Volkswagen Announces Chattanooga Plant Expansion; Focus On Electric Vehicles

Volkswagen announced today that it would expand its Chattanooga assembly plant to build the next generation of electric vehicles. Volkswagen's will invest $850 million in the factory and will add about 1,000 jobs in Tennessee and elsewhere in the United States. Volkswagen intends for Chattanooga to become its North American hub for all-electric vehicles using its modular electrification toolkit (MEB).

"The United States is one of the most important locations for us and producing electric cars in Chattanooga is a key part of our growth strategy in North America," said Dr. Herbert Diess, CEO of Volkswagen AG. "Together with our ongoing investments and this increase in local production, we are strengthening the foundation for sustainable growth of the Volkswagen brand in the United States."

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The City of Chattanooga welcomes Volkswagen's decision to manufacture electric cars at its Chattanooga facility.

"To be one of those sites is very exciting for us. It increases the longevity of the manufacturing plant, the investments being made and the jobs being created," said Ken Smith, Chairman of the Chattanooga City Council. Smith stated that Volkswagen has been an extremely cooperative partner with Chattanooga in developing business and employment opportunities.

With the expansion of the Chattanooga factory, Smith expects there to be a powerful and dynamic effect among second- and third-tier suppliers of parts and services to the facility. He cited the example of Gestamp, one of VW's metal component suppliers, which has established itself in Chattanooga.

Volkswagen's Chattanooga assembly plant currently employs 3,500. The plant has assembled nearly 900,000 Passat sedans and Atlas SUVs since opening in 2011. The factory will soon add the I.D. Crozz SUV model (which combines the size of a SUV with all-electric capacity) to its manufacturing lineup. The decision by Volkswagen to develop an electric SUV is in line with changing consumer interest away from sedans in the U.S.

Worldwide, Volkswagen is transitioning its focus towards electric vehicles for mass production. The company has committed nearly $50 billion to electric vehicles and digital services through 2023. By 2020, Volkswagen wants to sell 150,000 electric vehicles. By 2025, that number is planned to reach one million vehicles.

According to FreightWaves SONAR, the Volkswagen Chattanooga Assembly Plant manufactured 13,891 vehicles in March 2018.

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