How Will Audi's Electric Vehicles Stack Up Against Tesla Motors?

By Markets Fool.com

Last year's Audi e-tron quattro conceptvehicle wassaid to be aclose preview of the electric luxury SUV Audi will offerstarting in 2018. A big sedan built onthe same underpinnings will follow. Image source: Audi.

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German luxury-car maker Audi (NASDAQOTH: AUDVF) has confirmed plans for a big all-wheel-drive electric sedan that will be aimed directly at Tesla Motors' (NASDAQ: TSLA) Model S.

In a conversation with Autocar, Audi CEO Rupert Stadler said the sedan would be one of three premium battery-electric vehicles in Audi's global product lineup by 2020.

How the upcoming electric Audis will compare to Teslas

Audi has already confirmed that its first "premium electric vehicle" will be an SUV that is set to go into production in the first half of 2018. Audi's "e-tron quattro concept" from last year's auto show in Frankfurt is thought to be a very close preview of that new SUV, which will probably be called the Q6 e-tron.

The platform underpinning that SUV will serve as the basis for the new sedan, according to Autocar. It's made mostly of aluminum, and it uses three electric motors -- one in front and a pair in the rear. Together, they will produce 429 horsepower in the SUV, Audi has said, with a "sport mode" that can temporarily lift the motors' output to almost 500 horsepower. Audi is promising a range of 500 kilometers (311 miles) or more on the European testing cycle, which probably translates to around 260 miles of range under the stricter U.S. standard. (But it's very possible the range of the production version will be higher than Audi has promised.)

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That's well shy of the 700-plus horsepower put out by the top-performing versions of Tesla's Model S and Model X, but keep in mind that the specs Audi has announced probably apply to the base versions of its new electric vehicles. Audi won't hesitate to offer higher-performing versions (at higher prices, of course) if there's demand.

Audi will almost certainly have other features that help differentiate its electric vehicles from Tesla's offerings. For starters, the company will leverage its decades of experience with high-performing all-wheel-drive configurations. Speaking to Autocar, Audi research and development chief Stefan Knirsch promises "significant differences" in the driving experience in part because of the ways in which the electric Audis will send power to the individual wheels.

Audi also plans to offer wireless inductive charging, possibly as an extra-cost option, with an "autonomous parking function" that will automatically center the car over its charging plate.

The sedan might be Audi's future flagship

We can assume that much of what we know about the SUV will be true of the sedan. But the sedan might be positioned even higher in the lineup: Stadler told Autocar that the new electric Audi sedan will be positioned "as high up as possible, in the A8 segment."

The A8L, a longer-wheelbase version of the A8, is Audi's current top-of-the-line sedan. Image source: Audi.

The A8 is Audi's current flagship sedan. At one point, it was thought the company was working on an "A9," a longer, plusher sedan that would sit above the A8 in its lineup. It's possible the new electric Audi sedan will wear an "A9" badge -- and that it will be priced accordingly.

A new product category might be emerging: Big electric luxury sedans

It's an interesting idea. Battery-electric drivetrains would seem to offer exactly the kind of experience one would want in a huge, opulent luxury sedan -- namely, tremendous power potential with near-silent operation, without the social stigma attached to huge gas-guzzling limos.

Such a vehicle could find a ready market in China, where it's common for affluent executives to hire drivers to deal with the daily commute, and where zero-emissions vehicles are increasingly favored under regulations in China's smoggy cities.

Audi rival Daimler (NASDAQOTH: DDAIF)is known to be developing four electric Mercedes-Benz models, and reports have suggested that a big sedan will be among them. It's possible we're seeing the emergence of a new product category: Huge, opulent luxury sedans powered entirely by batteries.

Such sedans won't sell in huge numbers globally, but they should be very profitable products and will help raise the image of electric cars around the world.

The upshot: Serious competition for Tesla is finally on the way

Electric-car advocates probably feel the industry is moving at a snail's pace, but that's how it goes in the auto business. Tesla has shown the industry that there's a market for well-thought-out "premium electric vehicles," and the industry is responding.

Audi's efforts are part of a larger push by corporate parent Volkswagen (NASDAQOTH: VLKAY) into electric cars at all tiers of the market. But Audi will probably be the first to directly compete with Tesla when its electric SUV launches in 2018. Whether it shines or falls on its face will tell us a lot about the industry's prospects for competing with the Silicon Valley upstart -- and vice-versa.

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John Rosevear has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.