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Audi will start building its first purely electric sport utility vehicle in 2018 in Brussels, part of the Volkswagen AG luxury division's push to move beyond the diesel-emissions scandal by embracing cleaner technologies.

The Belgian plant will make both the car and its battery, positioning the site to supply powering systems for other Volkswagen vehicles as well, the company said. The move means a shuffle among other Audi production sites, with the A1 city car shifting from Brussels to Martorell, Spain, where Volkswagen's Seat brand makes vehicles, and the Q3 SUV currently built in Spain moving to Hungary.

The electric SUV is a challenge to Tesla Motors Inc.'s Model X, which went on sale in the US last year. It'll have a range of more than 310 miles on a fully charged battery, which would be slightly farther than Tesla's model. It's the first in a set of all-electric efforts from Audi, after Chief Executive Officer Rupert Stadler promised last year that more purely battery-powered models will be the nameplate's "answer to the diesel issue."

Incentives needed

The Volkswagen scandal might provide the push needed to accelerate a broader industry trend toward electric cars, Joerg Hofmann, chief of the IG Metall union, said last week at a press conference in Frankfurt. State help will also be needed, he said.


"The German government must finally show its colors" if it wants the country to be a leading market for battery-powered cars, Hofmann said. "This requires tax breaks and direct investments in infrastructure and incentives."

The Brussels plan sparked concern from Audi's works council chief, Peter Mosch, who represents employees on the unit's supervisory board, about whether the carmaker's two main factories in Germany would miss out on the electric-vehicle strategy.

"Production must not only focus on international locations," Mosch said in an e-mailed statement. "Our domestic factories are the strongest engines of our success."


While Volkswagen has struggled to reach agreement with US regulators on a fix for rigged diesel engines, Audi has proven more resilient than VW's mass-market nameplate. VW-brand sales dropped 4.8 percent in 2015, the marque's first decline in 11 years, while Audi's deliveries climbed 3.6 percent.

Naomi Kresge can be reached at nkresge@bloomberg.net; Christoph Rauwald at crauwald@bloomberg.net.