Volkswagen looks to build new EV facilities in the U.S., exec says

CHATTANOOGA, Tenn. – Volkswagen is “actively” looking to establish new assembly and battery facilities in the U.S., Volkswagen of America CEO Scott Keogh told CNBC on Wednesday.

Keogh declined to discuss potential locations for such operations. The German automaker’s electrification efforts are currently based in Tennessee, including localized production of the VW ID.4 crossover EV, which is set to begin later this year.

“We are actively in the process of looking at another production facility and also looking at a battery facility,” Keogh said in an interview.

Volkswagen is still discussing and evaluating its options, and no decisions have been made, a company spokesperson said.

Such facilities, whether new or expansions, would mean a significant decision and likely billions of dollars in new U.S. investment for VW, which currently has North American assembly plants in Tennessee and Mexico.

Any investment would follow similar moves by other companies to increase EV production in the U.S. – a major goal of the Biden administration.

The potential for new VW electric vehicle facilities in the U.S. was previously reported by European media.

Keogh’s comments followed the grand opening of the German automaker’s new $22 million electric vehicle battery lab, which is located near its sole American assembly plant in Chattanooga. It’s part of a $7.1 billion commitment to boost its EV efforts in North America.

The new 32,000-square-foot battery lab will test and optimize batteries for electric vehicles for the U.S. market. It’s one of four such facilities that VW has announced globally.

Keogh said Volkswagen expects to significantly increase its U.S. availability and sales of electric vehicles during the second half of this year, as it prepares to ramp up American production of its ID.4 crossover.

Volkswagen has been importing the ID.4 from Germany since last year in limited quantities of between 800 and 2,000 cars per month. Localized production at its Chattanooga plant is expected to ramp up quickly to about 7,000 ID.4 models by the end of this year, Keogh said.

“We don’t want to launch with 100 cars. We want to launch with a few thousand built up,” he said. “This is huge.”

Pre-production models of the vehicle, used for testing, validation and other purposes, are currently being assembled at the plant. Official production is expected to begin as early as next month. The vehicles are expected to flow into dealerships with significant availability as early as September, Keogh said.

Such a production ramp-up would be significantly faster than many new EVs hitting the market, including those from start-ups like Rivian as well as other traditional automakers like General Motors.

VW only sold 2,755 models of the ID.4 during the first quarter of this year. It sold 16,742 of the vehicles last year.

Keogh said the Chattanooga plant is eventually expected to reach production capacity of up to 10,000 ID.4 EVs per month once it’s fully up and running with three shifts of workers — a first for the plant.

Current imports of the roughly $41,000 EV, excluding any federal or state incentives, have not been enough to meet customer demand, Keogh said. The vehicles, he said, are “completely sold out.”