Report: IRA Might Prompt Audi to Produce EVs In The US

The company would like to be eligible for full $7,500 federal tax credit for its electric cars.

2023 Audi Q4 e-tron

Mark Kane

By: Mark Kane

Feb 26, 2023 at 8:39pm ET

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Audi is considering local production of electric cars in the United States, as the company would like to also be eligible for the federal tax credit.

Let's recall that due to the Inflation Reduction Act of 2022 (IRA), Audi's EVs are no longer eligible for the $7,500 incentive. That's a serious disadvantage, which already caused the the Audi Q4 e-tron (imported from Germany) to start effectively at over $50,000.

$7,500 incentive is the equivalent of 15 percent out of $50,000, which is a quite noticeable difference (potentially two times higher than average margin).

In 2022, Audi sold in the US some 190,000 cars (EV and ICE), but none were produced locally. The only solution to the problem would be the local production of electric Audi - combined with the local production of batteries in the future.

According to Reuters, Audi Chief Executive Markus Duesmann said in an interview with the German newspaper Frankfurter Allgemeine Sonntagszeitung that "The IRA has made building a U.S. plant for electric cars very attractive."

Some might say that it's rather a necessity than "attractiveness." Anyway, the idea is currently under consideration not only by Audi but the entire Volkswagen Group, which also is wondering about local production of its upcoming Scout EVs.

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

The Volkswagen brand is already a step ahead because it produces some versions of the Volkswagen ID.4 model in Chattanooga, Tennessee (the plan for 2023 is up to 90,000 units). The Volkswagen ID. Buzz might be next in line to be locally produced.

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Other German premium brands - like BMW and Mercedes-Benz - recently also started local production of electric cars in the US.

Previously Audi announced that there will be no new internal combustion engine models after 2026, which means that the issue will be even bigger in the following years. By 2030, all Audi plants globally to produce electric cars.