Audi is finally trying their hardest to break into the EV market, but it seems like they’re running into some unexpected issues. Due to a lack of battery supply, Audi was forced to briefly shut down production of its e-tron. Could this spell doom for the automaker’s future EVs?

Supply chain issues

Audi is learning what Tesla had to learn long ago, battery suppliers can almost never meet your demand. Tesla has spent billions on battery factories, and its partnership with Panasonic alleviates their supply chain woes.

Audi is betting big on the e-tron. They’ve gone so far as to run a(not so great) Superbowl commercial. And they hope to sell as many as 80,000 of them this year. But their battery supplier, LG Chem, won’t nearly be able to meet that demand.

In this past week, Audi has had to temporarily pause production of the e-tron because they just didn’t have enough batteries. Audi will likely have to start looking for other suppliers to fill in the gaps. And without any prearranged deals they’ll likely take a hit on battery cost.

What’s the hold-up?

Manufacturers like Tesla, GM, and Toyota have invested heavily in partnerships with battery suppliers. This is why Tesla is able to keep ramping up production while Audi has to put things on hold.

Audi is in a really tough spot here. They won’t be able to ramp up production of the e-tron without heavy investment into battery production. I’ve seen many manufacturers fall into this trap trying to follow the same supply chain model as ICE cars.

Traditionally manufactured ICE cars often have parts from dozens of suppliers. This keeps things cheap and means the manufacturer only has to handle the final assembly. This model does not work for electric cars. Batteries simply are not available in the quantities required for most manufacturers. Sourcing batteries in this way without a battery partner just makes things more expensive and leads to issues.

Our take

As it is right now I think I’m willing to write off any EV company that doesn’t have a reliable battery partner. Audi’s struggles are unfortunate, but not unexpected. But hopefully, the problems they’re having now don’t scare them away from the EV market. I’d love to see a true competitor to Tesla. But they have a huge head start securing their supply chain, and this proves that might be their biggest advantage.

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