Audi, owned by Volkswagen, is considering building a factory in the US to take advantage of subsidies provided by the Inflation Reduction Act (IRA), according to CEO Markus Duesmann.
The IRA offers subsidies and tax incentives for domestically produced green industry products, including a $7,500 consumer tax credit for North American-made EVs. Audi has committed to introducing only electric models from 2026, but does not yet produce cars in the US. The likelihood that Audi will build a plant with other Volkswagen brands is high, according to Duesmann.
The move is part of a trend among carmakers to localise production and supply chains to reduce logistics costs. While investment in the US is increasing due to the IRA, there is concern among European officials. Volkswagen's plant in Chattanooga, Tennessee began producing the ID.4 last year, and is targeting 90,000 EVs in 2023. Volkswagen is also upgrading its Mexican plants in Puebla and Silao to build EVs, motors and related components by mid-decade. Audi also has a plant in Mexico, which produces the Q5.
Last December, Audi's production chief Gerd Walker said the company preferred to revamp its existing production network towards EV production, rather than set up new greenfield projects unless more capacity was needed. Volkswagen is due to announce in March how it will restructure its global production network to scale up EV production. Investment in the US is increasing, and while this is positive for the country, it raises concerns in Europe.
To remain competitive, the EU is increasing its commitment to climate change policies, including its Green Deal. The goal of the Green Deal is to make the EU climate-neutral by 2050, and the EU has committed to reducing carbon emissions by 55% by 2030. The EU is also working to ensure a sustainable and secure supply of raw materials, including critical raw materials like lithium and cobalt used in EV batteries.
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