Audi of America Responsibility Report 2015 Fuels of the future Letter from the President 1 Partnering to revolutionize fuel production 8

Sustainable sales and service energy Promoting a more progressive customer experience Making carbon neutral mobility a reality 2 10

TDI clean diesel Veterans to technicians Delivering unmatched efficiency and performance Matching highly skilled Veterans with sophisticated 6 automotive technology 14 Letter from the President

At Audi, we are constantly striving for ultimate performance. That is as true for our approach to sustainability as it is for our vehicles.

Our goal is to make every aspect of mobility sustainable and responsible — for the customers we serve, the drivers we delight, the professionals we employ, the dealers with whom we partner, the communities in which we operate, and the planet we share.

The Audi brand’s commitment to sustainable mobility has been the driving force behind key innovations, including our TDI clean diesel engines, cylinder on demand technology, and a series of advances involving ultra-lightweight materials.

This commitment also manifests itself in environmental and talent sustainability initiatives, such as Audi energy, the Audi Progressive Retail Experience, and the Veterans to Technicians program.

As AUDI AG chairman has said, “A courageous company must… accept responsibility for its employees and society as a whole.”

Automotive companies often think in terms of quarters, model years, or, at the far end of the horizon, the several-year window from concept to consumer. As a company that is well into its second century, we strive to be a rarity among automobile makers: a company that thinks in terms of generations.

Best regards,

Scott Keogh President Audi of America, Inc. Audi energy

Audi energy can make carbon neutral mobility a reality

When customers purchase an A3 Sportback e-tron, they’ll not only be experiencing the first Audi plug-in hybrid vehicle in the United States, they’ll also be experiencing the closest thing to carbon neutral driving available today. This is achieved by an initiative we call Audi energy.

Audi has committed to offsetting the greenhouse gas emissions from every A3 Sportback e-tron. This includes assembly plant production, all shipping logistics to the U.S., and 50,000 miles of driving. We hope to extend this commitment to other e-tron vehicles as well.

To reach carbon neutrality, Audi is working with California-based renewable energy and carbon offsets provider3Degrees, which has received multiple awards from the EPA and the Department of Energy. We achieve these carbon savings through investments in the following programs:

U.S. landfill gas capture According to the EPA, municipal solid waste landfills are the country’s third-largest source of methane, a greenhouse gas 25 times more potent than carbon dioxide. Audi of America is supporting projects to capture the gas at five landfills across the United States. Once captured, the gas can be flared off or, ideally, used to generate power. Located in Virginia, Utah, Nebraska, and Texas (where there are two), the projects offset a

combined 227,502 metric tons of CO2-equalivalent greenhouse gas emissions per year. These offsets are verified by the Climate Action Reserve.

Conservation forestry (Kenya) Deforestation and forest degradation are responsible for almost 20 percent of the world’s greenhouse gas emissions. In 2008, the United Nations launched the UN-REDD Programme to create financial incentives to reduce emissions in designated developing nations where communities often rely on slash and burn agriculture in order to survive. Audi of America is supporting the Wildlife Works REDD+ Project to preserve 500,000 acres of highly threatened forest in the Kasigau Corridor region of Kenya. In addition to producing about 1.2 million metric tons of carbon offsets annually, theWildlife Works Kasigau Corridor project has created more than 500 jobs while generating essential funding for water projects, schools, medical care, and even wildlife protection.

Page 2 | Audi of America Responsibility Report 2015 Level 2 charger Although we based our carbon neutrality calculation on a highly conservative model that assumes drivers will use gasoline 100 percent of the time, we know that e-tron owners want to drive electric. And we want to encourage e-tron owners to further reduce well-to-wheel carbon emissions by driving on electric power as much as possible. To do that, we are making recharging at home more convenient than ever. Every new A3 Sportback e-tron comes with a free Audi-designed mobile charger that works with 120V or 240V and can be carried in the vehicle or mounted on a garage wall. In addition, Audi of America has partnered with Bosch Automotive Service Solutions to offer premium 240V conversion and charger installation services, ensuring that A3 Sportback e-tron owners have the ability to recharge their vehicles whenever and wherever they want.

Residential solar and energy storage Owners of electric plug-in vehicles are significantly more likely to own home rooftop solar systems. Through a partnership with Silicon Valley-based solar products manufacturer SunPower, which makes the most efficient and reliable solar panels on the market today, Audi is offering optional home solar systems with all of our vehicles in all 50 states. For a limited time, Audi customers will also receive exclusive access to SunPower’s new energy storage solution, allowing them to power their homes in the case of an outage.

Page 4 | Audi of America Responsibility Report 2015 TDI clean diesel

Audi pioneered turbocharged diesel engines with direct injection, introducing TDI engines in Europe in 1989. Since then, Audi has sold over 57,000 cars with the TDI system in the United States.

In the past 5 years, nearly 7 percent of our models sold were diesel powered. Today, we offer the A3, A6, A7, A8, Q5, and Q7 with diesel engines.

We remain committed to diesel because we believe it offers an unmatched mix of efficiency and performance. If one third of Americans drove clean diesel, America could reduce its dependence on foreign oil by 1.5 million barrels a day, more than the amount currently imported from Saudi Arabia.

And thanks to particulate filters that eliminate diesel soot and an AdBlue emissions system that scrubs nitrous oxide emissions, our diesel engines comply with the world’s most demanding emissions laws.

We know clean diesel can work: Our race cars have won at the eight times in the last ten years running on TDI engines.

The Audi R18 e-tron quattro has won at Le Mans in three of the last four years, demonstrating that TDI clean diesel and e-tron technology are a winning combination.

Page 6 | Audi of America Responsibility Report 2015 Fuels of the future

Beyond our commitment to making Audi vehicles cleaner today, Audi is also working to revolutionize fuel production for the future.

In 2011, AUDI AG formed a strategic partnership with Joule Unlimited, a biofuels company based in Massachusetts, to develop sustainable, carbon neutral fuels.

As Joule’s exclusive automotive partner, Audi has invested in a plant in Hobbs, New Mexico, where Joule is producing Audi e-diesel and Audi e-ethanol — synthetic fuels derived from carbon dioxide, sunlight, and brackish water that cannot be used for agriculture.

“This facility is the first of its kind able to generate sustainable fuels directly from sunlight and CO2,” says Joule president and CEO Paul Snaith. “Together with Audi, we can achieve a completely new dimension in unleashing the potential of biofuels — without the disadvantages that have hindered their use to date.”

Although the project is still in the development phase, Audi hopes to begin commercial production of the new carbon neutral fuels in the future.

The first facility of its kind able to generate sustainable fuels directly from sunlight and CO2

Page 8 | Audi of America Responsibility Report 2015 Sustainable sales and One of the main energy costs associated with dealerships is lighting. Audi of America offers dealers the option of purchasing service an LED lighting package, which lasts longer and has lower lifetime costs than the metal halide lighting used in the past. Today, the vast majority of new Audi facilities are utilizing LED Our commitment to sustainability and responsibility lighting technology. does not end with the vehicles we sell — it also applies to where and how we sell them. Audi has more than 280 dealerships in the United States, employing over 15,000 people and servicing the 1.4 million Audi vehicles on the road today. Through several design, sales, and service initiatives, Audi dealers are helping to make every aspect of the customer experience more sustainable.

Progress in design As sales continue to climb, more and more Americans are visiting Audi dealerships nationwide. In 2007, Audi introduced new “Terminal” design guidelines so that the luxury and efficiency of our vehicles would be matched by the dealerships in which they are sold. The design update was followed two years later by the announcement of a $1 billion investment in dealership construction and enhancements. By consolidating space, limiting waste areas, and using natural light, the Terminal dealerships save up to 30–40 percent in costs, achieved in part by a significant reduction in energy usage. There were 61 Terminal dealerships completed by the end of 2014, with an additional 34 expected in 2015.

In November 2012, Audi celebrated the opening of Audi Pacific, its first LEED Gold dealership in the United States. Located in Torrance, California, Audi Pacific features one of the largest Audi showrooms in the country.

Page 10 | Audi of America Responsibility Report 2015 Carbon neutral synthetic oil Audi is now recommending carbon neutral engine oil as the service Audi recommends EDGE Professional OE engine oils. These oils oil for all Audi engines, whether they run on gasoline or diesel. were certified as CO neutral in June 2014 by BSI PAS2060, the standard for In addition, Audi service centers collected more than 1.1 million measuring neutralized emissions. Castrol earned this certification for EDGE gallons of oil for second use in 2014 — enough to power 1,500 Professional products by investing in a portfolio of emission reduction projects, average households for a year. including reforestation in Kenya, clean electricity generation in China, and wind farms in New Caledonia. Battery recycling For every Audi Genuine Battery installed, one is recycled. The old battery is crushed and its components separated; the polypropylene case is melted down and used to produce new cases; and the lead is heated to remove impurities and then reused to make new lead plates. In 2014, more than 45,000 batteries were recycled.

Tire recycling Typical methods for disposing of can result in air pollution, soil and water contamination, and excessive use of landfill space. Through our internal recycling program, participating Audi dealerships submitted over 36,000 tires to be recycled in 2014. These tires were repurposed to create mulch for playgrounds, crumb rubber that was utilized in rubberized asphalt, and -derived fuel.

SmartWay transportation partners

The EPA SmartWay program is a public-private initiative aimed In 2013, CEVA Logistics received a SmartWay at reducing the environmental impact of supply chains. Audi of Excellence Award for its outstanding America uses EPA SmartWay partners Black Horse Carriers and environmental performance, including an CEVA Logistics to transport parts to dealerships across the country. emphasis on fuel-efficient driving and eco-sustainable warehouse facilities.

Progressive retail In January 2014, Audi of America began introducing the Audi Progressive Retail Experience, a set of digital tools that improves our customer sales and service experience and dramatically reduces the amount of paper used at Audi dealerships nationwide. Featuring e-brochures via the Sales Assist app, paper-free vehicle inspection and delivery processes via the eDelivery app, and electronic transaction and service tools, the Audi Progressive Retail Experience is taking a big step toward making the interaction Audi is instituting paperless, tablet-based employee between Audi dealers and customers more sustainable. training. Five years ago, the Audi Academy Technician Program spent more than $650,000 annually on printing. Our comprehensive approach to sustainable mobility encompasses By early 2016, the Academy expects to eliminate its more than new vehicles; it also includes processes to reduce printing costs entirely. environmental impact while servicing Audi vehicles already on the road.

Page 12 | Audi of America Responsibility Report 2015 Veterans to technicians

In early 2013, as Audi of America president Scott Keogh traveled the country for the Audi brand’s annual series of dealer forums, there was one concern that came up in every conversation: Audi dealership managers were facing a shortage of service technicians capable of handling today’s sophisticated automotive technology.

At the same time, Veterans of the wars in Iraq and Afghanistan were coming home and looking for jobs. Many of the returning soldiers had developed high-tech skills working on jets, helicopters, and other advanced military equipment. Recognizing a potential solution, Audi of America Director of Strategy Reinhard Fischer approached Keogh with an idea: What if the company worked to place Veterans in jobs as Audi service technicians?

Audi of America launched the Veterans to Technicians program in May 2013. The program recruits former military technicians using a vast network of Veterans’ organizations and military transition assistance centers, and then trains and places them in service department roles at Audi dealerships across the country.

In the first year of the program, more than 100 Veterans secured positions at Audi dealerships nationwide. Today, that number is 200 and counting, with every branch of military service represented. “The Veterans placed through the Audi Veterans to Technicians program have already made a profound, positive impact on the high level of customer service found at Audi dealers across the United States,” Fischer says.

With the brand experiencing record sales in the U.S., the demand for Audi technicians is expected to soar, and the Veterans to Technicians program will remain integral to the company’s growth.

Page 14 | Audi of America Responsibility Report 2015 Audi of America 2200 Ferdinand Dr, Herndon, VA 20171 (703) 364-7000