Audi attracts carmakers as Inflation Reduction Act subsidies to US plant

Audi attracts carmakers as Inflation Reduction Act subsidies to US plant

Volkswagen-owned Audi may build a factory in the United States in light of the Inflation Reduction Act, it said on Friday, the latest company to consider investing in the sector to take advantage of subsidies it provides.

the premium carmanufacturer, which sold approximately 190,000 carIn the US last year, it accounted for 11% of total sales, does not yet have a plant in the country, and is not currently eligible for tax incentives and subsidies offered under the Inflation Reduction Act (IRA) for vehicles and made in North America.

The $430 billion IRA was passed last August and provides subsidies and tax incentives for domestically produced green industry products, including a $7,500 consumer tax credit to buyers of North American-made electric vehicles.

It also includes restrictions on battery minerals and component sourcing in the region in an effort to phase out Chinese inputs.

Audi plans to make electric carNo new combustion-engine models will be introduced beyond 2026, at all of its locations globally, through 2030.

“The IRA has built an American plant to power carIt’s very attractive,” Audi chief executive Markus Deussmann said in an interview with German newspaper Frankfurter Allgemeine Sonntagszeitung, adding that it would build a joint plant with Volkswagen Group.

Industry publication Automobilwoche reported Friday that Volkswagen plans to build its own plant in the US for the Scout brand, which will make electric pick-ups and SUV trucks.

Asked whether the two plans are linked, an Audi spokesperson said various scenarios are possible and the companies are still evaluating options.

carManufacturers have moved in recent years in major markets such as the United States, China and Europe to reduce exports and imports and instead localize production and supply chains to lower transportation and logistics costs.

But a growing number of firms are now announcing new investments in Europe in the United States in light of the IRA, which is worrying European authorities.

carProducer Stellantis STLAM.MI on Thursday said it was already working to localize its battery supply and EV manufacturing, but the IRA gave it “further incentives to accelerate.”

Tesla Inc TSLA.O scaled down plans to manufacture batteries at its site in Brandenburg, Germany and is preferring cell production in the US because of the IRA.

Volkswagen’s plant in Chattanooga, Tennessee, started production of the ID.4 last year and is targeting 90,000 EVs in 2023.

Sources close to the company told Reuters last May that the plant would be expanded to make the ID electric minivan. Buzz, but the Scout brand will build off-road electric pick-up trucks and sports utility vehicles that need a new platform.

Volkswagen is also upgrading its Mexican plants in Puebla and Silao to start manufacturing EVs, motors and related components by 2025.

carThe maker is due to determine in March how it will reshape its production network around the world to ramp up EV production.

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