VW Group said to be formulating Scout, Audi EV assembly plans in U.S.

Audi may build an electric car factory in the U.S. to take advantage of the subsidies offered through the Inflation Reduction Act, CEO Markus Duesmann told Frankfurter Allgemeine Sonntagszeitung in an interview published Friday. He added that a decision had not yet been made.

Separately, Automotive News sibling publication Automobilwoche, citing company sources, on Friday reported that Scout, which Volkswagen Group acquired in 2021 with plans to relaunch it as an electric light-truck brand, will begin production in 2026 from a VW Group-built plant in the U.S. VW had considered contract manufacturers Foxconn and Magna but decided to build the plant on its own. "The decision to build the plant ourselves is available as a draft resolution and has thus been taken," company sources told Automobilwoche.

It was immediately unclear whether the Audi and Scout vehicles would be assembled in the same plant.

"We do not have a factory in the U.S. yet. With the American government's Inflation Reduction Act, building a U.S. plant for electric cars has of course become highly attractive," Duesmann told the newspaper in an interview.

Asked whether Audi would build a plant itself or do so together with other VW brands, he said: "Both are possible. But the probability that we do it within the group is high."

Duesmann's comments reinforce comments made in October to Automotive News by Oliver Hoffmann, head of technical development for Audi, who said the company was considering a U.S. assembly plant.

Automakers have in recent years moved to reduce export and imports across major markets like the U.S., China and Europe and instead localize production and supply chains to reduce transport and logistics costs.

But a growing number of companies are now announcing heightened investment in the U.S. over Europe in light of generous subsidies and tax incentives offered by the act, worrying European officials.

The $430 billion Inflation Reduction Act was passed in August and offers subsidies and tax incentives for 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.

Automakers are increasingly seeking to source batteries close to their plants — but a large proportion of the raw materials inside them are still likely to come from or pass through China, spelling trouble under Inflation Reduction Act rules.

In March, VW Group announced it would invest at least $7.1 billion in North America through 2027 to build up its regional electric vehicle production capacity — including construction of a battery plant as well as overhauls of its assembly plant in Puebla and an engine plant in Silao, Mexico — and bolster interim internal combustion engine-powered production.

Plans called for introducing more than 25 new EVs through 2030 across the group's brands that sell in the U.S.: VW, Audi, Porsche, Bentley and Lamborghini. It wants to localize "all major design and engineering responsibilities" for top-hat development of EVs for North American consumers by 2030.

Audi, which has committed to introducing only electric models from 2026, does not yet produce cars in the U.S., but the Volkswagen brand’s plant in Chattanooga last year began producing the ID4 and is targeting 90,000 EVs in 2023.

The automaker's production chief, Gerd Walker, said last December it preferred to revamp its existing production network toward EV production rather than set up new greenfield projects unless more capacity was needed.
VW is due to lay out in March how it will rejig its production network worldwide to scale up EV production.

In May last year, VW Group said it will launch Scout as an independent U.S.-based EV subbrand and build an all-new rugged pickup and SUV on a new platform. The vehicles will be designed, engineered and manufactured in the U.S. and tailored for the region’s customers.

The company last year tapped Volkswagen Group of America CEO Scott Keogh to run Scout. He is tasked with building Scout from scratch. The Wall Street Journal reported VW is aiming to eventually sell 250,000 Scouts a year.
While it is assured that Scout vehicles will be built in the U.S., how they will be sold is not yet clear.

Volkswagen-brand dealers say they were taken by surprise when the parent company announced Scout would be a separate brand. 

Charlie Hall, president of Hall Imports in Brookfield, Wis., and chairman of the Volkswagen National Dealer Advisory Council, in January told Automotive News: "We were completely caught off guard with the announcement and then the lack of information that came after that announcement," adding, "We want Scout vehicles to be in our VW showrooms." 

Reuters and Automobilwoche contributed to this report.