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German auto giant Audi is planning to cut costs in an attempt to back its move to electric vehicles (EVs), helping the carmaker progress from the emissions scandal that distressed its parent Volkswagen Group.

Sources familiar with the matter have stated that Audi will be trimming €10 billion ($12 billion) in spending by 2022 by means of slashing research and development expenditures.

The luxury car brand is also planning to build a new platform together with Porsche which could help both automakers to save money through sharing mechanical modules and electronics therefore allowing more funds to go into electrification technology.  

Moreover, two sources said that even with the additional expenses for Audi’s EV plan, it still wants to maintain its operating profit margin at 8 percent for at least a year. Its profit margin for the first half of this year was 8.9 percent.  

Audi’s Five New Vehicles

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As part of Volkswagen Group’s shift in to eco-friendly cars, Audi, its major source of profit, will also be bringing five new EVs to the market in the coming years.

The automaker is set to begin its EV move by next year, starting with the e-tron quattro, a five-door sport utility vehicle (SUV) to be developed in Brussels in 2018. A four-door Sportback version of the e-tron is likely to come out in 2019.

The e-tron quattro will include three electric motors and is likely to cover a range of about 500km while the Sportback is expected to make 320 kilowatt and run from 0-100km per hour within 4.5 seconds.

Dieselgate Scandal

Audi’s plan to cut spending is also for the purpose of helping Volkswagen to move on from the Dieselgate scandal two years ago which cost the company millions of car recalls worldwide, resulting to its first quarter loss for 15 years, of €2.5 billion ($2.9 billion) in late October.

Volkswagen confirmed using prohibited software in 11 million vehicles around the globe. It also agreed to pay more than $20 billion in civil and criminal settlements and penalties in the US. Four of the seven top executives are also set for dismissal in the near future.

In regard to the issue, Audi decided to recall 850,000 diesel cars so they would be equipped with new software to remove toxic gas emissions. The auto giant said that this move will counteract possible bans on vehicles with diesel engines.

Responding to the matter, the German government will be meeting with major automakers in an effort to solve diesel emissions.

Chief executives of Audi, Porsche, Daimler, Ford’s German branch, and Opel are invited to attend the meeting happening on Wednesday, along with several ministers and governors of German states that are auto business centers or mainly affected by nitrogen oxide discharged.    

Germany has already received a warning from the European Commission concerning its bad air quality. On Friday, a court in Stuttgart came to a conclusion that banning older vehicles would be the best solution in reducing the pollution and securing public health.

However, this kind of rule could greatly affect those using the said cars as they cover about one-third of the whole on the country’s roads.

Other countries, including Britain and France, have stated extreme measures to resolve the issue even though implementation is still far from happening.

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