BEERG Newsletter - EU/US: VW to build new plants in US and Canada

In further proof that European companies are being increasingly attracted to the US by the billions in green subsidies available under President Biden’s Inflation Reduction Act, Volkswagen has announced that it is to build a major auto plant in South Carolina. VW is reviving the Scout brand which it bought last year, and cars made it South Carolina will be marketed under that name.

The plant is expected to cost €1.9 billion or about $2 billion at current exchange rates, Volkswagen said in a statement. Breaking ground will take place mid-year, with production of the first Scout vehicles expected to begin in 2026. With the Scout brand set to go all-electric, VW has that it is setting up a battery plant in Canada. The automaker’s Audi brand is said to be exploring options to set up an assembly operation of its own in the U.S.

“The shift in the North American market toward electric mobility is a historic opportunity for the Group to take a stronger position, further diversify our global presence, and increase our resilience,” Volkswagen Group CFO Arno Antlitz wrote in a post on LinkedIn. ”We have a unique chance to grow profitably and to grow electric in the U.S. We intend to seize it.” 

The VW announcement underscores the need to take measures to safeguard European industrial competitiveness, including avoiding measures that could damage that competitiveness such as allowing EWCs to ask courts for injunctions to block change where they “believed” they had not been properly informed and consulted. The United Auto Workers, along with IG Metall and the VW World Works Council released a statement looking forward to unionising the plant. 

“We also welcome the fact that the (VW) Board of Management and the Supervisory Board have clearly stated that Volkswagen and Scout will respect employees and trade union rights at the new site. This means that future employees will have the right to decide on union representation without intimidation or influence,”

 the union statement said, noting that “IG Metall, the UAW and the Volkswagen Group and World Group Works Council will monitor the process in a constructive way.”

To date, the UAW has been unsuccessful in unionising any of the growing number of foreign-owned auto plants in the US South. 

But it is not all bad news for European industry. The world’s largest seller of electric and hybrid cars will not consider building its first European car factory in the UK because of the impact of Brexit. China’s BYD, which has been backed by the US investment billionaire Warren Buffett since 2008, intends to take on household names such as Tesla and become one of the three most popular electric vehicle brands in Europe by the end of the decade.

China’s top-selling electric car maker, which is targeting sales of about 800,000 cars annually in Europe by 2030, has shortlisted locations in Germany, France, Spain, Poland and Hungary. BYD, which stands for Build Your Dreams, said the UK had not even made a top 10 list of possible locations to build its first European car plant. The company already makes buses in Europe.

“As an investor we want a country to be stable,” said Michael Shu, BYD’s European president, speaking to the Financial Times. “To open a factory is a decision for decades. Without Brexit, maybe. But after Brexit, we don’t understand what happened. The UK doesn’t have a very good solution … Even on the long list we didn’t have the UK.”