Audi can still cancel its planned US plant even after the signing. This is shown by contract documents available to the Handelsblatt. At the same time, the car manufacturer is already keeping an expansion open.
New York. Even after signing the settlement agreement, Audi can still withdraw from its planned plant in the US state of Georgia. This emerges from contract documents from the regional economic development agency, which are available to the Handelsblatt.
Audi is expected to rent the factory premises from the economic development agency until mid-2027, only then will the deal be completed. Until then, the German car manufacturer can terminate if the examination of the site is not satisfactory - for example in terms of soil, the environment or development. Audi decides on this at its own discretion.
Such an exit would be comparatively cheap for the people of Ingolstadt. The main thing that would be lost would be a fee of two million dollars and the company's own preparation costs - a fraction of the planned investment of four billion dollars.
Georgia is making advance payments
Repayments provided for in the settlement agreement in the event of failed promises only take effect once the transaction has been completed. The contract has not yet been signed anyway: According to the documents, the signatures of Audi and the state are missing, and the VW supervisory board must also agree beforehand.
Audi left a question from Handelsblatt unanswered on Thursday evening until publication. The company did not want to comment on the same day to the Reuters news agency.
The contract is delicate for Georgia because the public sector makes advance payments. The economic development agency must buy additional land this year, otherwise Audi will be allowed to withdraw. She is allowed to start leveling around 400 hectares before the deal is completed; it is estimated to cost a good $78 million. And if it becomes more expensive, according to the contract, the state must make up the additional costs as far as the law allows. This also applies explicitly to rising material and fuel prices or difficult ground.
» Read also: Democrat wins in Georgia – election results put Audi under time pressure
The plant of the VW sister brand Scout Motors in South Carolina shows how expensive such guarantees can be. There, too, the state took over the earthworks and environmental requirements. In January, the responsible Ministry of Economic Affairs estimated the additional costs at $150 million, in addition to the $1.3 billion in incentives originally approved. This caused controversy in Parliament.
The schedule becomes explosive due to the midterms. In the midterm elections on Tuesday, Democrat Keisha Lance Bottoms surprisingly won the race for governor in Georgia. Her defeated opponent, Republican Rick Jackson, spoke at the campaign rally in nearby Perry almost two weeks ago, where US President Donald Trump announced the plant together with Audi boss Gernot Döllner.
Democrat Keisha Lance Bottoms: She surprisingly defeated her Republican opponent in the race for governor in Georgia. Photo: AP Photo/Brynn Anderson
Bottoms will take office in mid-January, until then the Republican incumbent Brian Kemp will still be in power. In addition, there is a tax deadline: Audi is only exempt from sales tax on building materials if Georgia classifies the plant as a regionally significant project by December 31st. According to the contract, this should only happen after the signature.
The Department of Economic Affairs in Atlanta relies on continuity. “The approach at Audi is consistent with how Georgia has supported large investments by car manufacturers over several governments,” a spokeswoman told the Handelsblatt on Tuesday evening. Georgia's commitments have spanned decades, and it sees itself as having a responsibility to remain a "reliable, long-term partner" of the companies that invest there.
The contract documents also show what is at stake for Georgia. If you add up all the services quantified therein, the funding package comes to around one billion dollars. The Atlanta Journal-Constitution newspaper had previously reported on the magnitude.
Tax benefits make up the majority
The biggest chunk is tax advantages: formally, the plant should belong to the economic development agency, which rents it out to Audi. That's why Audi doesn't pay regular taxes on the factory for 20 years, but instead pays fixed compensation payments. In its first offer in July, the economic development agency estimated the savings for the group at around $459 million. A good 400 million dollars will flow into roads, water supplies and the training of future employees. In addition, there are $137 million in direct grants, which are used to pay for land purchases and grading, among other things.
Related topics
AudiDonald TrumpGernot Döllner
In return, Audi commits to initially investing four billion dollars and creating 4,500 jobs with an average wage of around $63,000 per year by the end of 2033. If the group then falls below 80 percent of these commitments on average by 2050, it will have to repay part of the funding.
The contracts also keep a second expansion stage of the plant open: by the end of 2033, Audi can decide to invest a further three billion dollars and create 3,000 additional jobs. Further subsidies and tax advantages are also available for this.
More: The new America – What lies ahead for the economy, Europe and the world
Published according to the editorial standards of the Handelsblatt. You can find more information in our guidelines.
