Penske: Audi e-tron's slow start worrisome

LOS ANGELES — Since it went on sale in April, the Audi e-tron — the first EV from Volkswagen Group's premium brand and the tip of the spear in the automaker's $66 billion, multibrand global electric offensive — hasn't exactly electrified the market, and that has at least one big name in auto retailing worried about the industry's battery-powered future.

Electric vehicles "have not had the lift that [the industry] expected," Roger Penske, CEO of Penske Automotive Group, told analysts last month on an earnings call, specifically calling out the Audi e-tron's slow retail start.

Penske said there had been "significant cancellations" of e-tron preorders, and the main issue was affordability.

"I think there is some sticker shock. The customers that thought these would be more affordable, like a Q5. But when you're looking at an $80,000 vehicle in a $1,500 payment, it gets — it's really aggressive from the OEM standpoint," Penske said.

Through October, the Audi e-tron had rung up 4,002 U.S. sales. At last week's Los Angeles Auto Show, the brand showed off a sportback derivative of the e-tron that will be on the market next year. Three other EV models are due in Audi dealerships within the next several years, part of Volkswagen Group's EV onslaught.

Speaking to Automotive News at the show, new Audi of America President Daniel Weissland said the brand is "still at the beginning of a transformational phase into electrification" and asked for patience.

"I think we're pretty happy with our [e-tron] sales numbers," Weissland said. "November is the strongest month ever now on e-tron sales, so we really see a tick up. The question is always, 'What do you compare it with?' You can't compare the e-tron with a car which is $20,000 or $30,000 less expensive."

Weissland said that within its segment, "the e-tron is very successful" and that as electrification expands across more automakers and brands, acceptance of EVs will grow, too.

"It's great to get more electric vehicles into the market, because you know, customers need to embrace electrification," Weissland said.

"We want to protect the planet. We want to provide a sustainable future for our children, our grandchildren. The more brands joining the electrification road map, the better it is."

He said dealers and customers "need to embrace the change towards an electric future, but we'll get there."

Still, for dealers, profitability remains a concern as they are asked to stock EVs on their lots before consumers are willing to make a change.

"These vehicles coming out, there was expectation by the OEMs that they would be just snapped off the dealership," Penske told Automotive News in October.

On the earnings call, Penske said that in addition to cost, limitations of EVs in general remain a concern for consumers.

"There is no question today they're expensive, and everyone has range anxiety, and to me, what's going to be the residual value at the end?" Penske said. "So there's lots of questions. But when you think about it, it's the premium luxury vehicle, [and] most people have ... another car in the garage. So the growth is going to be slow."

Penske said that watching Tesla struggle to earn a return from its sales of EVs weighs on dealers, even as automakers begin to flood their lots with EVs.

"From a margin standpoint, I know one of our stores in Northern California probably will sell six or seven [e-trons in October] and has got 30 in stock. So that certainly has pressure on margin," Penske said.

Melissa Burden contributed to this report.