I'd be willing to bet that more German cars are made in the Deep South than many of their drivers even realize. For decades now, BMW and Mercedes-Benz have made strong use of American labor, turning out SUVs from their factories in South Carolina and Alabama, respectively. In fact, BMW is actually the largest automotive exporter by value in the United States.
Those investments have proven to be useful tariff armor in President Donald Trump's second term. The other German luxury brand, Audi, hasn't been so lucky, as it has no factories in the U.S., and being so import-heavy is hammering its bottom line. Now, Audi may turn to Scout Motors for help, and in a way that could circumvent the need for a U.S. factory—maybe.
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Welcome back to Critical Materials, our morning roundup of industry and technology news. Also on deck today: Toyota has a plan to stretch its cars' lifespans longer, and South Korea is pouring money into EV subsidies. Let's dig in.
30%: Audi's Next Large SUV Could Be A Scout EREV
EREVs—extended-range electric vehicles—seem to be the next big thing. You take a dedicated EV platform, capable of software updates and all those good things, and you add in a gas engine purely to recharge the EV battery. It gives customers a familiar experience while eliminating range anxiety, which is why it's becoming a popular choice for automakers planning their next-generation electrified SUVs and trucks.
Scout Motors' EREV trucks are expected to have around 500 miles of range, which is probably why customers are overwhelmingly opting for that version over the purely electric one. Now, according to a report from Automotive News Europe, Audi could borrow that EREV platform for a new by-America, for-Americans SUV. From that story:
Scout, a Volkswagen Group subsidiary like Audi, is constructing a new plant in Blythewood, South Carolina, expected to begin production by late 2027. Audi’s new SUV will be an electric model with a range extender, designed specifically for American consumers.
This approach will allow Audi to produce vehicles in the U.S. avoiding high investments and import tariffs. In a similar way Audi has introduced a new model in China this year, developed specifically for the Chinese market and sold under the AUDI subbrand.
Currently, Audi does not build vehicles in the U.S., instead relying on imports from Mexico and Europe.
Which is clearly a problem right now. How bad a problem? Well:
Audi needs a way to boost sales in the key U.S. market. Its vehicle sales in the U.S. fell 8 percent to just under 130,000 in the first nine months.
The slowdown in sales, partly attributed to increased import tariffs under the Trump administration, led Audi to lower its profit forecast for 2025. Audi CFO Jürgen Rittersberger has warned that tariffs alone will cost the company an estimated €1.3 billion for the full year.
That's about $1.5 billion—about a third of Audi's 2024 global profits. Ouch.
Yet turning to a local partner within the Volkswagen Group family like Scout is undoubtedly cheaper than building an entirely new factory from the ground up, which usually takes the better part of a decade. And while neither brand has officially confirmed this news, Scout has long said it's open to making other VW Group cars at its plant and sharing its truck and SUV platform. Automotive News Europe posits that this SUV could be a rival to the Mercedes G-Class or Land Rover Defender, and that makes sense too; we all know how much Americans love the pretense of off-roading.
60%: Toyota Will Make Models Longer And Depend More On Software
One frequent criticism of Tesla these days is that besdies heavy updates and the Cybertruck, much of its lineup is rather dated. Tesla's counter-argument is that with software updates, its EVs get new features all the time and remain competitive enough.
Now, it seems like Toyota is planning a similar strategy. While the Japanese automaker's reputation for reliability already comes in part from running powertrains until all the bugs are ironed out—the 4Runner had a five-speed automatic across two generations for about 20 years—it's now stretching the lifespans of its models from seven years to nine.
Nikkei Asia reports that the focus won't be on "new" models, but "focus on electrification and maintaining product value via software updates." From that story:
Software-defined vehicles—whose after-sales functionality is enhanced with software updates and new software—can offer improved performance without the need for new hardware. This marks a shift from the current industry business model, in which new features are incorporated all at once in a remodeled vehicle.
An average nine-year new-car cycle will be unusually long for Toyota. Full overhauls of flagship models had once come every five years or so. But as automobile performance improved in the 2000s, the time frame was gradually extended to seven years. The RAV4 sport utility vehicle, for example, will be revamped for the first time in roughly seven years, with a release set for fiscal 2025. The precise lengths of the product cycles are expected to vary by model.
As that story notes, Honda does new-model changeovers every six or seven years, while cash-strapped Nissan is up to 10. The Chinese automakers move much more quickly, however, and so Toyota will work to match their speed in that crucial market.
90%: South Korea Renews EV Push With New Subsidies
America may be slowing down in the EV race, but South Korea's Hyundai Motor Group still has to contend with a rising China and other rivals. Now, its home country is stepping up the EV subsidies, both for carmakers and for buyers. Here's Bloomberg:
The government is earmarking more than 15 trillion won ($10.2 billion), including low-interest-rate loans and guarantees, for domestic car and auto parts makers in 2026, the country’s industry ministry said Friday.
Subsidies for buyers of EVs are set to be increased by more than 30% to 936 billion won, and consumption and acquisition taxes will be waived for all-electric, hybrid gas-electric and hydrogen-powered vehicles. South Korea also plans to introduce a trade-in subsidy of up to 1 million won for new EV buyers who scrap their old cars.
In addition, the government will create a new 50 billion won fund and utilize an existing 150 trillion won fund for investment in next-generation vehicles, aiming to achieve full-fledged domestic production of autonomous vehicles by 2028.
Nearly all EV, clean energy and battery subsidies in America came to an end in the second Trump era. In markets where subsidies go away, automakers see a decline in EV sales—a major speed bump at a time when they're trying to get customers to transition and drive costs down through scale. Last month, the German government revived its own EV subsidy program, though with stricter eligibility restrictions than previously.
100%: Does A 'New' Car Have To Be New?
What do you think of Toyota's plan to extend the life cycles of its models? I think if any automaker can pull this off, it's them, but it depends on significantly upping its software game—an area where the Japanese company is sorely behind many rivals. Let us know what you think in the comments.
Contact the author: patrick.george@insideevs.com
