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Audi to bring key cars for U.S. market to North America -

CEO

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Could build new plant or produce at existing VW Group

facility

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Will also localise supplier network - CEO

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Long-term trends informed strategy, not short-term changes

- CEO

By Victoria Waldersee and Christina Amann

BERLIN, Feb 21 (Reuters) - Volkswagen's Audi

will expand production in North America with a focus on its most

important cars for the U.S. market and will make a decision on

where to base itself this year, its CEO said on Friday.

The carmaker is the latest company looking to localise

production near the increasingly protectionist U.S. market

rather than exporting from Europe and will either build a new

facility or produce at an existing Volkswagen Group plant,

Gernot Doellner told Reuters.

Audi, which has one plant in Mexico, has mulled bringing

more production to North America since 2023, spurred by tax

incentives offered under the Inflation Reduction Act passed by

former U.S. president Joe Biden.

Now, President Donald Trump's threat to impose a tariff of

around 25% on all car imports has created a fresh incentive,

leading Audi's Doellner to set out a specific timeframe for the

company's plan for the first time.

VW CFO Arno Antlitz told Reuters in January that the group,

among the most exposed to tariffs because of its large Mexico

site and its battery plant under construction in Canada, planned

to produce more in the United States.

"We have various options: We could go into existing

Volkswagen Group plants or we could build up additional

capacity," Audi CEO Doellner, who also sits on Volkswagen's

management board, told Reuters.

"We are open to solutions and are evaluating the various

options. We will make a decision this year," he added, declining

to specify whether the site would be in the United States.

LONG-TERM STRATEGY

As companies are eyeing U.S. expansion, EU officials are in

intense talks to avert new tariffs and reduce trade barriers.

The EU has a 10% tariff on passenger cars, four times the

rate of the U.S. passenger car tariff of 2.5%, though the U.S.

has a much higher 25% tariff on pickup trucks.

The Volkswagen Group has one plant in Tennessee producing

the electric ID.4 and two popular SUVs. Its Scout subsidiary is

building a second factory, due to begin production in late 2026.

In Puebla, Mexico, Audi already produces the Q5 SUV and

announced last June that it would build another EV in the

region, where Volkswagen Passenger Cars also makes the Jetta,

Tiguan and Taos.

But imports from Mexico and Canada may soon be hit with

another 25% tariff, leaving production in the U.S. as the only

tariff-free option.

Carmakers with larger U.S. factories that export some of

their cars, like BMW, are less worried about the

tariffs as they could reshuffle production to create more space

to produce cars for sale locally.

Doellner declined to say which models the new site would

make, stating only that the focus would be on electric vehicles

and SUVs.

Audi sold just under 197,000 vehicles in the U.S. last year,

11% of total sales.

The CEO emphasised that plans to localise production had

been underway well before Trump took office.

"We have a long-term strategy oriented towards the market

and customer needs, rather than short-term changes," he said.