Volkswagen Wants More US Battery Production

A recent report at CNBC gives us some very good news about Volkswagen. The company’s CEO of the US division, Scott Keogh, says the company is actively looking for places to build at least one more battery and vehicle assembly plant in the US.

“We are actively looking at another production facility and are also looking at a battery facility,” Keogh said. CNBC.

Some background

While this sounds good for the future of electric cars built and sold in the United States, he did not give them details on where these facilities could be built. As it stands right now, Volkswagen’s US factory building ID.4 is located in Tennessee, but there is no guarantee that any other facility will be near the existing one in Chattanooga.

Its Tennessee plant is a relatively new development. Scheduled for 2008, the plant opened in 2011. The first vehicle was the Passat, a mid-size sedan slightly larger than the more popular Jetta. The other vehicle the company built at the factory was the full-size 3-row Atlas SUV, which has been quite popular in the US (hey, we like our big SUVs). But now the facility is expanding to electric cars with the ID.4 2-row crossover and ID.Buzz (an electric van similar to the old microbus).

This was not Volkswagen’s first foray into the American car manufacturing scene. Previously, the company built variants of the Volkswagen Golf (a small hatchback) at an assembly plant in Pennsylvania. That plant opened in 1978, but closed after 10 years because it was not profitable. Production for many vehicles in the North American market remained in Puebla, Mexico, with NAFTA-backed imports going from there to the United States.

Many people are not aware that Volkswagen continued to make the classic Beetle design in Mexico until 2003, making the original Volkswagen one of the longest produced cars in history. The old Beetle, with improvements such as fuel injection and better interior, retained its old shape in developing countries that did not have stricter safety standards because its low price was all that many drivers could afford. Mexican beetles are popular imports in the United States because you can get a classic-style car that does not rust and fall apart for quite cheaply.

But today, it makes more sense to produce the latest electric vehicles in the United States for the U.S. market. While NAFTA is still a thing that protects a Mexican vehicle from import duties, exchange rate fluctuations, divergent US and Mexican car buying trends, and supply chain problems make it easier to build cars for purchase closer to home.

Electric cars exacerbate these problems. While Mexico is a beautiful country with good people, the money for electric cars is just not in most people’s budgets for reasons that are far beyond the scope of this article’s explanatory space. It is also more expensive to move heavier vehicles from Puebla to the United States. So at least for now, it makes sense for VW to build electric cars in the states.

Battery production is especially important

When it comes to the future of the United States, investing in battery production is not only a good thing, but crucial to our future. If we get to the point where the batteries for our electric cars mostly come from abroad, it increases the cost of building cars and makes us vulnerable to supply chain shocks and concerns about energy security.

The more battery production we can get going in the US, the better.

Featured image of Volkswagen.


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