NECKARSULM, Germany — Audi will kill its iconic TT sports car and replace it with an electric vehicle as part of a plan to emerge as a premium electric-car maker.

When it launched in 1998, the two-seat TT won numerous fans but more importantly, it established Audi as a design leader. This helped differentiate it from the more handling-oriented BMW and comfort-driven Mercedes, paving the way for an eight-year streak of volume records that only ended last year.

Audi outlined a strategy focused on sustainability that includes 20 battery-powered models at its annual  meeting here on Thursday. By 2025, its portfolio will include more than 30 models with electrified drivetrains, of which 20 will be full-electric, Audi said.

“In the medium term we want to have the strongest range of electric models among premium competitors,” CEO Bram Schot said.

Schot said a strategy focused so heavily on sustainability meant that the brand would have to cut a number of models that no longer made economic sense. This included the compact TT. In a few years, Audi will replace it with a new “emotive” electric vehicle in the same price range, he said.

Audi TT Taurozza

Audi also plans other changes in its lineup.

“The next generation of the Audi A8 might well be all-electric. Nothing has been decided yet, but I can well imagine it,” Schot said, adding the successor of the 2017-launched flagship might be a “completely new concept.”

R8 questions

Schot also questioned whether its R8 sports car, which is powered by a combustion engine, still corresponded with its vision.

By the middle of the next decade, Audi aims to sell one million electric vehicles and plug-in hybrids. As a result, the brand now expects 40 percent of its volume to comprise electrified vehicles, up from a third previously.

Audi took a first tentative start when it delivered the first units of its new e-tron electric crossover in Europe in March.

Chief Financial Officer Alexander Seitz backed the new plans, refuting the assumption that financial controllers dislike EVs because they generate lower contribution margins and dilute profitability.

Seitz argued that every EV sold could potentially generate valuable benefits, such as credits that count against the number of combustion engine cars sold in certain markets like California and China.

‘Hard cash’

“CO2 credits are hard cash in today’s world,” he told shareholders. “As finance chief, I am already looking forward to every electric car sold, even if their profitability cannot yet achieve that of conventional vehicles.”

Audi also wants to reduce, reuse and recycle its resources. The brand’s manufacturing plants in Germany, Hungary and Mexico are now expected to operate CO2-neutral in 2025, five years earlier than forecast in March.

This also means its entire value chain will have to be more sustainable in the process.

“A better CO2 footprint starts with our suppliers. We are making this into the key element of supplier agreements,” Schot said.

Audi is the latest German automaker to elect sustainability as an anchor in its strategy all the way through down to the individual components. Volkswagen and Mercedes recently said they would make this a defining criterion going forward.

Audi has been trying to free itself from the constant stream of negative headlines since revelations that it played a key role in parent Volkswagen Group’s diesel emissions-cheating scandal. Veteran CEO Rupert Stadler was forced to resign last year after he was arrested by German authorities on suspicion of destroying evidence.