Tennessee plant may be VW's EV factory

It appears that Volkswagen's electric future in the U.S. will be grounded in Tennessee.

VW has begun advertising on social media sites such as LinkedIn for small numbers of specialized positions in Chattanooga to support its MEB global electric platform. The platform will underpin at least four battery electric vehicles coming to the U.S. beginning in 2020.

Those vehicles — the I.D. Crozz crossover, I.D. Buzz microbus, I.D. hatchback and a coming electric sedan — are all due to be on sale in North America by 2025 as part of Volkswagen Group's push to sell 1 million electric vehicles across the globe annually by 2025.

Speaking last month in Germany, Volkswagen global brand head Herbert Diess told The Wall Street Journal that "Chattanooga is our first choice" to build its upcoming electric vehicle lineup for North America but cautioned that the company hadn't yet "taken a formal decision."

Right now, the 3.4-million-square-foot plant in the southeast corner of Tennessee builds two Volkswagen vehicles, the three-row Atlas crossover and the Passat sedan, on a conjoined assembly line. But those vehicles are on different trajectories. Through November, sales of the newly introduced Atlas continued to grow, while Passat sales have fallen sharply.

The Atlas, which went on sale in May, topped 5,100 sales in a month for the first time in November as it continues its ramp-up, while sales of the Passat cratered by 51 percent in November to 3,140 and are down more than 12 percent through the first 11 months of the year.

Currently, the Passat is built on Volkswagen's PQ platform and is scheduled to be redesigned in 2019 on the automaker's global MQB platform. And should Volkswagen decide to build its lineup of electric vehicles in Chattanooga, the MEB-based electrics can share an assembly line with MQB vehicles such as the Atlas and next-generation Passat. That would mean a better return on Volkswagen's billion-dollar investment in the plant it opened in 2011.

"Chattanooga is highly underutilized" in its current form, said Dave Sullivan, a senior analyst with AutoPacific. Sullivan said it "has to be hard" for Volkswagen to look at BMW's busy plant in Spartanburg, S.C., or Nissan's assembly complex in Smyrna, Tenn., and not think that its investment is underperforming. But adding products to the Chattanooga line could make the plant more cost-efficient, especially if it didn't require much additional investment, Sullivan said.

"If VW's plant can mimic Nissan's Smyrna plant — building a sedan, crossover and an EV under the same roof — they will be well on their way towards increased capacity utilization," Sullivan said.

While the Chattanooga plant may be underused it is not energy inefficient. It is the only automobile manufacturing plant in the world to receive a top rating in the LEED green building certifications. It receives a large amount of its electrical power — 9.5 megawatts — from a nearby 66-acre solar park with 33,000 solar panels, and reuses rainwater for cooling and restrooms, saving approximately 650,000 gallons of water per year.

The assembly plant currently employs about 3,500 workers on two shifts, and supports approximately 9,000 jobs in the region.

Electric vehicles remain a small piece of the overall U.S. auto market, but Volkswagen believes that building them locally while utilizing its global platform strategy is the key to a broader acceptance of the technology.

Volkswagen of America CEO Hinrich Woebcken said that the platform strategy, which allows the company to share EV components and technology on a global scale, will lower costs and make electric vehicles more affordable.

"Electric mobility for the whole industry is an exciting question," Woebcken said, "but we believe our plan of getting electric mobility for millions, and not just for millionaires, is the right approach."