Audi Joins the Plug-In Fray, But Will Consumers Bite at These Prices?

Source: Audi

As far as BMW’s i8 is concerned, it’s a modern design tour de force: a harmonious blend of metal, plastics, glass, and carbon fiber. It looks as modern as its engineering is, and its ambitious styling gives its powertrain a tremendous standard to live up to (which, as far as we can see, shouldn’t be an issue).

Audi (VLKAY.PK), however, is deciding to take its hybrid tech in a different direction, banking that consumers are going to swing more for its routine consumer car than a hot performance car. The statement from Audi is all about fuel savings, rather than its attention-grabbing nature. In fact, put next to the conventional A3 hatchback and without the obvious decals along the side, the differences would be hardly noticeable.

Audi has been working on its e-Tron plug-in hybrid platform for years now, but consumers have yet to see a meaningful mass-market application of it. The A3 hatch, which is so far unavailable in the U.S. in its current generation, will be able to travel about 31 miles on electricity alone before the 1.4 liter TSFI engine kicks in. Total system horsepower is a respectable 204, and torque comes in at 258 pound-feet — more than a Volkswagen Golf TDI and Toyota’s four-cylinder Tacoma pickup.

Audi says the A3 e-Tron can be charged in somewhat more than two hours from an industrial outlet, and “a smartphone app provides for extremely easy remote charging and precooling/preheating.” But the most crucial part is the A3 e-Tron reportedly gets 156.8 miles per gallon on the U.S. cycle. I know what you’re thinking: A 100 mpg-plus Audi? Sign me up. But there’s one aspect of the car that definitely isn’t as conventional as the exterior would have you believe, and that would be the price tag. In Germany, the A3 e-Tron is slated to go for 37,900 euros ($51,660 by today’s exchange rates) — about $20,600 more than the conventional gasoline-powered model.

Source: Audi

For that amount of money, Audi is going to be catering to some exclusive sets of buyers: the affluent who are seriously passionate about consuming less fuel and do so more out of social mindfulness rather than savings at the pump, and also those who drive so incredibly much that the amount of fuel saved would actually offset the twenty-grand premium on the MSRP. It’s also worth mentioning that fuel in Europe is considerably more expensive: In Germany, fuel is going for an average of 1.66 euros per liter, or about $8.50 per gallon, though diesel is cheaper.

This is Audi’s weapon not so much against the BMW i8 — there’s the rumored R8 e-Tron for that — but more against the i3, BMW’s all-electric commuter car. The Audi is both more expensive (by about $10K) and uses fuel (the i3 doesn’t, unless equipped with the range extender), but it’s also far less polarizing on the eyes.

The A3 e-Tron is just one of four rumored models that Audi will be rolling out to bring its hybrid platform to the masses. U.S. sales are expected to begin in the second or third quarter of 2015, Automotive News reports. “We strongly believe in plug-in hybrids and we will add a new model each year, beginning with the Q7 next year, followed by the A6 long-wheelbase sedan for China and the A8,” Audi CEO Rupert Stadler said on the sidelines of the A3 Sportback e-Tron’s introduction in Europe. “Plug-in hybrids are electric vehicles for everyday driving, exactly what our customers are asking for.”

So while BMW is counting on its i sub-brand to carry its line of alternatively powered vehicles, Audi is trying as hard as possible to incorporate the new tech into its existing line of cars. From a business perspective, there’s far less risk in Audi’s strategy, because if the cars don’t take, “they can allocate the capacity to their normal cars,” Macquarie analyst Christian Breitsprecher told Automotive News.

Source: Audi

By 2020, Stadler said the plug-ins could account for as much as 40 percent of the 2 million unit sales goal that Audi has in place — but it could also be as low as 10 percent. And if the pricing differentials continue to be as dramatic as that seen with this A3, then it might be safe to say that they’ll account for a smaller portion of sales.

The prices don’t seem so outlandish once put up against Toyota’s recently announced $70,000 hydrogen car. That car, however, doesn’t possess the luxury cachet that Audi does, and is instead meant to compete on a specifications level with the likes of the VW Jetta, Corolla, Chevy Cruze, and so on.

But maybe a large enough market for Audi is out there, with consumers who are looking for this kind of vehicle. It’s still comfortably below the $70,000 asking price of the Tesla Model S, but Tesla’s next small, $35,000 car may pose some issues down the line for Audi’s plans of luxury plug-in domination.