Volkswagen Group (XETRA:VOW)-owned Audi has suggested it could open a new electric vehicle (EV) factory in the US, given “attractive” incentives under the Inflation Reduction Act.
Although it hasn’t confirmed the plans, a move towards US-based production would mark the latest blow to the European EV market, which has struggled to prevent the likes of Ford Motor Company (NYSE:F) and British start-up Arrival from shifting focus to sites across the Atlantic.
The Inflation Reduction Act, introduced under the Biden administration in August last year, offers incentives to the likes of EV manufacturers, including tax credits and US$396bn worth of public funding.
As a result, “investing in the US is simple,” according to Frédérique Carrier, RBC wealth management’s head of investment strategy in Britain.
“The IRA rules apply to all states uniformly. By contrast, a single tax incentive across the continent does not exist in Europe, as each national government is responsible for setting tax credits”.
This makes setting a unified response difficult, Carrier suggested, adding the European Union’s March summit could see it implement a new approach to “underpin” growth.
Audi, which aims to solely make EVs from 2026, could be the latest to be attracted across the pond, therefore, with plans for future production due to be solidified by parent Volkswagen next month.
Since August, 22 EV companies have moved to ramp up production in the states, helping to create around 100,000 jobs in the clean energy sector.
This includes the likes of Tesla, Hyundai, BMW and Toyota.
Britain’s EV sector has also struggled to make leeway meanwhile, with battery startup Britishvolt falling into administration in January, casting doubt over its £3.8bn Northumberland gigafactory plans, although its technology business was later bought by Australian firm Recharge Industries, potentially reviving hopes for UK production.