Chattanooga, Tennessee, August 8, 2025
News Summary
Audi is exploring the establishment of a new production facility in Chattanooga to combat high tariffs on vehicle imports from the EU and Mexico. The move aims to enhance production capabilities and reduce operational costs amid changing tariff regulations. With an existing manufacturing presence in the area through its parent company Volkswagen, Audi may leverage local resources to produce an estimated 150,000 to 200,000 vehicles annually as part of a broader strategy to boost U.S. sales.
Chattanooga, Tennessee – Audi is considering establishing a production facility in Chattanooga as part of its strategic response to high tariffs affecting vehicle imports from both the European Union (EU) and Mexico. This potential move follows Audi’s reliance on vehicle exports from Europe and its existing facility in Mexico since 2016, which currently only assembles the Q5 model.
The Volkswagen Group, Audi’s parent company, has a longstanding presence in Chattanooga, operating an electric vehicle manufacturing plant that produces the all-electric ID.4 model. This existing infrastructure allows Audi to potentially leverage local supplier networks, which could significantly reduce the costs and construction time associated with setting up a new facility.
Currently, Audi has no manufacturing footprint in the U.S. As a result, it depends entirely on vehicle imports from its European plants and its Mexican assembly facility. New U.S. tariffs have intensified operational challenges; specifically, a 25% tax on vehicles imported from Mexico, which is projected to increase to 30%, and a prospective 15% tariff on EU imports. In light of these tariff adjustments, Audi’s executive team is reevaluating its production strategy and overall sales goals in the region.
The proposed facility in Chattanooga has the potential to produce between 150,000 and 200,000 vehicles annually. Audi is aiming to elevate its U.S. sales volume to 300,000-400,000 vehicles per year, an increase from the current sales figure of approximately 200,000. This growth plan reflects Audi’s broader strategy to enhance its presence in the U.S. market, alongside its commitments in Europe and China.
Specific vehicle models that may be produced at the new site have not yet been confirmed, but discussions are ongoing between Audi’s leadership, including CEO Gernot Döllner, and key stakeholders within the Volkswagen Group. These conversations relate not only to production logistics but also to potential tariff implications that could arise under the Trump administration.
Other automotive manufacturers, such as Mercedes-Benz and BMW, are similarly increasing their investments in U.S.-based production to counteract the challenging tariff landscape. Meanwhile, Audi’s CFO, Jürgen Rittersberger, outlined plans to introduce ten new models to the U.S. market, with their production sites to be finalized later this year.
The Chattanooga facility, which opened in 2011, is also actively working towards unionizing its workforce. This initiative highlights the evolving dynamics of labor relations within the automotive sector as manufacturers attempt to address operational challenges and foster a productive work environment.
As Audi contemplates expanding its footprint in the U.S., it recognizes the importance of aligning its production capabilities with market demands, aiming to achieve significant growth in the competitive automotive landscape.
FAQ Section
Why is Audi considering a new production facility in Chattanooga?
Audi is exploring this option due to high tariffs on vehicles imported from the EU and Mexico, which have adversely affected their operational costs and strategy in the U.S. market.
What vehicles are currently produced in the Chattanooga facility?
The Volkswagen Group currently produces the all-electric ID.4 model at its Chattanooga facility.
How many vehicles are expected to be produced at the new Audi facility?
The proposed facility could potentially produce between 150,000 and 200,000 vehicles annually.
What tariffs are impacting Audi’s U.S. operations?
Currently, a 25% tariff on vehicles imported from Mexico is projected to rise to 30%, and a new 15% tariff on imports from the EU is anticipated.
What is Audi’s sales goal for the U.S. market?
Audi aims to increase its sales volume in the U.S. to between 300,000 and 400,000 vehicles per year.
What are other automotive manufacturers doing in response to tariffs?
Other manufacturers, such as Mercedes-Benz and BMW, are also ramping up production in the U.S. to mitigate the impact of tariffs on their operations.
Deeper Dive: News & Info About This Topic
HERE Resources
Volkswagen’s Chattanooga Plant Adopts Two-Shift Production Model
Chattanooga’s Automotive Industry Faces Uncertain Future Amid New Tariffs
Chattanooga Considered for Porsche and Audi Assembly Plant
Additional Resources
- Times Free Press: Audi Considering Plant in Chattanooga
- Wikipedia: Audi
- Electrive: Audi Considers Building Twin Plant
- Google Search: Audi production facility Chattanooga
- Local 3 News: Could VW Chattanooga Add Audi Vehicle Production?
- Encyclopedia Britannica: Tariff
- Road & Track: Audi US Production Facilities and Tariffs
- Google News: Audi tariffs
- CBT News: Audi Eyes U.S. Plant to Counter Auto Tariffs
- Google Scholar: Audi production US
- Automotive News: Audi US Production and Tariffs
Author: STAFF HERE CHATTANOOGA WRITER
The CHATTANOOGA STAFF WRITER represents the experienced team at HEREChattanooga.com, your go-to source for actionable local news and information in Chattanooga, Hamilton County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Riverbend Festival, Chattanooga Oktoberfest, and Moon River Festival. Our coverage extends to key organizations like the Chattanooga Area Chamber of Commerce and United Way of Greater Chattanooga, plus leading businesses in manufacturing, insurance, and utilities that power the local economy such as Volkswagen Chattanooga, BlueCross BlueShield of Tennessee, and EPB. As part of the broader HERE network, including HEREBristol.com, HEREKnoxville.com, HEREMemphis.com, and HERENashville.com, we provide comprehensive, credible insights into Tennessee's dynamic landscape.
