Audi may build future EVs in the United States due to tariffs
Business Audi may build future EVs in the United States due to tariffs
In a move aimed at adapting to the rapidly changing tariff-centric trade environment, German luxury automaker Audi is said to be adjusting its production plans to reduce its exposure to the policies set forth by the Trump Administration. According to a new report by Automotive News and its German affiliate Automobilwoche, Audi could use VW Group manufacturing assets in the United States to build its vehicles.
Currently, most of Audi's U.S. lineup is imported from Mexico and Europe-a problem that could spell trouble for the automaker, as 25% levies went live on May 3.
Sources told the outlet that Audi could build the compact Q4 E-tron EV crossover at VW's plant in Chattanooga, Tennessee, while the bigger Q8 E-tron could see production moved from Mexico to the soon-to-be-completed Scout plant in Columbia, South Carolina. They also noted that Audi is looking for a potential U.S. site to build the Q6 E-tron.
In a statement to the outlet, Audi did not confirm any plans to move production stateside. However, it reiterated that the U.S. is its "third global pillar" in its global growth strategy, alongside Europe and China.
"We want to increase our presence in the U.S.," the spokesperson said. "We are currently examining various scenarios. We are confident that we will be able to decide on the specific details in consultation with the Group before the end of this year."
The news comes as Audi posted a 12% year-over-year jump in quarterly revenue during Q1 2025, which it credits to increased sales of its EVs. From January to March, the brand took in 15.43 billion Euros (~$17.49 billion), an improvement from the 13.73 billion Euros (~$15.56 billion) a year ago. During the same announcement, Audi CFO Jürgen Rittersberger said the automaker is set to introduce 10 models for the U.S. market and that production facilities for these models would be decided later this year.
Audi faces a challenging tariff scenario.
Of the trio of German luxury leaders, including Mercedes-Benz and the Bavarian Motor Works, Audi stands alone as an "odd one out" because it currently does not have any manufacturing facilities in the U.S. While the X3 is built at BMW's sprawling manufacturing facility in Spartanburg, South Carolina, the Audi-badged rival is built south of the border.
Audi's best-selling car, the Q5, is built at the brand's lone North American factory, in San Jose Chiapa, Mexico. Since it opened in 2016, the Mexican factory has produced over a million Q5s. In 2024, 56,799 Q5s were sold in the United States, accounting for more than a quarter of Audi's sales in the region.
Related: Why Audi's Bestseller Might Vanish from US Dealerships
Final thoughts
This news underscores the logistical supply chain challenges that many automakers face, including ways to absorb the 25% tariffs on imported vehicles and car parts, which have come into effect fairly recently.
Bloomberg reports that on May 2, the Trump administration announced that components that qualify for preferential treatment under the USMCA would be exempt from the 25% tariff. White House officials confirmed that Trump's move was made to help automakers relocate their parts supply chain to the United States.
However, for Audi, it wouldn't be easy, as the Q5s it makes in Mexico are not USMCA-compliant. According to data from American Automobile Labeling Act (AALA) documents provided by the National Highway Traffic Safety Administration (NHTSA), just 2% of its parts are made in the U.S. or Canada-making them Q5 a giant red flag for tariffs.
Related: Auto Insurance Industry Faces Up to the Self-Driving Car Revolution
Copyright 2025 The Arena Group, Inc. All Rights Reserved.
This story was originally published May 6, 2025 at 1:23 PM.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Miami Herald
an hour ago
- Miami Herald
Subaru Is Making a Huge Bet on the Forester to Navigate Trump Tariffs
Japanese automaker Subaru is resting on its bestseller, the Forester crossover SUV, to be its north star as it navigates the rough seas caused by the Trump administration's heavy automotive tariffs. According to a new report by Nikkei Asia, Subaru hopes the new Forester SUV will help cushion the blow from steep tariffs and keep its footing in its most important market. At the company's annual shareholder meeting in Tokyo this week, Subaru President Atsushi Osaki made it clear that Subaru will stay committed to its stateside customers. "We'll overcome this by maintaining the U.S. as our main market and balancing it with Japan and Canada," Subaru President Atsushi Osaki said at the automaker's annual shareholder meeting on June 25. To say that Subaru depends on the United States auto market to survive would be an understatement. According to its figures, more than 70% of Subaru's global sales are in the United States-far more than its Japanese automaking rivals like Honda and Toyota. In fiscal 2024, Subaru sold 662,000 vehicles in the U.S., or 71% of its total global sales of 936,000. Despite this, Subaru's manufacturing situation leaves it vulnerable to Trump's tariffs. Roughly half of Subarus sold in the States are Japanese imports, which means they're now subject to the 25% tariffs imposed by the Trump administration earlier this year. Subaru estimates those tariffs could cost the company $2.5 billion if they do not work proactively, making its $2.79 billion operating profit from the 2024-2025 fiscal year useless. However, the atmosphere around the shareholder meeting suggested that Subaru would heavily rely on the Forester as a savior for the marque. The latest version of the brand's most popular SUV first went on sale in the U.S. in 2024 with a purely gasoline version, followed by a Toyota-developed hybrid model released earlier this year. Demand is already strong. According to figures from Subaru of America, 15,434 Foresters moved off dealer lots and into the driveways of new owners in May 2025. As of last month, 84,629 Foresters had been sold since the start of this year, a 3.5% year-over-year increase. In addition, Osaki noted that strong Forester sales in Japan could reduce the impact of U.S. tariffs. "The new Forester is performing extremely well," Osaki said. He also added that the hybrid version was selling beyond its expectations. To help further cushion its tariff impact, Subaru plans to ramp up production in its U.S. factory in Indiana, its only overseas plant that makes finished cars. Starting this fall, Subaru will invest 40 billion yen (~$277 million) to begin producing the new Forester at the plant. The factory currently churns out around 340,000 to 350,000 vehicles annually, but Osaki said it could push past 400,000 with the new investment. Still, shifting more production away from Japan caused concern among shareholders. Subaru's domestic manufacturing operations are centered in Gunma prefecture, where many of its suppliers are also based. Osaki acknowledged the dilemma, noting that boosting U.S. output is impossible without its suppliers. "It's true that it would improve our ability to deal with the tariffs, but it would be would be difficult without cooperation from all of our suppliers," Osaki said in response to shareholder questions. "We need to think about this comprehensively." Subaru itself is in a precarious position. Last month, it informed dealers that price increases would add an additional $750 and $2,055 to the cost of vehicles, depending on the model and trim. Specifically, Forester buyers got a price hike between $1,075 and $1,600, depending on trim, while Crosstrek and Impreza buyers got hit by a $750 price bump. At the time, Subaru did not explicitly cite the tariffs as the reason behind the price bumps but noted that they are a response to "current market conditions." "The changes were made to offset increased costs while maintaining a solid value proposition for the customer. Subaru pricing is not based on the country of origin of its products," it said. Fast-forward to now, it seems that Subaru is proactive in recognizing what is working and what is not, though it is tough to tell what the tariff picture will be. According to a new report by Bloomberg, Japan's chief trade negotiator Ryosei Akazawa is on his way to Washington, D.C., to hold his seventh round of trade negotiations with his American counterparts. Copyright 2025 The Arena Group, Inc. All Rights Reserved.
Business Insider
an hour ago
- Business Insider
General Mills (GIS) Slashes Revenue Forecast as Trump Tariffs Squeeze Margins
Of late, General Mills (GIS) can't catch a break. Despite this week's fiscal fourth quarter 2025 earnings report featuring a beat on earnings per share (EPS), its stock dropped due to concerns over the company's strategic reinvestments and the growing impact of U.S. trade policies. Indeed, the consumer food company expects flat-to-negative organic sales and a drop in adjusted operating profit for the upcoming fiscal year. As price data shows, investors have reacted negatively to this week's earnings news, causing GIS stock to decline by almost 6%. Confident Investing Starts Here: I believe that investors have every right to feel uneasy due to a combination of internal (volume loss in its key market) and external (Trump's tariffs) threats, making me cautiously Neutral on GIS stock. General Mills' Latest Financials In its fiscal fourth quarter, General Mills reported earnings per share of $0.74, surpassing analyst expectations of $0.71, while revenue met forecasts at $4.6 billion, a 3% year-over-year decline. Despite the earnings beat, shares of General Mills have declined and are now trading near 52-week lows. This reaction reflects a broader market trend: investor attention is typically more focused on forward-looking guidance than on backward-looking results, which is reasonable given that future performance carries more weight in valuation models. In that context, General Mills' cautious outlook for fiscal year 2026 has unsettled investors. The company expects organic sales growth to remain flat, with a range of -1% to 1%. However, the more significant concern was its guidance for adjusted operating profit, which is projected to decline by 10% to 15% in constant currency from the fiscal 2025 baseline of $3.4 billion. This anticipated drop is a result of a combination of internal and external challenges. Some of these pressures were already evident in the latest quarter. As TipRanks data shows, in its largest segment—North American Retail—net sales declined by 3%, despite volume remaining flat, indicating underlying pricing or mix issues that may persist. This dynamic signals a deliberate reduction in the average price per unit and aligns with the company's strategic focus on 'returning to volume growth.' However, slashing prices doesn't always translate into higher sales volumes, particularly when underlying brand challenges remain. To address this, General Mills is ramping up its advertising investments, a strategy that will likely support the company's upcoming expansion into the fresh pet food category under its Blue Buffalo brand. Trump Tariffs Stir Trouble for General Mills Increased Selling, General, & Administrative (SG&A) costs aren't alone to blame for General Mills' profitability woes. Donald Trump's infamous tariffs continue to be a significant external operating headwind for General Mills. In fact, much of the 10% to 15% operating profit can be associated with tariffs, given that many ingredients and packaging materials are imported from China, Canada, and Mexico. General Mills' Mitigation Strategy Founded in 1928, General Mills is well-equipped to navigate challenging environments and has several strategies in place to help manage current headwinds. One key initiative is its 'Holistic Margin Management' program, which targets cost savings of 4%–5% as a percentage of cost of goods sold (COGS). This effort could yield up to $100 million in savings by fiscal year 2026, helping to offset inflationary pressures on input costs. The company is also shifting focus toward higher-margin, higher-growth categories. A notable move in this direction is the recent divestiture of its yogurt brands, including Yoplait and Go-Gurt, to Lactalis and Sodiaal for $2.1 billion—a clear example of strategic portfolio realignment. This transaction not only simplifies operations but also provides additional capital to reinvest in innovation and brand development. As a result, the coming year is expected to emphasize product innovation and brand building, although these efforts may weigh on short-term profit margins. According to TipRanks data, GIS maintains a profit margin of ~13%. From a valuation perspective, General Mills' stock appears reasonably priced, trading at a forward P/E of 12.74 —approximately 32% below the Consumer Staples sector average. For comparison, The Hershey Company (HSY) trades at a P/E of 30.27, supported by more substantial EBITDA margins of 25.84% versus General Mills' 19.91%. Is GIS Stock Worth Buying? On Wall Street, General Mills carries a Hold consensus rating based on two Buy, nine Hold, and two Sell ratings over the past three months. GIS' average price target of $56 implies an 11% upside potential over the next twelve months. Earlier this month, Morgan Stanley analyst Megan Alexander assigned a Sell rating to GIS stock with a price target of $51. The analyst expressed caution due to the company's 'decelerating scanner data trends' and a 'decline in retail takeaway.' She also expects a 'high single-digit percentage decline in earnings per share (…), driven by several headwinds, including profit dilution from the yogurt divestiture, operating profit headwinds from resetting incentive compensation, and potential cost inflation impacts.' On the other side of the aisle, Bank of America Securities analyst Peter Galbo is more bullish on General Mills, issuing a Buy rating on its stock with a price target of $63. He highlighted operational improvements, including improved gross margins, and believes the company's guidance for FY26, which calls for a decline in operating profit and EPS, is 'manageable.' General Mills Faces Tough Choices with Strong Brands In conclusion, General Mills' strategy of prioritizing volume growth over near-term profitability has drawn mixed reactions, and with good reason. The company operates in a mature, highly competitive market, faces flat growth, and has limited flexibility in terms of margins. While its planned entry into the fresh pet food category is an encouraging step toward diversification, it's still unclear when—or if—the necessary investments to build and scale that brand will yield meaningful returns. Ultimately, this situation underscores a broader reality: even a legacy player like General Mills cannot rely solely on established brands. Continued relevance in the food industry requires ongoing innovation and investment. For income-focused investors, t he stock does offer a compelling 4.49% dividend yield. However, this alone may not justify the risk, particularly given that 10-Year Treasury Notes are offering comparable yields with far less volatility. At this point, General Mills' products may be more appealing on store shelves than its shares are in a portfolio.
New York Post
an hour ago
- New York Post
Harvard, University of Toronto make contingency plan to allow foreign students to study if barred from US
Harvard University and the University of Toronto have revealed a contingency plan that would allow select international Harvard graduate students to continue their education in Canada if the Trump administration's plan to impose US visa restrictions and prevent them from re-entering the US is upheld by the courts. The US Department of Homeland Security moved last month to terminate Harvard's ability to enroll international students after the university allegedly failed to provide extensive behavioral records of student visa holders the agency had requested, including footage of protest activity involving student visa holders, even if it's not criminal, and the disciplinary records of all student visa holders in the past five years. A federal judge has since blocked the government's effort to end the university's visa program. Because of potential US visa challenges, students at Harvard University's John F. Kennedy School of Government who may be unable to return to the US will be given the option to continue their studies through a visiting student program at the University of Toronto's Munk School of Global Affairs and Public Policy. The program would combine courses taught by Kennedy and Munk faculty members, according to the deans of both institutions. The contingency plans were released to ease student uncertainty, but will only be used if there is enough demand from students unable to enter the US over potential visa or entry restrictions, the deans said in a statement. The Trump administration has moved to cut billions of dollars in federal research funding for Harvard. 'With these contingency plans in place, HKS will be able to continue to provide a world-class public policy education to all of our students, even if they cannot make it to our campus this year,' Harvard Kennedy School Dean Jeremy Weinstein said. The program will be available to international students who have already completed one year at the US campus. The Trump administration has moved to cut billions of dollars in federal research funding for Harvard, in part, over its handling of alleged antisemitism and violence on campus amid anti-Israel protests sparked by the Israel-Hamas war in Gaza. Harvard University and the University of Toronto released contingency plans to ease student uncertainty about potential visa restrictions. AFP via Getty Images Weinstein announced staff layoffs at Kennedy in a recent email to faculty and staff, citing 'unprecedented new headwinds' creating 'significant financial challenges,' including a 'substantial proposed increase in the endowment tax' and 'massive cuts to federal funding of research.' Over the past five years, more than 50% of Kennedy students have come from outside the US, the school's media office said. A total of 739 students from 92 countries in programs aimed at developing leadership in public policy and government are enrolled at the school, according to the Harvard International Office website.
