Audi could open U.S. plant to tap EV subsidies

Audi may build a factory in the U.S. in light of the Inflation Reduction Act, it said, the latest company to consider investments in the country to take advantage of the offered under the Inflation Reduction Act (IRA).

The Volkswagen Group brand sold around 190,000 cars in the U.S. last year, accounting for 11 percent of its total sales.

Audi does not have a plant in the U.S. and is at present not eligible for tax incentives and subsidies offered under IRA for vehicles sourced and made in North America.

“The IRA has made building a U.S. plant for electric cars very attractive,” Audi CEO Markus Duesmann said in an interview with German newspaper Frankfurter Allgemeine Sonntagszeitung in comments that were later confirmed by the company.

Duesmann said that a decision had not yet been made but that the IRA made it far more attractive to build electric vehicles in the U.S. Asked whether Audi would build a plant itself or do so together with other VW brands, Duesmann said: “Both are possible. But the probability that we do it within the group is high.”

Duesmann’s remarks reinforce comments made in October to Automotive News by Oliver Hoffmann, head of technical development for Audi, who said the company was considering a U.S. assembly plant in the U.S.

Audi plans to produce electric cars in all its locations globally by 2030, with no new combustion-engine models to be introduced beyond 2026.

The $430-billion IRA was passed last August and offers subsidies and tax incentives for a swathe of domestically produced green industry products, including a $7,500 consumer tax credit to buyers of North American-made electric vehicles. It also includes a restriction on battery minerals and component sourcing to the region, in an attempt to phase out Chinese inputs.

Automotive News Europe sister publication Automobilwoche reported on Friday that Volkswagen planned to build its own plant in the U.S. for the Scout brand, which will sell electric pickups and SUVs.

On being asked if the two plans were connected, an Audi spokesperson said various scenarios were possible and the companies were still evaluating options.

Carmakers have in recent years moved to reduce exports and imports across major markets such as the United States, China and Europe and instead localize production and supply chains to lower transport and logistics costs. But a growing number of companies are now announcing heightened investment in the U.S. over Europe in light of the IRA, worrying European officials.

Stellantis said on Thursday it had already been working to localize its battery supply and EV manufacturing, but the IRA gave it “further incentive to speed up.”

Tesla has scaled back plans to produce batteries at its German car plant near Berlin and is prioritizing cell production in the U.S. because of the IRA.

North America investment

Volkswagen brand’s plant in Chattanooga last year began producing the ID4 electric crossover and is targeting 90,000 EVs in 2023.

In March, VW Group announced it would invest at least $7.1 billion in North America through 2027 to build up its regional electric vehicle production capacity — including construction of a battery plant as well as overhauls of its assembly plant in Puebla and an engine plant in Silao, Mexico — and bolster interim internal combustion engine-powered production.

Plans called for introducing more than 25 new EVs through 2030 across the group’s brands that sell in the U.S.: VW, Audi, Porsche, Bentley and Lamborghini. It wants to localize “all major design and engineering responsibilities” for top-hat development of EVs for North American consumers by 2030.

VW is due to lay out in March how it will rejig its production network worldwide to scale up EV production.

Scout launch

In May last year, VW Group said it will launch Scout as an independent U.S.-based EV subbrand and build an all-new rugged pickup and SUV on a new platform. The vehicles will be designed, engineered and manufactured in the U.S. and tailored for the region’s customers.

The company last year tapped VW Group of America CEO Scott Keogh to run Scout. He is tasked with building Scout from scratch. The Wall Street Journal reported VW is aiming to eventually sell 250,000 Scouts a year. It was immediately unclear whether the Audi and Scout vehicles would be assembled in the same plant.

Reuters contributed to this report


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