Audi has cancelled the official launch event for its all-electric SUV, the e-tron, citing “organisational issues” one week after chief executive Rupert Stadler was arrested.

Audi, Volkswagen’s most profitable unit, said late on Monday that the Audi Summit, set for August 30 in Brussels where the e-tron will be built, has been cancelled. Instead, the summit will take place at an undetermined time and location in the United States.

The cancelled event is significant because the summit was supposed to demonstrate how Audi was ahead of rivals BMW and Mercedes in the race to electrify its fleet. But six days ago the company appointed an interim chief executive, Abraham Schot, after Mr Stadler requested he be relieved of his duties.

Munich-based prosecutors took Mr Stadler into custody last week for his alleged role in the diesel scandal, which has cost the VW Group more than $26bn in damages. Prosecutors named him a suspect on May 30 and raided his private apartment two weeks ago. Mr Stadler is being held in pre-trial detention, with prosecutors citing a risk that he could obstruct justice.

Interviewed by the FT just weeks before his home was raided, Mr Stadler had highlighted the importance of the Audi Summit as a milestone event for the carmaker as it emerges from the diesel scandal and blazes a new path.

“Believe me, it’s not just an electric car,” he said, “it’s a starting point for the next quantum leap.”

Mr Stadler was proud that Audi, the third-largest producer of luxury cars following Mercedes and BMW, was coming out with an electric SUV before its German rivals. “And that is in spite of diesel issues,” he said.

He then added the diesel crisis had actually been an “acceleration machine” to shake executives out of complacency. It forced everyone to ask, he said, “How do we get out of this mess?”

Last month Audi said it planned to sell 800,000 pure electric and hybrid cars by 2025.

Hours before Audi’s notice, Mercedes issued a press release saying it would officially launch its new all-electric brand, EQ, on September 4. Its first vehicle will be the EQC, a SUV to rival the Audi e-tron.

BMW, Mercedes and Audi experienced record sales last year, and together they dominate China’s luxury market — the world’s largest — accounting for more than two-thirds of sales. However, the German car industry has been criticised for being slow to unveil electric cars to rival Tesla, the US start-up.

Mr Stadler acknowledged that Tesla, despite its production problems, has captured the imagination of a new generation of drivers, robbing German carmakers of their reputation for having an innovative edge.

“First of all we have to be honest: Tesla knocked on the door and shook up the industry,” he said. “It was a wake-up call.”

In August, Mr Stadler told the FT, this would change. To combat criticism that German carmakers were electrifying their cars just to meet regulators’ demands, he said Audi was investing in “greenovations” outside of the car to go “the extra mile.” The e-tron, for instance, is being made in a CO2-neutral factory.

“Nobody asked us, legally, to do that,” he added. “I have to inspire the teams and say, ‘Hey, that’s not enough - please do the next things.’”

Mr Stadler made it clear that he saw BMW and Mercedes as the competition, rather than Tesla. In part because of Tesla’s low production volumes, but more so because the US electric carmaker has not made an annual profit since it was founded in 2003.

“We talk about the business model and the sustainability,” he said. “I don’t know any shareholder who is accepting 20 years of losses.”

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