Audi Wants a Piece of Tesla’s Pie

Volkswagen’s Audi subsidiary is preparing to take on Tesla Motors (NASDAQ: TSLA) and Toyota Motors (NYSE: TM) with two new models.

This could be a shot of Audi's diesel electric hybrid or hybrid crossover.

This could be a shot of Audi’s diesel electric hybrid or hybrid crossover.

First up is the Q7, a diesel-electric hybrid SUV with a plug-in option that’s supposed to be on display at next month’s Detroit Auto Show. Audi is also planning a diesel electric version of its A8. The Q7 is being seen as a direct challenge to Tesla’s Model X electric crossover.

News reports indicate the diesel-electric hybrid will be even more frugal than gasoline-electric hybrids. A gasoline-electric version of the Q7 could also appear on American roads next year. The technology was pioneered in the Volkswagen XL1 diesel-electric hybrid, which has been on sale in Europe for some time.

Specs for the Q7 are not available, but the XL1 gets up to 261 miles per gallon, according to news reports. There’s no word on when or if the XL1 will appear on American roads. Since it is a plug-in, the XL1 can be recharged from an outlet or supercharger and generate its own electricity.

Audi AG CEO Rupert Stadler told Bloomberg that his engineers are working on a zero-emission electric car that will go on sale in 2017. The as-yet unnamed vehicle will meet U.S. regulations for zero-emissions vehicles, which means its buyers will be eligible for a U.S. tax credit to buy the as-yet unnamed car.

“It’s probably going to be a crossover, but development work is still ongoing,” Stadler said. He did not say when or where the new vehicle would be unveiled.

Audi is also planning to introduce a battery-powered version of its $115,900 R8 sportscar next. Those vehicles will join the A3 E-Tron, another Audi plug-in hybrid that’s already available.

Audi is now the world’s second largest maker of luxury vehicles, with sales of 1.7 million cars this year. Audi wants to surpass archrival BMW and become the world’s largest maker of luxury vehicles as part of Volkswagen’s master plan for global auto domination.

Audi’s move is a sure sign that the auto industry thinks Tesla is a serious threat to established luxury carmakers. It looks as if Audi is positioning itself to be the go-to company for hybrids and zero emission vehicles. This definitely put pressure on Mercedes to ramp up production of its fuel-cell powered vehicles and Toyota to start building a fuel-cell powered Lexus.

An Audi TDI diesel Crossover

An Audi TDI diesel Crossover

Volkswagen is also planning to show off a new SUV concept at the Detroit Auto Show next month. It is not clear what that concept will be, but it could be a hybrid or a plug-in electric.

A regular version of the same vehicle, which will seat five passengers and be halfway between the Tiguan compact SUV and the Touareg, is also planned. Volkswagen is trying to add vehicles in order to reach its goal of selling 800,000 cars in the U.S. by 2018. The as-yet unnamed VW SUV will be built at the company’s plant in Chattanooga, Tenn.

Volkswagen’s other luxury brands, Bentley and Lamborghini, are also planning SUVs and could soon start bringing out hybrids as well. It looks as if the age of zero emission vehicles has arrived.

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