By Christoph Steitz

FRANKFURT – Audi premium car brand, Volkswagen (DE)’s largest profit contributor, needs to resolve a continuous shortage of auto chip chips every day, said its chief executive.

“We enjoyed a strong 2021 first half. The second half will be much less strong, we expect. We really have trouble,” Markus Duesmann told Reuters ahead of the Reuters Events Automotive conference https://reutersevents.com/events/automotive/?gclid=EAIaIQobChMIo5H4j5Cw8wIViOF3Ch34xAcgEAAYAiAAEgKrQvD_BwE, calling the situation “a perfect storm”.

Duesmann’s remarks highlight the challenges global carmakers face in dealing with a global chip shortage that has impacted car production all over the globe.

However, despite the fact that vehicle sales are down in the auto industry, it has managed to soften the impact through price hikes which have increased margins.

Audi said in July it could not build mid-five-digit numbers of cars in the first two years. However, its profit margin grew to 10.7% in that period. This was even higher than the 8% it had before the pandemic.

Duesmann also serves on Volkswagen’s management board. He said, “We are handling it fairly well I would think.” According to Duesmann, the group is seeking closer ties and the belief that the carmaker will emerge from this crisis stronger.

He said, “But for the moment it is a daily troubleshooting process.”

Audi, responsible for nearly a quarter Volkswagen’s first-half operating profits, has made a major shift toward battery-powered vehicles. This means that all its new models from 2026 onwards will be completely electric.

In the meantime, internal combustion engines are being gradually eliminated until 2033. Audi’s chief financial officer, in August, stated that electric vehicle (EV) profitability would be comparable to combustion engine cars within 2-3 years.

Duesmann suggests that it could be even faster.

Electric cars will soon be as profitable as traditional combustion engine cars. This is the point when electric cars are able to make as much as conventional cars. Duesmann explained that the prices for electric cars are almost equal right now.

Volkswagen (NASDAQ:) is also trying to take on Tesla (NASDAQ;), and to be the most successful seller of EVs worldwide. It is increasing its effort to create software. Herbert Diess, CEO, said that it is the true gamechanger in the sector.

Audi CEO Duesmann stated previously that Volkswagen would produce most of the automobile software necessary for the company’s transformation by itself and that partnerships were too premature.

Duesmann stated that “it would reduce speed and add complexity at the moment.” While we can share our platform software with automotive companies, it’s not feasible in the short-term or long-term. This would take place over a period of 5-10 years.

Duesmann is a former BMW Executive and now has responsibility for the luxury brands Lamborghini Ducati, Bentley, and Bentley, which were brought under the Audi umbrella.

The 52-year old Ducati enthusiast dismissed the rumors of one being sold.

Duesmann stated that these brands are “very valuable, very profitable brands,” and where there is potential to expand the level of synergy in the future. There are no plans to eliminate them.