In the era of electric mobility, decarbonization is becoming a competitive advantage. How Audi is shrinking its corporate carbon footprint and why this is key to making itself future-proof – a look at the new “Consistently Audi” strategy.
01/29/2020 Copy: Franziska Hartung – Photos: AUDI AG Talking Business
Reading Time: 5 min
Climate change: probably the biggest challenge facing humankind in the 21st century. Audi acknowledges its responsibility and aims to become part of the solution instead of part of the problem. The prerequisites for this vision are a clear objective, drive, and concerted action by the company. Audi expressly commits to the targets of the Paris Climate Accord.
Environmental awareness is on the rise – not just in society and in political circles, but also increasingly in the capital market. “The stock market tells us where the future is happening,” comments the value-oriented asset manager and CEO of Globalance Bank, Reto Ringger, in conversation with Audi CEO Bram Schot. “Stocks are bought because investors think that companies can tackle the new business, social and ecological challenges and quickly adapt their business model.” While revenue and EBIT were the measure of all things on the stock market until a few years ago, the picture today is more diverse. That is reflected in the growing relevance worldwide of Environment, Social and Governance (ESG) factors in investment decisions.
ESG stands for responsible actions with a positive environmental and social impact. According to an article in Forbes magazine an estimated 20 trillion dollars is now invested in products that meet ESG criteria – with the tendency rising sharply! 1 By using the carbon footprint as a key figure, sustainability becomes measurable and assessable for businesses. Audi is systematically shrinking its carbon footprint in order to safeguard its competitiveness. But above all as a demonstration of its social responsibility.
Innovation has always been at the heart of everything we do, but now it’s about taking progress in a new direction. Learn more about our path to a more sustainable mobility.
Audi looks at the entire life cycle of its models, starting from supply chain and production, through utilization, right up to recycling. Audi is to have entirely carbon-neutral 2 operations by no later than 2050.
From the present perspective, electric mobility is a vital key to climate-neutral, clean mobility. The Audi e-tron therefore marks the start of the four rings’ drive to electrify: Audi will present twelve electrified models by the end of 2020, including five electric cars and seven plug-in hybrids. By 2025, this will be 30 electrified models.
Audi stands to benefit here from its experience in developing the Audi e-tron. Audi will already start scaling up production with the Audi e-tron Sportback, thus ramping up the rate.
- Bram Schot, CEO AUDI AG
The electric initiative is a huge financial commitment, because the price of the batteries means the product costs of electric and electrified vehicles are (still) comparatively high. Nevertheless, it is clear that the focus on electric mobility will pay dividends because combustion-engine vehicles will get significantly more expensive by 2021 at the latest, when the new EU-wide fleet target for carbon emissions comes into force. It will limit emissions of carbon dioxide per car to 95 grams per kilometer. Manufacturers that overstep this limit will have a bill to pay: 95 euros per car for every gram above that figure. So CO₂ comes with a price tag. For Audi, that means CO₂ will be considered more closely in product costing, making it an active cost factor. This acts as a penalty on the product margin of combustion-engine vehicles with higher carbon emissions, and as a bonus on low-emission electric cars. Such a mechanism provides the right internal incentives for developing more environment-friendly vehicles.
The Audi Brussels plant is the first accredited carbon-neutral site of the four rings, and within the Group it serves as the pioneer for decarbonizing production: Audi already switched to green power there back in 2012, and 95 percent of the energy consumed now comes from renewable sources. Where it is unable to avoid emissions, Audi Brussels employs what is known as carbon credit projects.
What has already become a reality in Brussels is set to happen at all other plants throughout the Audi Group network by the middle of the next decade. For example, the Hungarian plant in Győr will likewise achieve carbon-neutral production as soon as next year.
- Audi sees a competitive advantage in operating sustainably as the basis of economic activity. As part of the new “Consistently Audi” strategy, the strategic goals therefore include sustainability. One vision is carbon-neutral2 mobility, where the entire life cycle of a vehicle is considered.
- When costing up its products, Audi gives CO₂ a price tag. This figure acts as a penalty on the product margin of combustion-engine vehicles with higher carbon emissions, and as a bonus on electric cars. Audi therefore creates compelling internal incentives for both the product and finances to develop more environment-friendly vehicles.
- The Audi e-tron serves as the blueprint for sustainable premium mobility.This vehicle,
the brand’s first fully electric model, is built in the carbon-neutral plant2 at the Brussels site. Audi will use the findings from its manufacture to bring new electric models to market faster and achieve carbon-neutral2 production in all Audi plants by mid-way through the next decade. Audi will have entirely carbon-neutral2 operations by no later than 2050.
- Audi is promoting the electrification of the product lines with even greater intensity. It aims to have 20 electric models in circulation by as early as 2025.