The chief executive of German automotive behemoth Volkswagen Group says his companies will have to scrap plans for a new production plant in the US unless tariffs imposed by US President Donald Trump are reduced.
“If the burden of tariffs remains unchanged, a large additional investment is not financially viable,” Oliver Blume, told German business newspaper Handelsblatt today.
“We need a reduction of costs in the short term and reliable business conditions in the long term.” He added that talks with the US administration had so far not yielded any results.
Volkswagen Group – which includes brands such as VW, Audi and Porsche – had first presented plans for an Audi plant in the US in 2023. In May 2025, the company said it was examining three locations including Chattanooga, Tennessee and Columbia, South Carolina.
Blume now says the auto tariffs imposed by Trump in 2024 have so far cost VW €2.1 billion in the first three quarters of 2025. He added: “So you can calculate how much additional burdens would cost us.”
Volkswagen Group is currently finalising its five-year investment plan. The company has already reduced its forecast spending on factories, new models and technology from €180 billion down to €160 billion. Further cuts may be necessary before the automaker will present the plan in March, together with its 2025 annual results.
Blume indicated that the company would aim to focus its investments better. Europe will remain the carmaker’s most important market, he said.
The group is planning to invest €10 billion in battery production in Spain as well as a new family of compact electrical cars under its VW, Cupra and Skoda brands.
Blume also demanded a more “active” industrial policy in Europe as well as a focus on reducing red tape and providing for fair trade conditions.
He was especially critical about Europe’s reaction to US tariffs, bemoaning that European carmakers had to pay 15 per cent tariffs on exports to the US while US producers are only paying 10 per cent and may soon not pay any tariffs at all.
“This deal is asymmetrical and contorts competition,” Blume stated.
