🚗 Audi is investing over 4 billion dollars in the U.S.

@Multibagger I don’t quite see it the way you do. Economic policy is never apolitical. And whether it supports Trump, the Democrats, or anyone else shouldn’t really matter to us. As long as the American president is democratically elected, we have to deal with it (and, by the way, the same goes for all other political representatives). After all, no one complained when German business leaders were lining up to visit China—what were human rights again?

I also don’t see the crisis as merely homegrown, but rather as primarily politically driven. There’s no other way to explain why it’s affecting all German manufacturers and brands equally. The politically mandated shift to electric mobility has destroyed our only competitive advantage. With our cost structure, we can’t compete against the heavily subsidized Chinese manufacturers (most of whom, by the way, are operating at a loss—unlike the German ones). Ultimately, German manufacturers have lost both the U.S. and China as markets at the same time. There’s just not much you can do about that...

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@Part_Time_Joe Audi even has a rule in its own Code of Conduct stating that it should not take a political or partisan stance. I don't know why that's supposed to be a matter of taste 🤷🏼‍♂️

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@Multibagger I totally agree 💯

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Chris@Multibagger

@Part_Time_Joe That’s factually incorrect as far as internal combustion engines are concerned. The trend toward electric mobility in China has been foreseeable for decades. But German manufacturers have always assumed that “Made in Germany” would prevail. However, that was only possible as long as there were enough Chinese consumers who were willing and able to pay the premium. And in Germany, they failed to continue working on developing small, affordable electric cars.

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@Creutzfeldt_Jakob Well, in that case, we have to be just as consistent and critically scrutinize any political involvement on the part of every corporation. It’s usually only when we support the “right” ones that everything seems to fall into place again. And that’s just classic double standards.

In the end, this is all about business interests. The plant is also intended to facilitate negotiations for subsidies and tariff relief, and Germany, in particular, stands to benefit from this.

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@Multibagger That may be true. But on the one hand, more internal combustion engine vehicles are still being registered in China than electric vehicles (... yes, hybrids are also internal combustion engine vehicles), and on the other hand, people tend to forget about the rest of the world. The rest of the world will continue to drive internal combustion engine vehicles for the foreseeable future.

The problem isn’t the shift to EVs, but rather the pace of that shift. Manufacturers in China are heavily subsidized (incidentally, 90% of them are insolvent again) and were able to start from scratch. German manufacturers received no subsidies and had to build around existing structures.

This idea that “Germany failed to develop affordable internal combustion engine cars”... sorry, but that’s populist nonsense. It’s not possible to offer a car for under 20,000 in Germany and sell it profitably. The cost structures simply don’t allow for it (thanks to the unions). The affordable models are all produced abroad.

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@Part_Time_Joe A quick addendum: The shift toward electric mobility—and this was clear to anyone who had looked into it—goes hand in hand with massive job losses. It starts with the fact that EVs are less complex. I just don't get why people are complaining now...

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@Part_Time_Joe Yes, I also question every instance of political involvement by a corporation—no double standards. I’m especially skeptical when the corporation itself prohibits this kind of political involvement.

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Chris@Multibagger

@Part_Time_Joe I did say that I don’t condemn the decision to build a factory in the U.S. based on economic interests. That’s just the way things go. But whether one has to announce this decision at one of the incumbent president’s largest campaign rallies—especially since he’s the one who forced this move through his tariff policy—is another matter entirely. By doing so, I’m rewarding the blackmailer twice over. I’m giving in to his ransom demand and making it clear that I view blackmail as a perfectly acceptable option.
It doesn’t matter whether the blackmailer is a Democrat or a Republican.

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Ver todas las 19 respuestas adicionales

@Creutzfeldt_Jakob I don’t necessarily mean you. But just look at who’s getting upset about this now. Where are all these people when BMW terminates the lease agreement with the AfD candidate? Where are all these people when, out of a sense of “free courage,” the logo is once again colored in rainbow hues (but of course only here and not in Islamic countries)? And where are they when it’s time for yet another economic summit in China?

I also don’t see Audi getting politically involved in the U.S. or actively campaigning. Trump is the president, after all. So you talk to the president—it’s about economic interests. Incidentally, it’s about our economic interests.

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What a PR disaster for Audi/VW. Letting Trump use them as pawns was definitely unwise.
A U.S. plant certainly has its advantages; on paper, it’s undoubtedly a well-thought-out move. But the way the whole thing was presented and communicated—especially with simultaneous job cuts in Germany—will continue to have negative repercussions for a long time to come.

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@Creutzfeldt_Jakob I don't see it that way. The people who are getting worked up about this right now are the very ones responsible for the whole thing (and, by the way, most of them aren't Audi customers anyway). Today's world moves fast, and by tomorrow it will all be forgotten.

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@Part_Time_Joe Yeah, I guess everyone has their own priorities….

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@Part_Time_Joe Today's world may be fast-paced, but fortunately there are still people for whom morality matters and who won't get caught up in such games. Just because the world is currently led by the most megalomaniacal and corrupt people doesn't mean we have to applaud them, too.

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@Olli68 That’s a point open to debate. Our moral standards apply primarily to ourselves. We base them on a humanistic worldview. Other cultures don’t do that—or do so only in a modified way. If you apply such standards, you wouldn’t be able to trade with half the world.

But to each his own. Everyone is free to stop buying cars from the VW Group and switch to Chinese manufacturers if they feel that aligns better with their moral values.

Germany, in particular, always sets itself apart as the world champion of exporting morality. Economically, however, we’re falling behind. In the end, it’s simply a decision driven by self-interest, and morality is something you have to be able to afford—which we can’t at the moment.

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@Part_Time_Joe Yes, everyone is free to support their moral convictions with their wallet. But that doesn’t mean I have to go out and buy a Chinese car. There are good Japanese cars, too. They haven’t sought their salvation exclusively in the Chinese market. Nor do they have to be used as a campaign tool by a would-be dictator.

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@Olli68 That said, as I mentioned, I see the corporations as bearing only partial responsibility here. I believe the fact that we—or rather, German corporations—find ourselves in this situation at all is primarily due to German policy, but above all to European policy. If they had acted with more foresight, Audi wouldn’t have had to strike a deal. But now it’s too late. We have a choice between the deal and even more—or even faster—job cuts in Germany. I’d rather go with the deal…

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@Part_Time_Joe These mistakes weren't made just in recent years. Most of them were made more than 20 years ago.

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@Olli68 Do you mean politicians or manufacturers? What mistakes are you referring to?

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@Part_Time_Joe The automakers. It all started with the Chrysler takeover in the mid-90s. The German automakers bought up brands that didn’t really fit their brand image (Lamborghini, Bentley, Rolls-Royce, etc.). It was a case of megalomania, driven by the desire to become the biggest in terms of unit sales alone. They neglected their target audience and their willingness to innovate.
As far as I know, VW was the first automaker in the world to experiment with an electric (or hybrid) vehicle in the early ’90s. The project wasn’t pursued further. Today, nearly every German electric car lags behind Chinese models in terms of technology. Some features are even simply copied. In my view, these are all problems because 20 years ago, M&A was prioritized over research.

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Smudo@Smudeo

Thanks for your post; I’ve been waiting for it.
4 billion is a huge number for a 30-unit plant. Two years ago, they were available for less than 1.
See also VW’s 90-unit plant in Puebla.
Why not use existing plants within the group (Scout, VW) in the U.S. to save on investment costs and increase profit per unit?
They aren’t fully utilized as it is.
AUDI here in Neckarsulm and Ingolstadt are operating at less than 50% of capacity in some cases—is there enough demand?
The U.S. is a highly contested market—returns still need to be established there.

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@Smudeo Without knowing all the details of the deal, it’s obviously hard to assess. But I can certainly imagine that it’s not that easy to convert an existing plant to produce other models? I think they’ve already thought this through. The solution would be too obvious for them to have overlooked it...

We also can’t forget that costs in the U.S. are significantly lower than here in Germany—from energy costs (in the U.S., wholesale gas costs about 1/10 of what it costs here!!) to other taxes and fees.

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Smudo@Smudeo

@Part_Time_Joe Jupp Bekannt,
But production costs aren't just about energy—they also include labor.
Labor costs in the U.S. are higher than in the EU.
Scout's production facilities are state-of-the-art;
VW Chattanooga has both powertrains, as does Audi's Kubus plant.
I'm skeptical about this and view it critically from an economic standpoint.

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@Smudeo Where did you get those figures? According to the VDA, an hour of labor in the automotive industry in Germany costs 65.60 euros. In the U.S., it’s only 44.08 euros. So that’s a cost disadvantage of a good 40%?

On top of that, as you say, there are other costs. Energy, taxes, other levies (tariffs, etc.). Just how big the actual cost advantage in the U.S. is depends on where Audi sources its vehicle parts, but it’s pretty much undisputed that production costs there are significantly lower than in Germany.

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Mo@Mo28

I don't think we can afford to have this discussion about morality. There are reasons why Audi wants to build a new plant in the U.S. while plants in Germany are set to close. Maybe we should focus on that instead.

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Bruzze T.@Steel-Team

I think it’s great that our completely brain-dead government is finally realizing that more and more manufacturing and industry are getting the hell out of this lousy FRG because of high costs and taxes!!! Basically, the only people who care that the poor Audi CEO made an appearance in Georgia during the upcoming elections are the Trump haters! But Trump’s tariff policy is having an effect—it seems to be working, at least in part 😉

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