Prof.

Rupert Stadler

Speech

th
38 International
Vienna Motor Symposium
April 27, 2017 | Vienna
Audi
Communications

Prof. Rupert Stadler

Chairman of the Board of Management of AUDI AG

Speech at the 38th International Vienna Motor Symposium

Piloted, connected, emission-free:

Transformation of the Audi brand into
a digital premium car company

April 27, 2017

Check against delivery

Professor Lenz, ladies and gentlemen,

A trend has been apparent at this International Vienna Motor Symposium for some years now: We can no
longer talk about powertrains in isolation. The mobility of the future is linked like never before with the
power of digitization. And the requirements placed on urban mobility are higher than ever before. Our
customers want to have solutions for flowing traffic, giving them more time and cleaner air. I would
therefore like to talk to you under the heading of Piloted, connected, emission-free: transformation of the
Audi brand into a digital premium car company.

In 2018, a document that was written in this wonderful city will be fifty years old. The Vienna Convention
on Road Traffic is valid today in 74 countries of the world. It created standards for traffic regulations and
laws, and made road traffic significantly safer. But three years ago, the United Nations had to recognize
that the rules set in 1968 are no longer appropriate for the requirements of our time. Even the word
automobile has changed its meaning since then. About 130 years ago, it referred to the transition from
being driven to driving oneself because one no longer needed horses.

And now we are starting the next exciting chapter in the story of mobility. Auto-mobile now means
self-driving made possible by automation. And the passengers in the car will be able to use their time
differently. Let me recapitulate through which stages highly automated driving is developing. Level 0 is
driver only. Only the driver is active.

Level 1 is assisted. That means either with accelerating and decelerating or with steering. The driver
performs the other task. International regulations allow assistance systems on the proviso that the driver
can always overrule them or switch them off.

Level 2 is partially automated driving. The driver constantly monitors how in certain situations the car
steers, accelerates and brakes by itself for a few seconds. The driver has to intervene regularly. Thats the

38th International Vienna Motor Symposium | April 27, 2017 | Vienna

* The collective fuel consumption of all models named above and available on the German market can be found in the
list provided at the end of this speech. | 1
** This car is not yet on sale. It does not have type approval and is therefore not subject to Directive 1999/94/EC.
Audi
Communications

state of the art in cars today. Whether its called traffic-jam pilot or something else: No series-produced car
is allowed on the roads today with more than level 2.

Level 3 is called highly automated piloted driving. One and a half years ago, I gave an overview of piloted
driving to the transport ministers of the G7 countries at the Frankfurt Motor Show. Meanwhile, legislators
worldwide are working on the right framework for a responsible transition from the car driver to the self-
driving car. Within the EU, Austria, Germany and Sweden have made a lot of progress; in the USA, the
states of Florida and California. What exactly is allowed by level 3? With initial applications, the car takes
over the task of driving. The driver does not have to monitor the car. For the first time, the electronics and
not the human watch over the system. The driver can do something else as long as he remains ready to
pay attention, as the lawyers put it. In concrete terms, this means that the driver of an Audi will soon be
able to take his hands off the steering wheel in slow-moving traffic at speeds up to 60 km/h on highways,
and switch his attention to the data highway. I will describe to you what we have waiting for him there in
a moment. First, lets stay with level 3, piloted driving. When the system reaches its limits, the driver is the
fallback level. He will have sufficient time before he has to intervene. If he doesnt intervene, the car will
create a safe situation, by parking at the side of the road, for example. Artificial intelligence has made this
rapid development possible.

In a few years, we will reach level 4: fully automated driving on certain permitted routes. The definition of
this stage is that the car will in all situations be able to create a risk-minimizing condition. For example,
the highway pilot for the entire highway, also at high speeds. On permitted stretches of the road, the driver
will decide whether and when he wants to drive. On non-permitted stretches of road, he will drive himself.

The next stage is obvious: level 5. Here, an autonomous system controls the car without any need for a
driver, from the start to the destination. The so-called robo-taxi is an example. It will drive its passengers
through city centers by 2025 or 2030, and will need neither a steering wheel nor pedals. The technical basis
consists of self-driving systems that we have been developing since early this year in our own subsidiary,
Autonomous Intelligent Driving GmbH. The greenfield approach of a startup allows us to work separately from
existing car projects and to think outside the box. Autonomous Intelligent Driving is designed as an open
platform. Other car brands are just as welcome as technology partners.

But back to the year 2017. On July 11, our new Audi A8** will have its world premiere at the Audi Summit
in Barcelona, and in parallel also in the feature film Spider-Man: Homecoming. The Audi A8** will be the
first genuine Level 3 automobile. As soon as the legal framework is created in key markets, we will launch
this third stage of automation in the new Audi A8**, once again demonstrating our Vorsprung.

It is only now that computer power and billions of transistors on one chip allow complex image processing in
real time. We are working in this area for example with our Israeli high-tech partner Mobileye, which was
acquired by Intel a month ago. Mobileye currently produces the worlds best image-processing chip. Todays
series models such as the Audi Q7, Audi Q5 or Audi A4 use it to recognize lane markings, vehicles, traffic signs
and pedestrians.

But how does a car learn to accurately recognize and classify objects? In the past, our development engineers
had to define those objects manually to a great extent. For the new Audi A8**, we have used deep learning for
the first time. This means that the machine learns independently with the aid of deep neuronal networks. On
this basis, the Audi A8** has set a list of features that it uses to identify vacant, drivable areas, which is a major
precondition for safe piloted driving.

38th International Vienna Motor Symposium | April 27, 2017 | Vienna

* The collective fuel consumption of all models named above and available on the German market can be found in the
list provided at the end of this speech. | 2
** This car is not yet on sale. It does not have type approval and is therefore not subject to Directive 1999/94/EC.
Audi
Communications

And now just imagine what you would do in a car if you could let go of the steering wheel. I am sure you
would feel like I did on my first test drives. You would have a completely different feeling for time. With
this potential, every driver stressed by traffic jams thinks about how the journey time could be used more
productively. He or she will soon be able to lean back and relax, or do some work. And then it doesnt really
matter if the journey lasts a few minutes longer.

We at Audi call the time gained in the car the 25th hour, which we give our customers every day. This has
far-reaching consequences. Think of a consultant with an hourly rate of 250 euros. Just gaining half an
hour on the way to work and back could add up to 50,000 euros more revenue in a year. This quickly results
in a business case. What our modern society desires above all is more time. Time to think, time for
creativity, time to relax and above all, time for family and friends. Time is the new premium.

With piloted driving, the car is more than a means of transport. It becomes a place of concentrated work
and added value. It becomes a place of refuge, in line with the cocooning trend. The car of the future might
even be a rolling bed that allows us to sleep for a while on long journeys.

One thing quickly becomes clear: Piloted and connected go together. And we are developing a digital
platform that creates added value for our customers; because in the digital age, a premium brand brings
together its customers and fans online and offers solutions for the complete mobile experience. By 2025, we
aim to have ten million Audi customers on our digital platform, which will offer entertainment, shopping and
convenience solutions.

The car of the future, as I see it, will assume new roles with its artificial intelligence: a chauffeur, who takes
me safely to where I want to go. A secretary, who reminds me when and where I have to do something. A
butler, who picks up my shopping from the supermarket. A postbox on wheels, into which couriers can
deliver parcels. A personal doctor, who monitors my vital functions. And even an empathic companion
through the day, who detects my moods and adjusts light and music accordingly. The Audi of the future will
think with its occupants. To do so, it will need fast Internet, a lot of data and artificial intelligence to evaluate
that data.

For the fast Internet, we will this year be the first brand worldwide to integrate the new LTE Advanced mobile-
communication standard in our cars. This standard allows upload speeds of up to 50 Mbit per second and
download speeds of up to 300 Mbit per second, which is three times as fast as glass-fiber speeds and three
times as fast as todays download speeds in cars. It will allow ultra-HD video streaming in cars, for example.
We recently presented the lightning-fast LTE Vehicular system with Vodafone and Huawei at the Mobile World
Congress in Barcelona and the CeBIT trade fair in Hannover. Thats the version of LTE that is specially adapted
for the automobile. A decisive factor is delay time, which is to be reduced to less than a millisecond. This will
allow cars and other smart objects to communicate their position and status in the Internet of things almost in
real time. LTE Vehicular will allow the fast exchange of data with traffic lights and road junctions for example,
and also with other cars even if they are beyond the range of a transmitter mast, it can be done directly.

There are even considerations of all road users, including pedestrians, communicating their positional data in
this way. This expands the horizon of conventional vehicle sensors: beyond the drivers field of vision; enhanced
with radar, ultrasound and cameras in the car; and in the future with the help of theoretically unlimited
volumes of data. This means the car can see far ahead and even around the corner. And it will also receive big-
data traffic forecasts through the extrapolation of real-time information and empirical values. In this way,
dangers can be recognized even earlier and accidents can be avoided.

38th International Vienna Motor Symposium | April 27, 2017 | Vienna

* The collective fuel consumption of all models named above and available on the German market can be found in the
list provided at the end of this speech. | 3
** This car is not yet on sale. It does not have type approval and is therefore not subject to Directive 1999/94/EC.
Audi
Communications

In the future, we want all relevant information from one car to be provided to all other cars in the same
second. The gathering point for that is the high-definition traffic map from our digital map provider, HERE. You
can imagine it this way: The data generated by all cars will be used to create a reality index in real time. It will
one day describe the world to the nearest centimeter, by entering all information on smart objects into the
map with a kind of date-time-place-stamp. Cars will report to HERE on sudden braking maneuvers or road
blocks registered by their sensors or cameras. Thats the next step towards the smart city.

And that brings me to the third part of my talk: The automobile of the future must be emission free. Thats
important for our cities if we want them to remain as attractive and pleasant to live in as Vienna. Ive just come
back from Shanghai, a megacity with 23 million inhabitants. There, we presented to the world our
Audi e-tron Sportback concept as a project for 2019. It will be our second electric car, following the launch of
the Audi e-tron in 2018. Both e-trons will have a range of more than 500 kilometers, offering everyday
practicality for the first time in our core premium segment.

The e-tron range breaks with our brands nomenclature and thus marks a turning point just like the
Audi quattro, which already revolutionized the drive train back in the 1980s. As you can see, we are making use
of the creative possibilities that arise when the absence of a combustion engines means that we no longer need
such a large air intake. Or inside the car, when the lack of a transmission means that there is no more central
tunnel and the passengers have additional space. Together with a premium electric car in the compact
segment, we will put three electric cars on the roads by 2020. And we assume that every third Audi sold will
have partial or full electric drive by the middle of the next decade.

Three weeks ago, we announced a strategically important cooperation for the next decade. Together with
Porsche, we will develop a shared vehicle architecture for the premium electric cars of the coming decade. We
are combining our strengths and focusing our energy. This means a significant reduction in the number of
drivetrain versions over the long term; because we can only create the resources required for the electric drive
systems of the future by reducing complexity in the area of conventional drive.

In parallel, we are developing synthetic fuels with the goal of climate neutrality. Audi e-gas for example, which
is used by the Audi A3 g-tron* / Audi A4 g-tron* / Audi A5 g-tron* for their dual-fuel combustion engines. This
e-gas binds CO2 from the air with the use of excess eco-friendly electricity. This is also an offer to change over.
As every change in customer behavior takes time, the combustion engine will keep its place in the model
portfolio during this transformation phase also in the next decade. Im sure you will hear that soon from other
speakers as well, especially in the talk by Dr. Bulander from Bosch. So the mix of drive systems will be a feature
of this historical phase of transformation.

In the medium to long term, the mix of professions in the automotive industry will also change. To the same
extent that electric motors, batteries and fuel cells are gaining importance, the relevance of electronics and
informatics, of big data and virtual reality is also increasing. The digital transformation is a key enabler on the
way from hardware producer to mobility provider; because in a few years, we will generate a substantial
proportion of our business in the areas of software and services.

Ladies and gentlemen,

calls for startup qualities are often heard. But what does that really mean? Discarding our neckties and
using first-name terms with everyone as of tomorrow? Chilling out and putting prototypes on the market in
their beta stage? I dont think so somehow. When I encourage my Audi people to adopt startup qualities, I
mean firstly speed, as if it were a matter of survival like at a startup. Secondly, I mean focusing on the one

38th International Vienna Motor Symposium | April 27, 2017 | Vienna

* The collective fuel consumption of all models named above and available on the German market can be found in the
list provided at the end of this speech. | 4
** This car is not yet on sale. It does not have type approval and is therefore not subject to Directive 1999/94/EC.
Audi
Communications

ideal solution; and not trying out everything as if there were unlimited funds available. Third, I mean
having the courage to make all-or-nothing decisions.

With this approach, the automotive industry can compete with the new players from the IT industry of
Silicon Valley or China. We have mastered the hardware for over a century, and that will continue to be the
starting point for automotive engineering in the future.

Ladies and gentlemen,

we are facing a far-reaching transformation. This is a shared task for our entire industry.
Thank you.

End

Contact

Jrgen De Graeve
Corporate Communications
Tel.: +49 841 89-34084
juergen.degraeve@audi.de

38th International Vienna Motor Symposium | April 27, 2017 | Vienna

* The collective fuel consumption of all models named above and available on the German market can be found in the
list provided at the end of this speech. | 5
** This car is not yet on sale. It does not have type approval and is therefore not subject to Directive 1999/94/EC.
Audi
Communications

Fuel consumption of the models named above:

Figures depend on the tires-/wheels used as well as the transmission version.

Audi A3 Sportback g-tron

CNG consumption in kg/100 km: 3.6 3.3
Combined fuel consumption in l/100 km: 5.5 5.1 (42.8 46.1 US mpg)
Combined CO2 emissions in g/km (CNG): 98 89 (157.7 143.2 g/mi)
Combined CO2 emissions in g/km: 128 117 (206.0 188.3 g/mi)

Audi A4 Avant g-tron

CNG consumption in kg/100 km: 4.4 3.8
Combined fuel consumption in l/100 km: 6.5 5.5 (36.2 42.8 US mpg)
Combined CO2 emissions in g/km (CNG): 117 102 (188.3 164.2 g/mi)
Combined CO2 emissions in g/km: 147 126 (236.6 202.8 g/mi)

Audi A5 Sportback g-tron

CNG consumption in kg/100 km: 4.3 3.8
Combined fuel consumption in l/100 km: 6.4 g 5.6 (36.8 42.0 US mpg)
Combined CO2 emissions in g/km (CNG): 115 102 (185.1 164.2 g/mi
Combined CO2 emissions in g/km (gasoline): 144 126 (231.7 202.8 g/mi)

38th International Vienna Motor Symposium | April 27, 2017 | Vienna

* The collective fuel consumption of all models named above and available on the German market can be found in the
list provided at the end of this speech.
** This car is not yet on sale. It does not have type approval and is therefore not subject to Directive 1999/94/EC.