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Audi is teaming up to build a Tesla competitor

Powerful battery in Audi electric car with cell modules from LGPowerful battery in Audi electric car with cell modules from LG
Audi plans to develop a battery for an all-electric SUV using cell modules from South Korean suppliers LG Chem and Samsung SDI.Courtesy of AUDI AG

Audi is partnering up to develop a battery designed for an all-electric SUV with a range of more than 310 miles, putting the company in direct competition with Tesla’s upcoming Model X.

Under the deal announced Thursday, LG Chem (LGCLF) and Samsung SDI (SSNLF) will supply Audi with batteries produced at their European plants. The South Korean tech companies will also invest in cell technology in Europe.

The aim, it appears, is to develop an all-electric SUV that can compete with its luxury counterpart Tesla (TSLA). The partners are also trying to bring production of the latest battery technology to Europe.

Audi board member for procurement, D. Bernd Martens, intimated that very point in a statement released Thursday. “Together with our South Korean development partners, we are bringing production of the latest battery‑cell technology to the EU and strengthening European industry with this key technology,” Martens said.

The end goal is to make electric cars—which still lag behind gas-powered vehicles—more attractive to customers.

The companies didn’t disclose a production or development timeline for the battery, or how much would be invested in the project. Audi didn’t provide any details about the SUV’s design either. However, we do know that Audi plans to show a concept for a future Audi Q6 coupe at the Frankfurt Motor Show next month. An all-electric version of the Q6 would likely fall under Audi’s e-tron family, a series of electric and hybrid vehicle concepts that debuted in 2009. The 2016 A3 e-tron plug-in hybrid is the first to go into production.

A number of automakers like Daimler AG’s Mercedes Benz unit and BMW are ramping up electric and plug-in hybrid vehicles, largely to comply with emissions regulations in Europe. However, Audi’s new project seems geared more for North America, where SUV sales continue to soar. It would also offer customers in the U.S. an alternative to Tesla’s much-delayed gulf-winged Model X SUV, which is expected to be delivered to customers who pre-ordered the car in September.

Last year, LG Chem struck a deal with Audi to supply the automaker with batteries for plug-in gas-electric hybrid vehicles. At the time, LG Chem said the batteries would be used in Audi’s next-generation plug-in hybrid vehicles.