Audi plans to introduce an electric crossover about the size of its compact Q3 sport utility vehicle as the Volkswagen AG premium brand fills out its lineup of battery-powered Tesla fighters, according to people familiar with the matter.

The car will be built at VW’s Zwickau factory in Germany and share technology with its sister brand to save cost, said the people, who asked not to be identified as the plan isn’t public. It would complement three different versions of Audi’s first all-electric model, the E-Tron, which was unveiled in California last year, as well as a battery-powered variant of the Q2 SUV designed for the Chinese market, the people said.

The unit plans to launch seven hybrid cars and five battery vehicles by the end of next year, an Audi spokesman said. He declined to elaborate on specific models.

Audi, Volkswagen’s biggest profit contributor that has trailed behind rivals Mercedes-Benz and BMW AG in recent years, has been overhauling its lineup to narrow the gap in sales volumes and margins. The unit also got caught up in the broader diesel-emissions cheating crisis that roiled VW — culminating in the arrest of former Chief Executive Officer Rupert Stadler in June. His successor, Bram Schot, has warned workers to brace for bigger rather than smaller challenges in 2019.

Schot’s success is critical to help Volkswagen finance an unprecedented push into electric cars meant to bring the world’s biggest carmaker even with US leader Tesla Inc. Volkswagen plans to introduce more than 50 purely battery-powered vehicles until 2025 across the group.

The Zwickau factory, about an hour’s drive from the eastern German city of Leipzig, is central to VW’s electrification push. VW is investing 1.2 billion euros ($1.4 billion) in the plant, which now makes Golf hatchbacks, so it can churn out as many as 330,000 electric vehicles per year.

The VW group has announced plans to start making six electric models there by 2021, including the I.D. Crozz compact crossover. The company has said it plans two Audi models at Zwickau, without identifying those projects.

The Audi spokesman dismissed reports about a series version of the PB18 E-Tron high-performance concept car the brand showed at the Pebble Beach Automotive Week in Monterey last year. CEO Schot had merely meant to state with a sense of irony the company would build the supercar if someone could make the project economically viable, according to the spokesman.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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