The car manufacturer Audi is losing a fortune in the USA. Now a billion-dollar project is supposed to help initiate the turnaround. But the possible deal with the US government in Washington is still open.
Audi plans to build a factory in Georgia to avoid tariffs on importing vehicles into the United States.
The billion-dollar project depends on negotiations with the US government about state funding and customs relief, which the VW Group is demanding as a prerequisite for the investment.
An expansion of the existing VW plant in Chattanooga was rejected, also due to the strengthening of the US auto union United Auto Workers at Volkswagen.
The production of large SUV models from Audi is to take place in the USA in the future, which could free up capacity in European plants and represents a possible setback for the VW subsidiary's factory in Neckarsulm.
New York, Düsseldorf. Audi boss Gernot Döllner made his last major US appearance just two months ago. In mid-August, the Audi boss presented the new Q9 in New York, a giant SUV with which the Ingolstadt-based company wants to catch up with BMW and Mercedes-Benz.
For the PR images, Döllner and his Americas boss Vito Paladino drove over the Brooklyn Bridge through the early morning New York fog. “Big Audi meets Big Apple,” exulted corporate communications.
The truth is, however, that Audi currently has to import the XXL SUV specially developed for American customers from Slovakia - and pay high tariffs for it.
That could change in the future. After a year and a half of struggle, a solution to Audi's US problem could be emerging. A two-stage plan that has so far been kept secret could make Döllner's life easier in some areas, but could also provoke new friction in Audi's homeland.
Corporate and management circles report to Handelsblatt that Audi is planning to build a new plant in Georgia. The project is well advanced. According to information from supervisory board circles, there has not yet been a resolution at either Audi or the VW Group. An Audi spokeswoman declined to comment.
In addition, a kind of “immediate measure” is planned. Accordingly, Audi is likely to build its own Scout-based cars at the Scout factory in South Carolina. The Blythewood factory is nearing completion.
Volkswagen took over the traditional US brand Scout in 2021 and wants to sell pick-ups and SUVs specially developed for the US market under the brand name. The Audi model could be a large SUV, working title: “Hardqore”. The Handelsblatt reported about it.
The Scout factory is designed to produce around 250,000 vehicles annually. In view of the tariffs, expanded production in the USA definitely makes sense, said an insider.
Billion dollar project depends on negotiations with the US government
Both Georgia and South Carolina are governed by Republicans. A VW partner is already building in Georgia: the US electric car manufacturer Rivian is building a factory there with a planned capacity of up to 300,000 vehicles.
Volkswagen and Rivian founded a billion-dollar joint venture in 2024. The original aim was to overcome Volkswagen's software problems at the time. However, both sides always kept the idea of expanding the partnership open.
However, Audi's billion-dollar project is still dependent on an agreement with the government of US President Donald Trump. VW had already tried to negotiate a customs deal with Washington last year - in vain.
But now some people in charge, especially at Audi, sense a new opportunity: the midterm elections in November could increase the pressure on Trump to score points with new industrial investments and American jobs.
The Audi leadership therefore traveled to Washington for the crucial negotiation phase. According to information from Handelsblatt from corporate circles, Audi boss Döllner and supervisory board chairman Manfred Döss held personal discussions there this week.
VW CEO Oliver Blume, who has repeatedly intervened in the negotiations in the past, is said not to have been there this time. It is not yet known whether Döllner and Döss were able to achieve a breakthrough.
Volkswagen had made state support a prerequisite for the billion-dollar investment. In Washington, negotiations are therefore underway not only about the factory, but also about financial incentives and possible tariff relief. What is important is not just how many billions of dollars are invested, but above all what the company gets in return, says a person familiar with the processes.
It is not yet known how expensive the US plans will be overall. State funding is likely to cover part of the costs. However, the company would have to at least partially finance the equipment of the factory with machines and other production facilities itself.
The project has not yet been budgeted for in Volkswagen's ongoing investment planning. The adoption of the plans for the next five years is likely to be delayed until next year due to internal disputes, as the Handelsblatt reported.
Expansion of VW plant in Chattanooga off the table
The Audi investment could thus become part of a more comprehensive understanding between Wolfsburg and Washington. Money is also likely to flow from the states.
While a new factory is only likely to have an impact in the medium term, customs relief could immediately relieve Audi - and possibly the Volkswagen and Porsche brands represented in the USA at the same time. It is still unclear whether and to what extent Trump would be willing to sign such a deal. This could make or break the entire deal.
A long-discussed option now appears to be off the table: expanding the existing VW plant in Chattanooga, Tennessee. According to information from corporate circles, the strengthened US auto union United Auto Workers (UAW) also played an important role.
It first prevailed at Volkswagen in 2024 and concluded a collective agreement in February 2026 that guaranteed employees wage increases of a total of 20 percent as well as other benefits.
The decision against Chattanooga can therefore also be understood as a signal to the employee representatives. It was only announced on Monday that Volkswagen was considering freezing employees' salaries worldwide for the next few years.
For Audi boss Döllner, an agreement would be a relief and damage limitation at the same time. According to Handelsblatt information, Audi lost around one billion euros in the USA last year alone. Audi circles expect a further loss of 800 million euros for 2026.
Unlike BMW and Mercedes-Benz, Audi does not have its own production in the USA. Tariffs of 15 percent apply to imports from the EU. A special tariff of 25 percent generally applies to the bestseller Q5 from Mexico.
In the first nine months of this year, Audi registrations in the USA fell by more than 16 percent to around 108,000 vehicles. It is the lowest value in the region since 2012. Even during the diesel crisis in 2015 and the Corona years 2020 to 2022, Audi sold more cars in the USA than it currently does.
However, the new US factory is likely to worsen the situation at Audi's European locations. According to current plans, large SUVs such as the Q9 and probably also the Q7 will roll off the assembly line in the USA. These models are currently manufactured in the Slovakian capital Bratislava.
As facelifts, both models could be built in the Georgia factory from the 2030s. Both Q9 and Q7 are to be equipped as facelifts with the new VW Group software “SDV 1.0”, which VW is currently developing together with Rivian.
US manufacturing in Georgia would be a setback for Neckarsulm
Georgia would have room for such a plant, for example in Peach County. Near Fort Valley is the “Middle Georgia Mega Site,” a 620-hectare site that predominantly belongs to the local development authority. The area is specifically marketed to manufacturers of cars and construction machinery; the plans show space for a test track.
Local authorities are already specifically recruiting a large provider: in May, Peach County, Houston County and Macon-Bibb founded a joint development authority for this purpose. Each of the three counties pledged up to $7 million for marketing and development. None of those responsible gave a specific name. Whether it will be Audi is not yet clear from any public document.
A relocation of Audi's SUV models would have consequences for the European production network. If Q7 and Q9 move from Bratislava to the USA, capacity could become available there. One possibility would be to fill these with model series from the German Audi plant in Neckarsulm, where, among other things, the A5 and A6 are manufactured. Models from other VW brands from German factories are also possible. Nothing has been decided yet.
