Volkswagen to invest $800M in Chattanooga plant, adding 1,000 jobs

CHATTANOOGA, Tenn. — Chattanooga will be home for a second facility for Volkswagen, marking a $800 million dollar investment.

Chattanooga will be the first manufacturing facility in North America that will produce vehicles using Volkswagen’s modular electric toolkit chassis, or MEB. The first Volkswagen electric vehicle will roll out in 2022.

VW made the announcement Monday morning at the Detroit Auto Show.

Volkswagen says it will build a new 7-seater electric SUV in Chattanooga plant, in an investment that translates to 1,000 new jobs.

VW says the first electric car to roll off the production line in Chattanooga will be the ID. CROZZ1 SUV model. Volkswagen will also offer the ID. BUZZ1 in North America, the reinterpretation of the legendary VW bus. VW says both cars are part of Volkswagen’s new ID. family, which will make optimum use of the possibilities of e-mobility. Among other features, VW says the vehicles will offer long ranges, a spacious interior, dynamic driving behavior and a new level of digital connectivity.

“The shift toward electric vehicles is a trend that can be seen worldwide, and Volkswagen’s decision to locate its first North American EV manufacturing facility in Chattanooga underscores Tennessee’s manufacturing strength and highly-skilled workforce,” Tennessee Governor Bill Haslam said. “As one of Hamilton County’s top employers, these additional 1,000 jobs will have a lasting impact on the region. I thank Volkswagen for its partnership and also applaud the company for its ongoing commitment to education and workforce alignment, which helps Tennessee build a pipeline of talent for years to come.”

In addition to Chattanooga, Volkswagen is building the first dedicated EV production facility in Zwickau, Germany, starting MEB production by the end of 2019. Volkswagen will also add EV production at facilities in Anting and Foshan, in China, in 2020, and in the German cities of Emden and Hanover by 2022. The VW brand has forecasted selling 150,000 EVs by 2020 worldwide, increasing that number to 1 million by 2025.

Volkswagen’s Chattanooga facility is more than 3 million square feet and situated on 1,400 acres. In 2011, the Chattanooga plant became the first and only automobile manufacturing facility in the world to be certified LEED Platinum. The Volkswagen midsize Atlas SUV and Passat sedan are currently built in Chattanooga. More than 100,000 Atlas SUVs and 700,000 Passats have been manufactured at the plant.

The US 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. "The management team, led by Scott Keogh, is committed to continuing to increase our market share in the coming years. 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 US."

In March 2018, Volkswagen announced an additional investment of $340 million in Chattanooga to build the five-seat version of the Atlas, the Atlas Cross Sport, which will begin production later this year. The Atlas Cross Sport announcement brought Volkswagen’s total investment at that time to $2.3 billion.

Mayor Berke, Hamilton County Mayor Jim Coppinger, Tennessee Governor Bill Haslam and Tennessee Governor Bill Lee were all in Detroit for the announcement.

“I’ve thought for a while that the TVA region could be a national leader in manufacturing electric cars," Senator Lamar Alexander said in a statement Monday. "Today’s announcement by Volkswagen that it has selected Chattanooga as its first North American manufacturing facility for electric vehicle production will create 1,000 new, good-paying jobs for Tennesseans and is yet another success story for our state’s auto industry. Tennessee’s workforce, central location, our right-to-work law, our top-notch roads, and our state leadership have all contributed to Tennessee’s ability to create and expand good paying automotive jobs. Congratulations to Governor Haslam on this exciting announcement for our state.”

Congressman Chuck Fleischmann also shared his excitement over the expansion, saying, “I am elated to hear of the continued commitment and expansion of Volkswagen in Chattanooga. Today’s announcement that Chattanooga has been selected as the North American hub of electric-vehicle manufacturing beginning in 2022 promises to be extremely beneficial with a multi-million dollar investment and the creation of new job opportunities. I look forward to this announcement coming to fruition and I thank Volkswagen for being a driving force in the success and prosperity of Hamilton County.”

Read Volkswagen's official news release here.

Volkswagen said last week it posted an annual sales record in 2018. The company has paid more than more than $31 billion in fines and settlements after it was caught installing software that let cars cheat on U.S. emissions tests.

President Donald Trump and executives from VW and Germany's other biggest automakers discussed the companies' investments in the U.S. in December. Trump has been trying to pressure the German automakers into opening more factories in the U.S. and has threatened tariffs on imported vehicles.

Herbert Diess, CEO of Volkswagen AG, said the plant in Chattanooga "is a key part of our growth strategy in North America." The facility sits on 1,400 acres (560 hectares) and currently employs about 3,500 people.

"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 U.S.," Diess said in a statement.

Gary Jones, President of the United Auto Workers, had this to say in response to the announcement: "We are encouraged by today’s product announcement and we look forward to the day when VW agrees to follow U.S. labor laws.”

Watch VW's full announcement from the Detroit Auto Show below:

We are working to get more information. This story will be updated.