Audi targets US factory to take advantage of subsidies


By revealing on Friday that it plans to build an American electric vehicle factory, German automaker Audi became the latest company to signal that the Biden administration’s support for high-tech manufacturing and green energy is paying off. .

The German automaker joins a string of car, computer chip, battery and solar panel makers who have announced concrete plans or tentative prospects to boost US production, all driven at least in part by subsidies and relief taxes put in place in legislation backed by the White House. .

Some of the projects may not materialize and larger economic factors are driving investment. But it is clear that the incentives of the Inflation Reduction Act (IRA) and the bipartisan Infrastructure Investment and Jobs Act (IIJA) are helping to stimulate activity, said Willy Shih. , a manufacturing expert at Harvard Business School.

“What it did was it spurred a huge wave of capacity building in the United States for electric vehicles and electric vehicle materials and batteries,” he said. “I used to be skeptical about the practicalities of returning manufacturing to the United States. Now that I see the impact of the IIJA and the Inflation Reduction Act, my observation is, well, it seems to work.”

Brad Setser, an economist in the Obama and Biden administrations who is now a senior fellow at the Council on Foreign Relations, said recent investment announcements have been “big and impressive” and show there is “a lot of support for specific sectors”.

But he warned that larger projects will take time to come online and could encounter hurdles along the way. There are also headwinds to domestic production at the moment, he said, including the strength of the U.S. dollar and the post-pandemic shift in consumption from goods to services.

Other economic forces are working in favor of the projects, notably

In comments to the German newspaper Frankfurter Allgemeine Zeitung published on Friday and confirmed by the company, Markus Duesmann, chief executive of Volkswagen-owned Audi, said subsidies provided by the IRA made the prospect of a US factory “a lot more attractive”.

“The decisions haven’t been made yet, but the VW Group will probably make more cars there in the future for the US market,” Duesmann said.

Agnes Schwägerl, Audi Group communications manager for international locations, pointed out that no formal decision has been made regarding a US plant. “The US market is extremely important to us,” Schwägerl said, adding that the automaker regularly goes through different scenarios.

The Inflation Reduction Act includes grants and tax incentives designed to stimulate domestic investment in a range of green industries. It includes a $7,500 tax credit for electric vehicles made in the United States, designed to reduce the financial burden of ownership, as well as grants for domestic manufacturers of electric vehicles.

Audi is one of a host of major automakers that have invested heavily in electric vehicle production in recent years. The company said it wants to shift all of its production from new vehicles to electric vehicles by 2026 while investing 18 billion euros in hybrid and electric technologies. It plans to market more than 20 fully electric vehicles by 2025.

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