that Chinese customers have a very high acceptance of new things, while our European customers still stay in a relatively traditional business model."

To this end, Audi has strengthened its R&D capabilities in China. "We hope to place more emphasis on localized R&D in China and be closer to the Chinese market and Chinese customers." Said Saki.

In addition to strengthening the R&D capability of Audi's China R&D center in Beijing, Audi also hopes to enhance its localization, especially in the area of Intelligent Networking, through its Chinese partners. Volkswagen Group and FAW Group are planning to set up a joint venture of Intelligent Networking Union to jointly develop networking business.

Bola Salter hopes that Audi should not be confined to the position of "China, for China", but should be "in China, for the world". He said: "Many Europeans are learning through contacting Chinese customers and business models. China's iteration speed is fast, potential is infinite, and very enterprising spirit. It is worth learning from people all over the world."

China is an important pillar of Audi's global business model, and China is bringing changes to Audi. "Thirty years ago, we invested in this market and became the first high-end brand. We are now deepening our commitment to pay more attention to local development and production of our products. In addition, we can directly understand the new trends of China's technology and mobile interconnection, and integrate these trends into our products for global customers to use.

China has also become Audi's most important research and development and testing base for automatic driving. In addition to Audi's research and development center in Beijing, Audi also set up an automatic driving test center in Suzhou. Autopilot must constantly collect mileage data to support iteration of autopilot algorithms and functions. However, Audi's approach seems somewhat clumsy.

Although the new generation of Audi A8 has reached the capacity of mass production L3 level autopilot, Audi still has no open related functions. Although criticized, Audi hopes that this function will be absolutely safe when it is open.

Tesla, an American rival, is collecting a lot of driving data by opening up its automatic driving assistance system to users. However, it also costs users a lot. And Audi's persistence keeps the research and development and testing costs of its autopilot high. "We have done a lot of tests on Chinese roads frequently. We are the first luxury car brand to get two licenses for automatic driving test in Beijing and Suzhou." Saith said.

Salter acknowledges that Audi's advantage in the Chinese market is being approached by competitors due to its busy dealing with "diesel emissions" incidents and new WLTP testing rules in recent years. Over the next few years, however, Audi will focus mainly on the Chinese market.

"In the future, we plan to sell more than one million Audi models in China every year." Set, who is in charge of China business, has reiterated this goal, which he hopes will be achieved by 2022.

Deepening cooperation with FAW will increase Audi's domestic vehicle lineup from 6 to 12 models. "This will be an important support for our goal of millions of vehicles."

At present, Audi China 2.0 strategy has also been released, in April this year at the Shanghai Motor Show, Audi will present a brand new face in front of Chinese consumers.

The biggest challenge

The transition is not easy for any car giant, especially for the troubled Audi.

Fortunately, the trouble is over. Audi is thoroughly rethinking.

"it's not enough for us to just meet expectations. We want to set new standards! " "We are now at a challenging stage," Scotch said. Our sustainable economic success, profitability and future viability are threatened. This is why 2019 is our new starting point year. We hope to bring new direction to our company and Sihanouk brand. "

However, any transformation will face obstacles and puzzles, and so will Audi. "the biggest challenge with transformation is cultural transformation, which involves the whole product shaping process, and Audi needs to significantly accelerate the time cycle of product generation," Scotch told Che.

Audi wants to move from hardware experts to software specialists, which will require iterative updates and quickly adapt to the impact of the external market on its own change. Internally, Audi needs to keep young employees up-to-date in terms of their qualifications and competencies, while the company consolidates staff and expert resources to help them contribute. Externally, Audi can't fight alone. It needs to coordinate with partners, professional companies that are very knowledgeable about mobile travel. These are the difficulties in the process of transformation. "you know, the external environment is changing very quickly, and then the company is faced with changes.

Obviously, Audi's new management team has a heavy burden, and Audi's transformation is on the way.