German automaker Volkswagen Group plans to invest $4 billion in a new Audi plant in the US state of Georgia, aiming to ease the burden of high tariffs that have severely eroded Audi's profits, according to a report by Gasgoo citing Bloomberg.
Audi announced on October 24 that it will build the plant in Macon, central Georgia, to produce large SUVs, including the all-new Q9 and the Q5, which is currently built in Mexico. The greenfield project is set to break ground next year, with an annual production capacity of about 200,000 vehicles.
US President Donald Trump called the investment plan "" on October 24, saying it confirms that tariffs on imported cars are working. The project is expected to create 4,500 jobs, providing a political win for Trump ahead of the midterm elections.
Unlike competitors BMW Group and Mercedes-Benz Group, Audi's US-bound vehicles are entirely imported from Europe and Mexico, leaving them exposed to Trump's punitive tariffs. Its best-selling Q5 SUV has been particularly hard hit, as the model does not comply with the USMCA rules, the trade agreement negotiated with Canada and Mexico during Trump's first term. Audi's US sales fell 16% year-on-year in the first nine months of this year.
Audi's global production strategy
"If Audi wants to be successful, it needs a global production footprint," Audi CEO Gernot Döllner said in a press call on October 25. He added that Audi is currently loss-making in the US, the world's second-largest auto market. "By investing here, we will make our business model more resilient."
However, the Volkswagen Group has not yet finalized the plant plan. In German labor negotiations, employee representatives hold half of the supervisory board seats and have signaled they may demand concessions before approving the plan, with talks covering labor conditions, wages, and investment terms. Döllner expects the supervisory board to make a final decision next month.
The move comes amid internal turmoil at Volkswagen, where management and employees have clashed over competitiveness reforms, which at one point included plans to close German plants. Last month, Volkswagen reached an agreement to double its global job cuts to 100,000, about 15% of its workforce.
Volkswagen's works council said in an email on October 25: "Adding capacity at new locations must complement and benefit existing plants within the global production network. In this regard, several internal issues still need to be clarified by the relevant committees."
The European automaker has considered adding US production capacity on and off for years, dating back to 2018 during Trump's first term. Audi has repeatedly delayed decisions; Volkswagen Group CEO Oliver Blume has said the group cannot afford to bear high tariffs while heavily investing in new capacity.
Tariff relief negotiations
A US official involved in the negotiations revealed on October 24 that the Trump administration and Volkswagen Group will continue to discuss tariff relief plans in exchange for the plant commitment. Any policy adjustments would apply to all automakers expanding US production capacity, not just Volkswagen Group and its brands.
The official said the core of the negotiations is to reach an agreement where automakers can receive tariff relief credits proportional to their commitment to add US production capacity. On October 25, Döllner declined to comment on possible future tariff relief.
Audi's choice of Georgia, one of the most critical swing states in US elections, gives both Democrats and Republicans an incentive to support the deal, or at least not to overturn it. Trump is campaigning intensively across the US, but polls show his approval rating at or near historic lows, and Republicans are likely to suffer significant losses in the November 3 elections.
New vehicle plants typically take several years to build, and Audi expects the first models to roll off the line in the early 2030s.
Volkswagen, which owns Audi and Porsche, is trying to revive its long-underperforming US business. Blume has identified North America as one of Volkswagen's biggest remaining growth opportunities, especially in high-margin rugged SUVs and pickups, a segment where the group has a weak presence.
Meanwhile, Volkswagen Group's sales in China, long a key growth and profit source for the German automaker, continue to weaken.
Speaking at a rally alongside Trump on October 24, Döllner said: "We plan to produce our largest and most premium SUVs in Macon. This is a long-term investment because we believe in the US market."
Audi plans to launch the Q9 in the US this year, its largest SUV, targeting the Mercedes GLS and Cadillac Escalade. However, the new model will initially be produced in Slovakia, also subject to Trump's auto import tariffs.
Volkswagen already has a plant in Tennessee, which was unionized by the United Auto Workers (UAW) in 2024, and is building a plant in South Carolina to produce the Scout Terra SUV and Traveler pickup. Audi had previously said it could also choose to build models at that South Carolina plant.