Audi considers first US production plant so its EVs qualify for tax credits

German automaker and VW Group subsidiary Audi is flirting with the idea of implementing EV production on US soil, so its vehicles can once again qualify for federal tax credits under new terms outlined in the Inflation Reduction Act. Audi CEO Markus Duesmann recently shared a couple of possibilities Audi is considering in a potential move to the states.

Audi’s e-tron lineup of electric vehicles has long held a comfortable position as one of the most diverse in the industry. It has continued to expand since its initial launch in 2018. We have since seen an e-tron GT, e-tron S, and Q4 e-tron, to name a few, plus several additional models in the works – not to mention Audi’s growing conceptual lineup of über-innovative EV designs.

Alongside PHEV versions of some vehicles, some Audis qualified for federal tax credits… that is until President Biden signed the Inflation Reduction Act last summer, laying out much stricter qualification terms that were more beneficial to US supply chains.

Those terms kicked in on January 1, 2023, and as a result, only one new Audi EV purchase currently qualifies for federal tax credits, and it’s a plug-in. Last fall, we first covered word that Audi was considering its first-ever production footprint in the US in order to play ball with the IRA terms.

At the time, Chief Technical Officer Oliver Hoffman anticipated the IRA would have a “huge impact” on Audi’s North American strategy and that the German automaker was, in fact, considering building its first US EV production facility, adding a decision could come in 2023.

Most recently, Audi’s CEO has shared a similar sentiment and even thrown out an additional business pivot that would bring Audi EV production to the US more quickly.

Audi could begin US EV production sooner with VW Group

During a recent interview with the German newspaper Frankfurter Allgemeine Sonntagszeitung, Audi CEO Markus Duesmann said that the stricter terms in place under the new Inflation Reduction Act have made the prospect of implementing EV production in the US “very attractive.” Automotive News Europe later confirmed these comments.

While the company’s CTO originally said Audi executives were mulling a new EV facility in the States, Duesmann relayed that it is merely one option being considered. Another option is to collaborate with its parent company Volkswagen Group, which already has production footprints in the US and is working to erect more.

Earlier today, we covered news that Volkswagen’s reborn Scout brand of EVs will be built in the United States at a new pending factory. The exact location is yet to be determined, but Automobilwoche, which reported the news, stated the new US facility will also be used for Audi EV production. According to the Audi CEO, however, a decision has not yet been made:

Both are possible. But the probability that we do it within the group is high.

High probability, indeed. It simply makes more sense. Being part of a major automotive conglomerate like Volkswagen Group does have its advantages. In addition to being assembled in North America, Audi’s EVs must acquire and assemble a majority of battery materials on the continent or through a free-trade partner. However, those terms in the IRA are currently not being enforced until the US Dept. of Treasury shares its battery guidance, expected sometime next month.

Volkswagen Group currently has ID.4 EV assembly in Chattanooga, Tennessee, and two plants in Mexico; it is in the process of revamping to build EV motors and other components by 2025. The Group has already inked deals in Canada for local battery materials as well. Audi, too, has a production footprint in Mexico, where it builds the Q5.

This will certainly be a story to keep an eye on as US EV production from Audi feels imminent.