Authorities in South Carolina said they would bear the bulk of the cost of building a new Volkswagen plant in the state to produce Scout electric SUVs. The grant amount will be $1.3 billion for a total project cost of $2 billion. In addition, Volkswagen will receive almost $200 million more in tax credits, as well as very good prospects for sales of finished products – in accordance with the American Inflation Reduction Act passed last year, the State will give electric vehicle buyers a deduction of up to $7,500. Volkswagen expects to receive even more for the construction of its battery factory in the United States – from 9 to 10 billion euros in grants and loans, according to the Financial Times. Initially, the company planned to build this plant in Eastern Europe, but then, according to the publication, the plans changed, which was announced to representatives of the European Commission in early March.
Neither Germany nor other EU countries can offer such conditions to manufacturers. It is therefore not surprising that one German car manufacturer after another has crossed the ocean. BMW is in the process of expanding and modernizing its existing production in the same South Carolina, investing 1.7 billion euros in this activity. Audi also plans to open its first plant in the United States. According to company boss Markus Duesmann, the final decision has not yet been made, but it will most likely be positive. Klaus Rosenfeld, company director of Schaeffler, one of Germany’s largest auto parts suppliers, says along the same lines: “We will most likely build our next factories in America.”
“The situation is dramatic,” admits Hildegard Müller, president of the Association of the German Automotive Industry, in an interview with the Augsburger Zeitung. Nine out of ten German automakers no longer see Germany as an attractive production location, she said. Representatives of other German industrial sectors will also migrate to America, in one way or another related to renewable energy technologies, for which large subsidies are now allocated in the United States. “Audi, BMW, Schaeffler, Siemens Energy, Aurubis – the list of German companies planning major investments in the United States or expanding existing facilities is getting longer and longer. Whether building electric vehicles, to produce hydrogen or to recycle metals – generous subsidies attract those who are associated with environmentally friendly technologies,” says the German television channel ARD. According to the Association of Chambers of Commerce and German industry, one in ten German companies now plans to move production overseas, and America is the most attractive destination.
“The US Inflation Reduction Act jeopardizes the competitiveness of Germany and the EU,” says the Union of German Chambers of Commerce. But what can be opposed to American protectionism, no one, in fact, knows. The Europeans have not yet been able to come to an amicable agreement with the Americans, and now they are drawing up their own plan to subsidize the industry, hoping to agree to it in the very near future. But, as is usually the case in the EU, the process is dragging on due to internal conflicts and contradictions between countries. Business can’t wait long. According to the Financial Times, before abandoning its plan to build a battery factory in Eastern Europe, the Volkswagen group had been waiting for several months from the European Union for some sort of response to the American law under the form of its own financial proposals to builders. But he didn’t wait and decided he still had to move to the United States.
