Volkswagen Wants To Invest In America For The Sake Of Cheap Cars

Despite already producing some of its most popular products like the Atlas and ID.4 stateside, German automaker Volkswagen is preparing to invest more heavily in its U.S. manufacturing footprint to sidestep some of the Trump administration’s tariffs. Speaking to German newspaper Süddeutsche Zeitung, Volkswagen AG Chariman of the Board of Management Oliver Blume said that the company would bolster its existing 20,000-employee presence in the U.S. with “massive investments” that have yet to be announced, following direct conversations in Washington, D.C., with Secretary of Commerce Howard Lutnick.

Leveraging Chattanooga Even More

Blume said he would keep details of his meetings with U.S. officials confidential, but The Guardian reported that Volkswagen anticipated putting more effort into American production in order to help shape the Trump administration’s final tariff policy. According to that outlet, Blume said that he focused his discussions with the American government on Volkswagen’s future, but that he also hoped some of the solutions could be applied universally. Right now, Volkswagen builds the Atlas, Atlas Cross Sport, and ID.4 in Chattanooga, Tennessee, with further truck and bus plants under the International brand in Texas, Ohio, Alabama, and Oklahoma.

Although Blume didn’t admit to any specific supply chain plans in his discussion with Süddeutsche Zeitung, it’s possible the company may relocate North American–spec Tiguan production from Puebla, Mexico, to Chattanooga. The small SUV shares its MQB Evo platform with the Atlas and Atlas Cross Sport, so the switch could be reasonably cost-effective for the company. But in order to really sidestep tariffs, domestically produced cars also need to feature domestically produced components, which could be challenging considering the company’s turbocharged 1.5- and 2.0-liter gasoline engines – used in every non-electric Volkswagen sold in the U.S. – are manufactured in Mexico. Whether Chattanooga could also accommodate an engine plant remains to be seen.

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Porsche Might Also Need Some Help

Volkswagen isn’t Blume’s only concern, as he is also the CEO of the Porsche brand. The luxury automaker faces a significant challenge if Trump’s tariffs on European-produced cars come into effect. Most Porsches except the Slovakia-manufactured Cayenne are built in Germany, meaning the company’s entire lineup will face a 25-percent tariff on imported cars. Blume’s planned investment in Volkswagen of America could potentially be used as a bargaining chip for lower EU import duties, particularly since VW EVs and SUVs sell in much higher numbers than Porsches.

On a more official level, EU Trade Commissioner Maroš Šefčovič was expected to chat with Secretary Lutnick today during a meeting in Paris of the Organization for Economic Cooperation and Development. The informal chat was intended to further discussion between the EU and the US on a fair trade agreement, but so far, no news has come from France on the matter.

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Volkswagen isn’t the only automaker to approach the Americans on a tariff deal; BMW, the highest-valued auto exporter in the U.S. thanks to its plant in Spartanburg, South Carolina, has been eager to come to a solution. Meanwhile, Mercedes-Benz’s Tuscaloosa, Alabama, facilities produce a number of popular SUV and EV models that get exported globally, and that company has been in talks with the U.S. as well.

Source: Süddeutsche Zeitung via The Guardian