Audi plans first US plant in Georgia with reported tariff relief

The planned plant

Audi plans its first US factory near Macon in Georgia, a project Donald Trump announced at a Republican campaign rally in the state on Saturday, 24 October. The reported investment figures differ by outlet: Deutsche Welle gives 3.6 billion euros, Handelsblatt says about 4 billion euros, and Spiegel Online cites 4.2 billion dollars. The plant is designed to produce up to 200,000 vehicles a year and create 4,500 jobs. Construction is planned to start early next year, and the first cars are expected to leave the line in the early 2030s. The factory would build premium SUVs for the US market.

Tariff relief in exchange

Two people familiar with the matter told Reuters that Washington has offered Audi lower tariffs in return for the factory, with an effective rate of 10 percent expected. Imports from Europe currently face a 15 percent tariff. One insider said Audi had asked for a halving to 7.5 percent, while the US government insisted on a rate in the double digits. It remains unclear whether a lower rate would apply to all imported vehicles or only to cars from Europe, and when it would take effect. The Wall Street Journal, which first reported the plans, said Audi imports all of its US-sold cars from Mexico and Europe and paid more than one billion dollars in tariffs last year. According to insiders, the US Commerce Department is preparing a program for companies investing in US production, with details still under discussion. Participants would have to commit to starting factory construction before the end of next year, and other carmakers could be offered similar terms.

Current rate for European imports15%

Expected effective rate, per insiders10%

Rate Audi asked for, per one insider7.5%

Current rate for European imports

15 %

Expected effective rate, per insiders

10 %

Rate Audi asked for, per one insider

7.5 %

Data from the article text

Criticism inside Volkswagen

According to insiders, Daniela Cavallo, the group works council chair, warned the VW supervisory board presidium before the appearance and described the criticism as as sharp as it could be. Gernot Döllner and production board member Gerd Walker travelled to Georgia to advance the negotiations, according to an internal letter to staff in which Döllner said the invitation to present the plans with Trump was accepted solely in the company's interest. Manager Magazin reported that Döllner had presented the plan to the presidium before the event but gave no figures or facts, according to participants. Audi's compliance rules, which Döllner signed, bar appearances with politicians three months before elections. VW switched off comments on an internal intranet post about the US plans and deleted posts already published there, and calls for Döllner to resign have been raised.

Reactions in Germany and the car industry

IG Metall chief Christiane Benner called the appearance highly embarrassing and politically unacceptable, and said Döllner clearly broke the company's own rules on political neutrality before elections. Armin Laschet (CDU), chair of the Bundestag foreign affairs committee, defended Döllner on Wednesday, 28 October, in the Münchner Runde on BR television.

“That is normal competition.”

Laschet argued that German carmakers often build near potential markets, as BMW and Mercedes have long done, and recalled being shown Tesla's Grünheide plant by Elon Musk in 2021. He said the difference lay in Audi's compliance rules and that the move could have been handled with more sensitivity. Lower Saxony minister-president Olaf Lies said Döllner had become "part of a political staging". Greens parliamentary spokeswoman Jamila Schäfer said a US plant cannot rescue Germany's struggling car industry and called for a common European strategy.

Mercedes-Benz CEO Ola Källenius, presenting nine-month figures on Wednesday, 28 October, was asked by Handelsblatt about tariff credits.

“If a policy is in the works that could create potential tariff credits for investments and other things, that would be good news.”

He added that what Mercedes hears from its Washington office is that no such policy exists yet in its current form. BMW and Mercedes could benefit if an equal-treatment principle applied, but Källenius found it hard to imagine rules limited to single companies.

What happens next

Audi's supervisory board holds a special session on Friday, 30 October, in Ingolstadt, with the Döllner appearance on the agenda, according to Spiegel Online citing company circles. The investment still needs approval from the VW supervisory board, and Tagesspiegel reports that the board has no papers on which approval could rest. The tariff deal rests on an oral assurance from the US side with nothing in writing. Manager Magazin reported that Trump is to sign a decree lowering the 15 percent rate on European vehicles and the 25 percent rate on vehicles built in Mexico, though no figures were presented. The midterm elections in early November are expected to be hotly contested for the Republicans.