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The Audi Q6 E-Tron May Also Have To Be Built In America To Satisfy Demand

Audi may be a major luxury player in the U.S., but rivals BMW and Mercedes-Benz have one big thing the four-ring brand does not: an American factory that can produce cars locally. That's going to be a challenge, considering the big volume goals Audi has for the new Q6 E-Tron, so it's eyeing a few options—including borrowing some factory space from a surprising source.

That kicks off our midweek edition of Critical Materials, our morning news roundup. Also on today's agenda: Stellantis settles a deal with California that it once fought against, and just about everybody seems mad at Elon Musk in Germany. We're going around the world on this one, folks, so let's get started.

30%: Audi Looks Into U.S. Manufacturing 

Hey, car companies: Do you want your EV buyers to take advantage of tax incentives? If so, you've gotta build those EVs in North America. So says the Inflation Reduction Act, whose onerous terms have heavily incentivized U.S. car and battery manufacturing. 

But building cars on our shores has never been Audi's forté. BMW has a gigantic plant in South Carolina (America's biggest car exporter by volume, fun fact) and Mercedes has been cranking out cars in Alabama for decades, but Audi only makes the Q5 in Mexico. Other models get imported from Europe.

You can already see where this is a problem for the new Q6 E-Tron, a big-deal car that's "key to the growth of the business here in North America as our volume EV model," as Audi America's president put it recently. And if buyers can't get the tax break, they'll likely shop elsewhere. As such, the Financial Times reports Audi is eyeing more local production: 

Audi is looking into manufacturing electric cars in the US, including using space in a $2bn plant being built by parent company Volkswagen in South Carolina.

Chief executive Gernot Döllner said the company had discussed “different scenarios on how to produce in the US” as it looks to increase its market share. “There’s more potential for growth in the US,” he said.

He added that “bigger SUVs” would be part of Audi’s US strategy. While EV sales have taken off in coastal regions, many drivers in inland states still prefer combustion engine models, he added.

The story doesn't say it directly, but unless the Volkswagen Group is building some other $2 billion factory in South Carolina that they didn't tell me about—which would be extremely rude—he's referring to the new Scout Motors plant near Columbia, SC.

When I was at their factory groundbreaking, Scout executives also alluded to the possibility of other VW Group models getting built there, so this isn't entirely surprising. (I have emails in to both Scout Motors and Audi about this and will update if I get a response.)

Meanwhile, Döllner, Audi's CEO, insists it's in the EV game for the long haul, even if the White House changes hands in November and that results in some new policy decisions:

However, he denied that rowing back on the IRA by a new administration next year would threaten any shift in manufacturing, saying it would not be “that important”.

“[Cancellation of the IRA] would not make it less attractive to us, especially as a premium manufacturer. We are not that reliant on subsidies and the battery incentives [for VW] are already locked in, in Canada,” Döllner said.

“We are planning much more long term than one legislative term.”

Audi actually has been eyeing a dedicated U.S. plant in recent years, but no final decisions have been made yet. 

60%: Stellantis Joins California's Tough Emissions Laws, Even If Trump Rolls Them Back

Audi playing the long game with EVs is one sign of how this technology is here to stay, even if the rate of growth is slowing a bit. (Bloomberg NEF still expects them to be up 32% year-over-year, so this is all far from dead in the water, like the cable news pundits think.) Here's another sign: last year, Stellantis fought against a deal the state of California struck with Ford, Honda, BMW and Volvo to voluntarily reduce car emissions over time. 

That deal actually happened in 2019, back when the Trump Administration at the time was seeking to roll back emissions standards for light-duty cars and trucks; basically, it was those automakers saying they would chase cleaner vehicles together on their own even if the U.S. backed off on such strict rules. Stellantis cried foul, but now it's in, Gov. Gavin Newsom's office announced yesterday. 

Here are the details, via Forbes:

Stellantis will cut emissions through the 2026 model year under the agreement, effectively avoiding the production of 12 million additional metric tons of greenhouse gas emissions, according to a statement from California Gov. Gavin Newsom’s office.

The automaker will also comply with California’s requirement to have zero-emission and plug-in hybrid vehicles comprise 68% of new light-duty vehicle sales by 2030, even if the California Air Resources Board can’t enforce the standards due to judicial or federal challenges.

Stellantis will also invest $4 million to produce public charging stations in California’s rural areas and its federal, state and county parks, in addition to another $6 million investment in other states that have adopted California’s emissions standards. 

And here's the really important part: even if America gets a second Trump administration and the president attempts to remove California's emissions-setting authority, which he tried to do once later in his first term until Biden's EPA reversed it, this is a voluntary agreement with the automakers. It will stay in place regardless of any attempts to try that again.

“Together, we have found a win-win solution that is good for the customer and good for the planet,” Stellantis CEO Carlos Tavares said. “This agreement will avoid 10 to 12 million metric tons greenhouse gas emissions over the lifetime of the agreement and will also allow our U.S. customers to fully benefit from our advanced technologies, including five plug-in hybrids and two pure electric vehicles.”

90%: Elon Musk VS. The Culture Wars In Germany 

When he's not doing ketamine for the sake of Tesla's investors, CEO Elon Musk does things like jaunt off to Germany to try and cheer up his workers after so-called eco-activists attacked the Giga Berlin factory and knocked it offline for a spell. That's certainly unfortunate, but thankfully, it appears no one was injured.

Still, the incident shows that Musk, once hailed as a hero for setting up one of Europe's top EV powerhouses, has since become an extremely polarizing figure on both sides of Germany's political aisle. Tesla, too, even though it's probably done more to reduce tailpipe emissions than any other car company. This is from the Wall Street Journal:

Musk’s ambition to cement Tesla’s position as the EV leader in Europe has become entangled in local culture wars, making his shining factory a lightning rod for a range of critics—from local citizens to environmental activists, left-wing militants and far-right politicians. 

[Local resident Manuela] Hoyer is one of the central figures organizing opposition to GigaBerlin, as Tesla calls its plant. She and her allies scored a victory last month when 62% of residents voted in a nonbinding referendum to deny Tesla’s bid to knock down 250 acres of local woodlands to make room for more factory buildings, a train yard and a daycare center. 

“Our concern is about the water protection areas in the forest,” she said. GigaBerlin sits amid acres of pinewood forests and country roads winding past lakes whose shores are dotted with bungalows and boat docks. 

And then on the other side of things, you have Germany's right-wing Alternative for Germany (AfD), which is opposed to electric anything, as well as people who don't like all the foreign workers Tesla employs there: 

In an unexpected confluence of trends, local leaders of Germany’s far-right AfD have joined the far-left in opposing the factory’s expansion. In addition to concerns about the landscape, the AfD points to the thousands of foreigners from Poland and elsewhere recruited to work here. 

Recent public opinion polls project the AfD could become the strongest party in the state of Brandenburg, where Grünheide is located, at regional elections in September. The party could garner up to 30% of the vote, according to polls. 

The Tesla plant has done little to benefit local residents, said Kathi Muxel, an AfD official on the Grünheide city council and in the state legislature.

“In the summer, you can see the Tesla workers from Poland sleeping in their cars at the lake,” Muxel said at a roadside cafe and convenience store. 

What an unusual spot for Tesla to be in. 

100%: How Much Can Political Opposition Stop The Electric Revolution?

There is a very, very good chance that Trump could retake the White House in November, and Germany's AfD would be the second largest party there if an election were held today, the AP reports. This is a global trend, so how much can it really put a potential damper on an electric-car future? Or is that future inevitable based on market forces alone?

Contact the author: patrick.george@insideevs.com

 

 

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