Recently, Audi announced it would abandon its plan to stop producing internal combustion engine (ICE) vehicles by 2033, marking a significant shift in the automotive industry’s electrification efforts. While the industry is still waving the flag for pure-electric transformation, this German giant has redefined the pace of its transition with the word “pragmatic” — not a retreat, but a smarter balance found through the market and technological dynamics.
From “aggressive pure-electric” to “oil-electric parallel”: What is Audi calculating?
When Audi declared in 2021 that it would stop producing gasoline vehicles by 2033, it was seen as a dramatic break from traditional automakers toward electrification. However, with global sales dropping by 11.8% and a 10.9% decline in the Chinese market in 2024, Audi had to face a hard truth: at the time when the electric vehicle (EV) penetration rate in Europe had just crossed 20% and China had barely surpassed 30%, pushing solely for pure-electric vehicles was essentially a gamble with market share.
The more critical technological bottleneck is the delayed development of the SSP pure-electric platform, which was supposed to carry the electric transformation for Volkswagen Group. Due to delays by the group’s software division, CARIAD, the platform won’t be ready until at least 2029. Rather than releasing half-baked electric cars and damaging the brand, Audi has opted for a plug-in hybrid (PHEV) transition — in 2025, Audi will launch 10 new plug-in hybrid models, such as the A6 and Q5, featuring “rechargeable fuel-powered hearts,” with an electric range of 80 kilometers, satisfying emissions regulations while also giving consumers a choice.
F1 isn’t a gimmick, it’s a “technology gilding” for internal combustion engines
Audi’s decision to enter Formula 1 in 2026 hides a clever logic for extending the life of internal combustion engines. F1’s new regulations require the use of 100% synthetic fuel from 2026, a technology that could be directly applied to RS high-performance cars. Imagine the next-generation RS6 plug-in hybrid: 500 horsepower and F1-derived fuel technology, which could claim “carbon-neutral fuel driving” while keeping performance enthusiasts hooked on the iconic engine sound.
Even more brilliant is Audi’s branding strategy: while Mercedes and BMW are getting caught up in the electric vehicle parameters, Audi uses F1 technology to “gild” its gasoline vehicles. By labeling its internal combustion engine cars as “F1-derived,” Audi immediately boosts their premium value. This approach is reminiscent of Porsche leveraging its Le Mans racing credentials to back up hybrid technology — a textbook example of commercial logic.
Abandoning small electric vehicles, Audi is playing a high-end game
One key detail in this adjustment is Audi’s explicit decision not to enter the budget electric car market, like Volkswagen’s ID.2, but instead to announce an A3-sized electric vehicle in 2026 and lead the development of the Volkswagen Group’s high-end SSP platform. This indicates a shift in its electrification strategy towards “high-value markets” — small cars are less profitable, so it’s better to focus resources on models like the A6 and Q7, which are mid- to large-size vehicles.
More decisively, the SSP platform has been modified to be “oil-electric compatible” — it seemingly prolongs the life of internal combustion engines, but in reality, it’s a flexible solution for the transition. This platform can accommodate electric vehicles, range extenders, or even gasoline engines, offering a fallback if the electrification process faces delays.
The collective awakening of traditional automakers: Electrification isn’t black-and-white
Audi’s pivot exposes a truth about the industry: carmakers who once declared “all-in on electric” are now moving to a “dual-track” approach. Mercedes retains AMG gasoline performance cars, BMW still offers a 3.0L six-cylinder option for the X5, and Volvo hasn’t entirely ditched internal combustion engines. Why? Because while EV penetration is increasing, factors like charging infrastructure, battery costs, and consumer habits are still not fully established.
Audi’s intelligence lies in returning to the commercial essence: not treating electrification as a political correctness, but responding to market demand. While other brands struggle with whether gasoline is “outdated,” Audi uses a combination of “F1 technology backing, plug-in hybrid transition, and platform compatibility” to both secure its base and explore the future.
Industry shockwaves: The ripple effect triggered by Audi’s decision
Audi’s strategic shift has created strong ripples in the industry. For component suppliers, many who had already been restructuring for pure-electric transformation now face the need to reassess and adjust their production plans. For example, companies that had focused on fuel engine components and were planning to reduce production capacity for electric vehicle parts can now breathe easier and rework their production schedules. For battery suppliers, while Audi will continue to push electric models, the slower pace of electrification means that the expected order growth may decrease, requiring a reevaluation of market strategies.
On the competitive front, Audi’s move also provides a new perspective for other luxury carmakers. Brands like Tesla, which have always positioned themselves around pure-electric technology, will now face competition from Audi’s fuel-electric parallel strategy, allowing Audi to hold onto market share in the short term with gasoline and plug-in hybrid models while accumulating funds and technological expertise before fully transitioning to electric.
Future challenges and opportunities
While Audi’s oil-electric parallel strategy shows flexibility and foresight, the future remains full of challenges. On the policy front, the European Union’s 2035 ban on gasoline vehicles still looms large, and Audi needs to meet regulatory requirements while ensuring a smooth transition. In the market, consumer acceptance of the brand’s strategic shift remains uncertain. If Audi mishandles the balance between gasoline and electric vehicles, it could lose consumers who are committed to the pure-electric, eco-friendly concept.
However, Audi also has unique opportunities. As synthetic fuel technology develops, large-scale commercialization could not only help Audi sustain its advantages in the gasoline vehicle field but also build a brand image of sustainability. Additionally, Audi’s strong presence in the high-end market provides solid brand support for its electric vehicle development. As long as Audi can achieve breakthroughs in electric technology, it still has the potential to secure a strong position in the luxury electric vehicle market.
Automotive transformation has never been a simple, one-size-fits-all revolution. It’s a dynamic balance of technology, market forces, and policy. Audi’s adjustment this time is less of a compromise and more of a sign that a traditional giant has regained its “rhythm” in the electric vehicle marathon — after all, the ones who laugh last are never the fastest, but those who know how to pace themselves.
