Audi Could Build EVs in U.S. Thanks to Biden’s Inflation Reduction Act

• There’s no question the Inflation Reduction Act is driving massive changes in the U.S. electric vehicle market, both for shoppers buying them and companies making them.
• No decisions have been announced, but the new law makes building EVs in America “very attractive,” Audi CEO Markus Duesmann said late last week.
• If Audi does build EVs here, it will be just the latest in a long line of companies. Following the signing of the IRA last August, over $28 billion in EV manufacturing investments for the U.S. have been announced.

The IRA’s hits just keep on coming.

The Inflation Reduction Act (IRA), which was passed into law last August, shook up the electric-vehicle market in the U.S. One shakeup came in the way the law encourages domestic EV production, and the latest automaker to respond is Audi, which said Friday that it is evaluating construction of a new EV factory in the U.S.

“The IRA has made building a U.S. plant for electric cars very attractive,” Audi CEO Markus Duesmann told the German newspaper Frankfurter Allgemeine Sonntagszeitung. Duesmann said if Audi does build EVs here, it would probably be at a joint plant with the Volkswagen Group, according to Reuters. The Washington Post quotes Duesmann as saying, “Decisions have not yet been made, but the VW Group will probably make more cars over there [in the U.S.] in the future for the U.S. market.”

While Volkswagen has a plant in Chattanooga, Tennessee, Audi does not currently have any plants in the U.S., and the automaker’s e-tron EVs are built in Brussels, Belgium. The Audi production facility closest to the U.S. is in San Jose Chiapa, Mexico, where Audi builds the Q5. To qualify for some of the changed tax credits laid out in the IRA, EVs increasingly need to be assembled in the U.S. Other recent federal legislation, especially the CHIPS and Science Act, are also encouraging companies to make EV components, like batteries and silicon chips, in the U.S.

The IRA’s details change as the years go on, but the overall trend has already prompted over $28 billion in EV manufacturing investment announcements between the signing of the law in August and the end of 2022, according to the Electric Vehicle Association. Figures from the Bureau of Economic Analysis show that investment in U.S. factories of all types is rising, too, from around $70 to $75 billion per quarter in 2020 to $88–$105 billion per quarter in 2022, the Washington Post noted. An analyst the paper spoke to said the industry expects these numbers to keep going up in the years to come as more incentives come online.

Audi has ambitious electrification plans for its U.S. fleet. Audi of America has said it will have one-third of its portfolio be electrified by 2025. Audi has also said it will invest around $19 billion to develop and produce new hybrid and electric vehicles. A new U.S. plant would fit well with those plans.

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