VW breaks ground on Tennessee electric plant

Volkswagen Chattanooga Chief Executive Officer Tom du Plessis speaks during the groundbreaking event for the Volkswagen electric vehicle facility at the Volkswagen plant Wednesday, Nov. 13, 2019 in Chattanooga, Tenn. Volkswagen is making Tennessee its North American base for electric vehicle production, breaking ground on an $800 million expansion at the plant in Chattanooga. (Erin O. Smith/Chattanooga Times Free Press via AP)

CHATTANOOGA, Tenn. -- Volkswagen is making Tennessee its North American base for electric vehicle production, breaking ground on an $800 million expansion at its plant in Chattanooga.

Volkswagen of America Chief Executive Officer Scott Keogh was at the factory Wednesday for the expansion's groundbreaking ceremony. In an announcement from Volkswagen, Keogh called it a "a big, big moment" for the company.

"Electric vehicles are the future of mobility and Volkswagen will build them for millions, not just millionaires," Keogh vowed.

Also Wednesday, Hyundai announced it will build a pickup-style sport-utility vehicle at its plant in Alabama, which the company said is being enlarged in a $410 million expansion project.

Volkswagen's move toward electric vehicles underscores the company's effort to transform itself after the 2015 diesel scandal, in which Volkswagen was caught using software to cheat on emissions testing.

Further cementing a more-eco-friendly image, the company also announced a partnership with The Conservation Fund to protect and restore land in the U.S.

Senior Executive Vice President for Public Affairs David Geanacopoulos, speaking in Chattanooga on Wednesday, said Volkswagen's first donation will expand the nearby Cherokee National Forest by about 1,500 acres, according to a release from the company.

The donation "will help improve water quality, access to recreation and outdoor exploration," Geanacopoulos said.

The zero emission vehicle has the working name "ID. CROZZ." ID stands for intelligent design. Initially it will be made in Germany. Once Volkswagen completes a 564,000-square-foot addition to the Chattanooga body shop, production is expected to begin there in 2022. The company is also adding a 198,000-square-foot plant for the assembly of battery packs.

Volkswagen currently builds the midsize Atlas SUV and the Passat sedan at the Chattanooga factory. A five-seat version of the Atlas, called the Atlas Cross Sport, began production there in October and goes on sale early next year.

Both internal combustion engine vehicles and battery electric vehicles will be built on the same assembly line. The plant, which employs about 3,800 people, will add about 1,000 new jobs.

Attending the groundbreaking were Tennessee Gov. Bill Lee, German Ambassador to the U.S. Emily Haber, and other state and local officials.

In Alabama, a statement from Hyundai said production of the Santa Cruz compact SUV will begin in 2021 at the Korean automaker's plant near Montgomery, where about 1,200 new jobs are expected.

First introduced as a concept vehicle in 2015 and aimed in particular at millennials, the Santa Cruz will have an open bed like a pickup truck and a lower profile like a small SUV, according to the statement and photos released by the company.

The Hyundai plant near Montgomery already has more than 3,000 employees. The company said it will add 200 jobs, and suppliers and support companies are expected to employ an additional 1,000 people in the area.

The factory, which began production in 2005, already produces the Santa Fe SUV and two sedans, the Sonata and Elantra.

Montgomery's newly inaugurated mayor, Steven Reed, said he recently visited Seoul with an economic development delegation.

"With the addition of the Santa Cruz, Hyundai is again choosing to launch a new vision," he said. "I look forward to continuing to strengthen this vital relationship in the coming years and working with our partners to support this tremendous investment."

Alabama, with more than 40,000 automotive manufacturing jobs, ranks fifth nationally in car and truck production, producing nearly 1 million vehicles in 2018, according to the Economic Development Partnership of Alabama.

Business on 11/14/2019