Audi plans electric car factory in US due to IRA, CEO says

VOLKSWAGEN-OWNED Audi is planning an electric car factory in the United States to take advantage of subsidies offered by the Inflation Reduction Act (IRA), chief executive Markus Duesmann told the Frankfurter Allgemeine Sonntagszeitung.

“We don’t have a factory in the US yet. With the American government’s Inflation Reduction Act, building a US plant for electric cars has of course become highly attractive,” he told the newspaper in an interview.

Audi would most likely build a joint plant with Volkswagen, which is planning on building more cars for the US market locally in future, Duesmann added.

Carmakers have in recent years moved to reduce export and imports across major markets like the United States, China and Europe and instead localise production and supply chains to reduce transport and logistics costs.

But a growing number of firms are now announcing heightened investment in the United States over Europe in light of generous subsidies and tax incentives offered by the IRA, worrying European officials.

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

Carmakers are increasingly seeking to source batteries close to their plants – but a large proportion of the raw materials inside them are still likely to come from, or pass through China, spelling trouble under IRA rules.

The Volkswagen Group has not yet announced any strategic changes induced by the IRA, but said last March it planned to invest at least US$7.1 billion in North America and add 25 new electric vehicles there by 2030.

It began production of the ID.4 electric crossover at its Chattanooga plant in Tennessee last year and is upgrading its Mexican plants in Puebla and Silao to starting building electric vehicles, motors and related components by mid-decade. REUTERS