VW Plans New $4B Audi Plant in Georgia

Volkswagen AG plans to build a new $4 billion factory for its premium Audi brand in the southern US state of Georgia, expecting the move will yield potential relief from tariffs that have severely eroded profits.

The German manufacturer will build a new plant in Macon, central Georgia, to make large SUVs including the new Q9 and Q5 that’s currently manufactured in Mexico, Audi said Saturday. Construction of the greenfield project will start next year with a capacity to produce about 200,000 vehicles per year.

President Donald Trump on Saturday called the plan “incredible,” saying it was a testament to the impact tariffs levied by the US on auto imports are having. The move, set to create 4,500 jobs, heralds a political win for Trump in the final stretch of the midterm election cycle.

Unlike competitors BMW AG and Mercedes-Benz Group AG, Audi relies exclusively on imports from Europe and Mexico into the US, making it subject to Trump’s punishing tariffs. Its top-selling Q5 SUV is hit particularly hard because it doesn’t comply with the USMCA, the trade pact with Canada and Mexico Trump negotiated in his first term. Audi’s US sales were down 16% this year through September.

“Audi can only be successful if we have a global footprint,” Audi Chief Executive Officer Gernot Döllner said Sunday during a call with reporters, adding that Audi is currently loss-making in the world’s second-biggest auto market. “By investing here, we’ll make our business model more robust.”

Parent VW still needs to finalize the plan for the facility. Its powerful worker representatives, which make up half the supervisory board, signaled they may extract concessions to greenlight the factory during difficult labor, wage and investment talks in Germany.

Döllner said he expected a decision by VW’s supervisory board next month.

The company has been through a bruising few months as management and workers clashed over measures to boost competitiveness that at one point targeted plant closures in Germany. Last month, VW won an agreement to double global job cuts to 100,000, or roughly 15% of its workforce.

“Additional production in new location always has to complement and benefit existing sites in the global production network,” VW’s works council said Sunday in an email. “In this respect, there are several open questions yet to be answered internally through relevant committees.”

Europe’s biggest carmaker has considered adding another American manufacturing site on and off for years, including dating back to 2018 during Trump’s first term. Audi had repeatedly delayed a decision, with VW CEO Oliver Blume saying the group cannot afford to pay high tariffs and heavily invest in new production capacity at the same time.

In exchange for the factory commitment, Trump and VW will keep holding talks on some kind of tariff reprieve, a US official involved in the negotiations said Saturday. Any changes would apply to all manufacturers who expand US production, not just Volkswagen and its brand.

Talks are focused on a potential deal that would give some sort of proportional tariff relief credit to manufacturers that bring concrete commitments of new production to the US, the official said. On Sunday, Döllner declined to comment on potential future tariff relief.

Selecting Georgia places Audi’s new plant in one of America’s foremost political battleground states, creating an incentive for both Democrats and Republicans to back the deal, or at least not upend it.

Trump is traveling across the country in a pre-voting campaign blitz, even as polls show his popularity at or near all-time lows and Republicans facing the prospect of a sizeable defeat on Nov. 3.

It generally takes years to build a new auto assembly plant, and Audi expects the first models to roll off the production line in the early 2030s.

VW, which owns Audi and Porsche, is trying to reset a US business that’s long fallen short of its ambitions. Blume has identified North America as one of VW’s biggest remaining growth opportunities, particularly for rugged SUVs and pickups that produce large profits, and where the group has little presence.

It’s also grappling with waning sales in China, which had long been a key source of growth and earnings for the German carmaker.

“We are planning to bring our biggest and most premium SUVs and produce them here in Macon,” Döllner said at Saturday’s rally, standing near Trump. “This is a long-term investment because we believe in the American market.”

Audi plans to introduce the Q9 in the US this year, its biggest SUV and one aimed at winning market share from models like the Mercedes GLS and General Motors Co.’s Cadillac Escalade. The new model will be made in Slovakia, though, meaning it too would be subject to Trump’s auto tariffs.

Volkswagen also owns a factory in Tennessee that was organized by the United Autoworkers Union in 2024, and is building a plant in South Carolina that will produce Scout Terra SUVs and Traveler pickups. Audi has previously signaled that making vehicles at the latter facility would be an option.