Audi teaming up with LG Chem, Samsung for electric SUV batteries

Deal will result in cells for German luxury brand's alternative to Tesla's Model X.

Audi has announced that it is teaming up with LG Chem and Samsung SDI to manufacture high-capacity batteries for a new range of pure-electric SUVs. The German automaker and LG Chem previously announced a separate deal to develop batteries for gas-electric hybrid vehicles in August of last year.

The goal of Audi's new partnership with the South Korean battery giants is to assemble packs with a range of over 500 kilometers -- 310 miles -- but as Green Car Reports points out, it's important to note that the range target is likely modeled on the European testing cycle, which tends to result in significantly longer range estimates than the EPA test. Thus, a US range of 240 miles -- about the same as a Tesla Model S P85D -- is probably more likely.

Speaking of Tesla, the Silicon Valley automaker previously stated it plans to start delivering the first of its Model X utility vehicles to customers later this year. That's the same premium, electrified turf that Audi has had its eye on for some time now. The Volkswagen Group luxury brand has been telegraphing that it plans to enter the luxury e-SUV space in the near term, and a Q6 concept version of just such a model is slated to debut at September's Frankfurt Motor Show. The show car is expected to ride atop a version of the VW Group's MLB modular architecture, and is rumored to have a three-motor powertrain good for over 500 horsepower.

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Audi A3 e-tron charge port. Audi

The battery deal, which will see cells manufactured in Europe, is is being viewed as a logical expansion of Audi's e-tron plug-in vehicle initiative, a project that first surfaced in 2009. The company's initial production offering, the 2016 A3 e-tron plug-in hybrid, is coming to the US this October.

Thus far, electric cars have proven to be very slow sellers (Tesla's Model S being the notable exception). That troubling financial reality has been compounded by the fact that the development of EV hardware requires significantly more capital than an equivalent traditional internal-combustion power train. Despite this cost gap, automakers' EV programs continue apace, if only to meet increasingly strict government regulations.

e-SUVs like the forthcoming offerings from Audi are perhaps the most likely segment to result in profitable pure-electric vehicles, a longstanding bogey that has thus far eluded all manufacturers, including Tesla and high-volume automakers such as General Motors and Nissan. That's because consumers have shown a willingness to pay a significant premium for SUV attributes like a higher seating position, added cargo room and the presumption of increased capability and safety in foul weather and poor road conditions. Since SUVs don't cost much more to build than the sedans and wagons upon which they are often based, these vehicles have proven to be key industry profit drivers.

The terms of Audi's deal with LG Chem and Samsung have not been disclosed.

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