Tariffs vs. Tires: Audi Hits the Brakes on Major US Factory Plan
Volkswagen Group CEO Oliver Blume has officially suspended plans for a dedicated Audi production facility in the United States, declaring the multibillion-dollar investment "financially unviable" under current trade conditions. In a recent interview, Blume revealed that the automotive tariffs imposed by the Trump administration have already cost the company roughly €2.1 billion ($2.5 billion) in just the first nine months of 2025. This massive financial hit has forced the group to rethink its "math" on American expansion.
The decision marks a significant reversal from 2023, when Audi was actively exploring U.S. manufacturing to capitalize on federal subsidies. While those incentives initially made the project attractive, the subsequent shift toward heavy duties on European automakers has flipped the script. Blume noted that despite high-level discussions in Washington and at the World Economic Forum in Davos, the company has yet to receive the tariff relief or "reliable business conditions" necessary to justify such a massive capital commitment.
As part of this strategic retreat, Volkswagen has officially scrapped its long-standing goal of capturing a 10% share of the U.S. market, with Blume calling the target "outdated." The company is now pivoting to a more conservative, "step-by-step" growth model and has trimmed its global five-year investment plan by €20 billion. For now, Audi remains the only major German luxury brand without a U.S. assembly plant, leaving its American supply chain dependent on its facility in Mexico—where vehicles currently face significant import duties.
