Audi CEO: ‘Building a US plant for EVs has become highly attractive’

Audi CEO Markus Duesmann recently uttered that building a new EV plant in the US becomes highly attractive given the new IRA subvention plan for electric vehicles issued by the Biden administration. He added that it is not clear whether Audi will build its own plant or whether it will be part of the Volkswagen Group.

According to the German magazine Automobilwoche, an internal decision has been made that Volkswagen will build its own plant in the US for its new Scout brand. In principle, it is conceivable that Audi will produce together with Scout in one plant.

A joint plant with VW is the most obvious, said Duesmann in the Frankfurter Allgemeine Zeitung (FAZ). “The VW Group will probably build more cars destined for the US market over there. The Inflation Reduction Act (IRA) is trying to stimulate the local production of EVs and batteries.”

EV production planning

In March, Volkswagen wants to be ready with its plan for a worldwide EV production network. At the moment, Audi has a plant in Mexico, where the Q5 is produced, but in the US itself, the four-rings brand has no factory of its own. VW, on the contrary, has a plant in Chattanooga (Tennessee), where also the ID.4 is being built.

At the end of last year, Gerd Walker, responsible for production at Audi, declared that Audi wasn’t planning to build new factories and counted on its existing producing network for the energy transition. “We don’t want so-called ‘lighthouse’ projects on greenfields; we try to ameliorate existing plants to perform as new ones in the end. New plants are only realistic when we need additional capacity.”

Inflation Reduction Act

The IRA program issued by the Biden administration represents a $430 billion investment and taxation scheme for EVs produced in the US. The aim is to become less dependent on foreign industries (particularly Chinese) and inject some new life into the American car industry. The European car industry has been criticizing this initiative as being protectionist, but the US Treasury Secretary, Janet Yellen,  is denying this.

“We’ve been very clear with Europe that this is not a subsidy war. We’re not trying to steal jobs. This is our climate plan.” Yellen expects that future limited free trade agreements focused on battery minerals with the European Union and other trusted allies would not need approval from Congress.

Yellen said that such agreements, which would be aimed at granting automakers based in Europe, Japan, and other countries access to new US tax credits for electric vehicles, would also likely include high labor standards and export control provisions to ensure secure supply chains.

She added that the United States and Europe were getting closer to reaching understanding over the US green energy subsidies and said Washington would not try to stop Europe from enacting competing subsidies.