Volkswagen Plans to Open a North American Factory to Build EVs

author: Eric Walz   

LOS ANGELES — Volkswagen was one of the world's many top automakers bringing its new models to the Los Angeles Auto Show this week. Besides showing off its new 2019 model lineup, the German company announced plans to open a North American factory to build electric vehicles.

Scott Keogh, who was appointed CEO of Volkswagen Group of America in October, said a new plant was needed to build a yet to be named electric model, priced between $30,000-$40,000, that is due in 2020.

The company is still deciding where to locate the new assembly plant.

"We are 100 percent deep in the process of ‘We will need an electric car plant in North America,' and we're holding those conversations now," Keogh told journalists at the Los Angeles Auto Show.

The move is part of a massive investment in electric vehicles that Europe's largest carmaker plans to make. Volkswagen has plans build nearly one million fully-electric vehicles each year by 2025.

With VW's price target of under $40,000, the new electric model will compete with the Tesla's Model 3.

The Volkswagen I.D. Hatchback electric concept vehicle

Tesla right now has the largest share of the U.S. market for electric vehicles, but new electric models from German automakers Volkswagen, BMW and Audi are expected to hit the market over the next two years, giving Tesla some serious competition for the first time in the electric vehicle space.

Volkswagen announced earlier this month it would spend almost $50 billion on developing electric cars, autonomous driving and mobility services by 2023. In addition, VW is exploring a partnership with U.S. automaker Ford Motor Co to share electric vehicle platforms to spur development.

In order to meet a production timeline for 2020, the new electric model will initially be sourced outside of the United States, Keogh said, with production eventually moving to the U.S. at the newly chosen site.

Volkswagen already produce a significant number of models in the U.S. at its Chattanooga, Tennessee assembly plant, which opened in 2011. The Chattanooga plant currently builds the Volkswagen Passat and the Volkswagen Atlas SUV.

Volkswagen's German rival BMW has been building vehicles at its sprawling Spartanburg assembly plant in South Carolina since 1994. The Spartanburg plant is the has the highest production volume of the BMW plants worldwide and produces the popular X3 and X5 SUVs.

Keogh said that Volkswagen's Chattanooga plant could be one option, as there is enough room at that facility to retool it for electric vehicle production, however it will not necessarily be chosen based on that alone.

Volkswagen's first electric model is expected to launch in 2020 as the I.D. Neo, a compact vehicle based on the Golf platform with price tag around $23,000. The car will be built on the company's new MEB platform, which is scalable to other models in Volkswagen's upcoming electric portfolio.

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.