Volkswagen today said it will go ahead with its $600 million investment in its operations in Tennessee, despite an international emissions cheating scandal which the company is now estimating will cost it upwards of 30 billion euros. Yesterday, Volkswagen posted its first quarterly loss in 15 years.
Volkswagen plans, all told, to invest $900 million in producing a new midsize, seven-passenger SUV for the U.S. market. Production on the SUV, which Volkswagen says will create an additional 2,000 jobs, is scheduled to begin in Chattanooga, Tenn., toward the end of 2016.
“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,” said Michael Horn, president and CEO, Volkswagen Group of America, 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.”
In addition to investing in a new manufacturing line for the mid-size SUV, Volkswagen has created a new Engineering and Planning Center in Chattanooga. This center will house all future projects for the North American market through a central location, enabling the company to quickly and efficiently implement market-specific changes to vehicles.
“Today, we reaffirm our support of the Chattanooga plant, our employees and the broader community,” said Christian Koch, president and CEO, Volkswagen Chattanooga. “We know we have a lot of hard work ahead of us, but this is a crucial moment in our efforts to deepen our commitment to America.”
The scandal, which came to light in mid September, involved the company installing emissions "cheating devices" in what is now estimated at over 10 million of its diesel-engine cars worldwide. The devices allowed the cars to emit, without detection, up to 40 times the amount of nitrogen oxide that regulations allow.
To allow for the production of the new midsize-SUV for North America, the current space at the plant in Chattanooga will be expanded by 50,000 square meters. Production of the new vehicle will be integrated into the current plant structure.
Currently, about 2,400 employees work at the Chattanooga plant.