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Western Europe Automotive Insights
 June 1, 2008
LENGTH: 398 words
HEADLINE: Audi Plans To Run On Sanyo Hybrid Batteries

Audi, the luxury unit of Volkswagen, is planning an alliance with the Japanese electronic giant Sanyo to develop a pilot hybrid project for the Volkswagen Group.

The alliance could result in Sanyo batteries and other electronic components being used in future models of the Volkswagen group. According to a German newspaper, the two parties will work on a combined project worth EUR1bn for the development of advanced battery technology and electronic components.

Former CEO of the company, Bernd Pischetsrieder, had plans of spending in excess of EUR2,000 on production of each hybrid vehicle than conventional alternatives. However, succeeding CEO Martin Winterkorn considered the expenses too high and the business case too weak. A decision was therefore made to concentrate on more efficient internal combustion engines to help reduce fuel consumption. VW group now has fallen behind its rivals in terms of its hybrid programme. Audi CEO Rupert Stadler revealed that the company was at least five to 10 years behind in its production of electric vehicle from Audi.

Development of a fuel saving technology is now a prime priority for the company in view of the strict EU emission regulations. Industry sources have revealed that electric cars will be in focus as the company is looking to make zero emission vehicles within 10 years. Mr Stadler from Audi finds great prospects in electric cars and foresees battery technology dominating in the coming years.

Following the huge success of Toyota's Prius, whose sales are reported to be up over 50% year-on-year (y-o-y) in February 2008, the major players in the German auto market have jumped in to prove their environmental credentials. All vehicle manufacturers have been working on long-term alternatives to fossil fuels, like bio-fuel engines and fuel cells or hydrogen technology. However, the 2012 legislation means they will have to invest heavily in interim technologies such as hybrids.

Audi is one of the most successful brands in the Volkswagen Group in Europe and any alliance with this brand will play a fundamental role in the group's plans for growth. If the deal between Audi and Sanyo comes through, BMI sees it as a major step towards electric car development by Audi. For VW, it would mean a viable solution for the development and supply of hybrid cars, while keeping pace with its rivals in terms of its hybrid programme.
LOAD-DATE: May 9, 2008
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