Audi considers 1st U.S. assembly plant amid new EV tax credits

Federally funded electric vehicle tax credits contained in the Inflation Reduction Act signed into law this summer have Volkswagen Group, and especially Audi, taking a hard look at expanding its manufacturing footprint in North America — potentially including what would be Audi's first plant in the U.S.

In an exclusive interview, Oliver Hoffmann, head of technical development for Audi, said the new rules "will have a huge impact on our strategy here" in North America.

"To be honest, we are looking right and left: What can be the opportunity for us to get together with a strong [Volkswagen Group] in the background," said Hoffman, speaking from Audi's design center in Malibu, Calif. "And now we are on the way, especially as the rules changed and as you know there is big spending of the government for EVs, with special circumstances, and we are looking forward to how we can meet these requirements."

He continued, "For us, we have big opportunities within the group to make this happen, with our platform spreading strategies, this is a big opportunity for us. And we will look where we want to produce our cars in the future."

Under former CEO Herbert Diess, VW Group's brands committed to phasing out internal combustion vehicles across much of the world by 2035, and have been working to consolidate their scores of future EVs onto a single platform. For the group's brands that sell new vehicles in the U.S. — primarily VW, Audi and Porsche — a single shared assembly plant in the U.S. with locally sourced battery production could help those brands qualify for tax incentives for their EVs, provided they fall under the price limit of $55,000 for sedans, hatchbacks and wagons, and $80,000 for pickups and SUVs.

The VW ID4, now produced in Chattanooga, is the only group EV that may qualify for the incentives laid out in the Inflation Reduction Act.

Audi's only North American assembly plant is in San José Chiapa, Mexico, where it builds the Q5 crossover.

The brand's new Q4 E-tron and Q4 E-tron Sportback compact crossover EVs are built on the same platform as the VW ID4 and could potentially share an assembly line with that vehicle in Chattanooga, though no announcement has been made. The group recently signed an agreement with the government of Canada to use Canadian-mined minerals for future battery production.

Hoffmann suggested that a decision on expanding Audi EV production to North America could come in early 2023.

The brand's slate of EVs are all imported into the United States. He said he and other Audi brand executives have been "really impressed" at how quickly EVs have grown in the U.S., despite its geographic and charging infrastructure challenges.

"I think with these new rules, it will have a huge impact also for our strategy here, and to be honest for localization of cars here," Hoffmann said. "We have a strong history here, but for us, it is a huge chance to grow here in [the U.S.], also the premium market with our EV models."

In other comments, Hoffmann and Audi design head Marc Lichte said that the brand's recent Sphere concepts were more than just EV design exercises but point to several futuristic traits that will be featured prominently in upcoming Audi production vehicles in the back half of this decade.

"I think, starting in 2026, you will see a completely different package of our cars," Hoffmann said, "where we see some huge steps forward in terms of package, in terms of direction, and some new technologies. And we're really looking forward to show these cars."

"The Grandsphere is one which is a concrete teaser of a serious production model," Lichte said. "I'm working with my team together with engineers from [Hoffmann's] team right now on this project. The process takes about four or four and a half years, so then you know exactly when we go to market."

Lichte said converting from internal combustion engine vehicles to EVs has inverted the way cars are designed and developed. Because of the demands of the battery packaging, Audi is now designing vehicle interiors first "and working our way out to powertrain and ultimately exterior design."

Lichte also said that the skateboard battery package is making it more difficult to design classical sedans because of the added height required to accommodate energy storage underneath the passenger compartment.

"Some of the biggest discussions between Ollie and me are over [roof] height," the veteran designer said.