Audi to set up a factory in US to take advantage of IRA subsidies, says CEO Markus Duesmann

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 the IRA, worrying European officials.

The $430 billion IRA was passed last August and offers subsidies and tax incentives for a swathe of domestically produced green industry products, including a $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.

Audi, which has committed to introducing only electric models from 2026, does not yet produce cars in the United States, but Volkswagen's plant in Chattanooga, Tennessee, last year began producing the ID.4 and is targeting 90,000 EVs in 2023.

Volkswagen is also upgrading its Mexican plants in Puebla and Silao to start building EVs, motors and related components by mid-decade.

Audi also has a plant in Mexico which produces the Q5.

The carmaker's production chief Gerd Walker said last December it 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 lay out in March how it will rejig its production network worldwide to scale up EV production.