$900M Chattanooga Plant Upgrade Escapes Volkswagen's Axe

Aaron Cole
by Aaron Cole

Volkswagen will still invest $900 million in its Chattanooga, Tennessee plant despite company-wide cost cutting from its diesel disaster, the automaker announced Thursday.

The company had long planned on a mid-size, three-row SUV to compete in the U.S.. However, those plans were upended when the Environmental Protection Agency announced in September that Volkswagen’s diesels had been illegally polluting, and the company shed billions from its value in following days.

The three-row SUV, which may follow closely Volkswagen’s CrossBlue Concept, was announced last year for the Tennessee plant. Volkswagen said it would begin building the SUV at the end of 2016.

This week, Volkswagen announced its plan for restructuring operations and emerging from the diesel scandal that’s cost the company billions so far in depleted stock value. In the third quarter, Volkswagen set aside more than $7 billion to pay for the 11 million affected cars worldwide, but many analysts say it’s likely that won’t be enough to cover the costs.

“The United States continues to be one of the most important markets for Volkswagen, and our commitment to Chattanooga and the state of Tennessee is clear proof of that,” Michael Horn, president and CEO, Volkswagen Group of America said in a statement. “The Chattanooga plant is a core part of our strategy in North America. Here and throughout the region, we will work toward meeting the demands of our U.S. customers and regaining their trust in the Volkswagen brand.”

The company said it would shed non-essential plans and models, and delay its restructuring of its operations in North America until it fixed its diesel cars.

According to a statement, Volkswagen announced it would create 2,000 jobs in addition to the plans for the SUV. In Tennessee alone, Volkswagen said it would spend $600 million in plant improvements.

Aaron Cole
Aaron Cole

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  • SCE to AUX SCE to AUX on Oct 29, 2015

    I'm surprised, since they might need that $0.9 billion for repairs & fines. But seriously, this has to be a relief to the Chattanooga workers.

  • FAHRVERGNUGEN FAHRVERGNUGEN on Oct 30, 2015

    VW CrossBlue? More aptly, VW needs Blue Cross... Was hoping for VW Far Tare. Or VW Gaspe.

  • James Hendricks The depreciation on the Turbo S is going to be epic!
  • VoGhost Key phrase: "The EV market has grown." Yup, EV sales are up yet again, contrary to what nearly every article on the topic has been claiming. It's almost as if the press gets 30% of ad revenues from oil companies and legacy ICE OEMs.
  • Leonard Ostrander Daniel J, you are making the assertion. It's up to you to produce the evidence.
  • VoGhost I remember all those years when the brilliant TTAC commenters told me over and over how easy it was for legacy automakers to switch to making EVs, and that Tesla was due to be crushed by them in just a few months.
  • D "smaller vehicles" - sorry, that's way too much common sense! Americans won't go along because clever marketing convinced us our egos need big@ss trucks, which give auto manufacturers the profit margin they want, and everybody feels vulnerable now unless they too have a huge vehicle. Lower speed limits could help, but no politician wants to push that losing policy. We'll just go on building more lanes and driving faster and faster behind our vehicle's tinted privacy glass. Visions of Slim Pickens riding a big black jacked up truck out of a B-52.
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