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Volkswagen to produce new CrossBlue-based midsize SUV in Chattanooga; $900M investment

The new mid-size SUV is based on the CrossBlue concept. Click to enlarge.

The Board of Directors of Volkswagen Group of America has decided to award the production of its new midsize SUV to the Chattanooga plant in Tennessee. The Group will be investing a total of approximately US$900 million (€643 million) in the production of the newly developed, seven-passenger SUV, creating 2,000 additional jobs in the US. About US$600 million (€432 million) will be invested in Tennessee.

The midsize SUV, which is based on the MQB-based CrossBlue plug-in hybrid concept vehicle, was developed especially for the North American market. The CrossBlue made its global debut at the 2013 North American International Auto Show in Detroit. (Earlier post.)

Built off of the MQB Modular Transverse Matrix components set (earlier post), the plug-in CrossBlue concept offered a manufacturer-estimated 35 mpg (6.72 l/100km) combined (37 mpg highway and 33 mpg city), 89 mpge (2.64 l/100km equivalent) in electric mode, and an all-electric range of up to 14 miles (22.5 km).

Being based on the MQB, the new mid-size SUV will be able to offer a range of powertrain options, depending upon market demand.

The United States of America is and will remain one of the most important markets for Volkswagen. Over the past few years, we have achieved a lot there. We are now launching the second phase of the Volkswagen campaign in the US. With the midsize SUV, the expansion of the Chattanooga plant and the new development center, the focus is on the wishes of the US customer. This is also a strong signal for the US as an industrial and automobile production location. The Volkswagen brand is going on the attack again in America.

—Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen Aktiengesellschaft

Apart from investing in the production of a new vehicle, the Chattanooga location is to receive a new, independent National Research & Development and Planning Center of the Volkswagen Group of America for project coordination in the North American market. The objective is to identify customers’ feedback in the market and to integrate them more expeditiously into existing and planned vehicle models.

This will lead to the creation of approximately 200 qualified engineers working in Chattanooga. This decision is another element in the investment program that the Volkswagen Group has launched in the region. From 2014 to 2018, the Volkswagen Group will be investing more than US$7 billion in the US and Mexico. It is Volkswagen’s goal to deliver 800,000 vehicles in the US by 2018.

At Chattanooga, the new SUV will be integrated into existing plant structures. Existing areas in production will be used for the assembly of the midsize SUV. A total floor space of 50,000 m² (approx. 538,000 sq ft) will be added to the existing production facility.

Volkswagen also announced that the Chairman of the Group Works Council of Volkswagen, Bernd Osterloh, will join the Board of Directors of Volkswagen Group of America, Inc.

It is important for us that our colleagues in the U.S. know that we also care about the production site and the employment in Chattanooga. I am looking forward to my work on the Board. I am determined to uphold the interests of Volkswagen employees in Chattanooga. The North American market offers considerable opportunities; in my opinion, these have not been pursued with sufficient consistency in the past. With today’s decision to produce the midsize SUV in the USA, we are taking a key step.

—Bernd Osterloh


Winterkorn > The Volkswagen brand is going on the attack again in America.

Not exactly the most well-chosen phrase to describe German engineering contributions to American well-being.

Maybe it would be helpful to view the modern automotive competition as a race more than a battle. Especially so when you've been left far behind and there is no "front" to "attack" but instead a "leader" to "catch up to".


Whether described as a race or a battle, the VW group can hardly be said to be significantly behind on a world wide basis, which is how the car industry works.

Their decision to concentrate on China over the last few years has paid off big time, and now they can switch some of that emphasis to the American market including the US.

They would have got their priorities wrong if they had not put their first emphasis on a bigger and faster growing market.

If you mean that they are significantly behind on electric car production, with the possible exception of Tesla that view seems to me mistaken from the POV of the underlying engineering.

Their heavy investment in new platforms means that they can swiftly and comparatively easily turn out PHEV, BEV, Natural Gas or Fuel Cell cars economically in relatively low volume for any of their models.

Nissan/Renault is only now working to catch up.
Of course they have BEV cars on the road in volume, but in nothing like the volume their plans were based on.

That has cost them billions to date, and they risk having their lunch eaten by the likes of VW.

They are not the world's most profitable car manufacturer by coincidence, and they are about to bring that weight to bear both in North America and in electric cars.

If the article was referencing worldwide sales, and fossil-fuel vehicles, I'd say you have a good point, DaveMart.

But the article is about the US market and PHEV, and that's what my comment was addressing.

VW once owned the small, economical car market in the US, and was not only respected, but loved. It was the Apple of its day. Raving fans. A fanatical, cultish following (in a good way).

But the once top US selling foriegn automaker steadily lost market share every year since the late 1960s, with the exception if a small uptick recently. But as recently as last year, Bloomberg referred to VW as an "also-ran" in the US.

VW certainly has the capability to lead. But in the US, they are far behind, and there's no other way to characterize their astonishing multi-decade slide.

Introducing a PHEV with a 14 mile all-electric range is simply not impressive this late in the game. Even Mitsubishi's Outlander delivers almost double that, and the accomplishment means significant operating cost saving to its buyers, and cleaner air.

Volkswagen is capable of better.


I take your point on US sales, but think that the umderlying technical base they have will enable a rapid recovery once they re-focus on the US.

I would disagree about 14 miles of EV range being a show-stopper. The Prius PHEV does very well with a low AER, however much that displeases enthusiasts.

VW have made a decision to go for a pack size which seems to be constant for their models, regardless of how much weight they have to lug.

Maybe I should point out that I don't actually like VW/Audi much, as in my view they have ignored reliability for two long, and some of them spend more time in the garage than on the road.

Maybe Americans feel the same way I do, and VW will have to greatly improve reliability to get back on top there, but VW seems to know exactly how to run a car company, as its profitability and, I would argue, underlying technical base show, so perhaps once they try harder in NA they will sell well there without outstanding reliability as they do elsewhere.

I totally agree about improved reliability being essential to VWs path forward. Spot on. They seem to be getting better but reputation takes a very long time to repair.

Whether or not enthusiasts pan 14 miles of range is less important then the economic calculation prospective buyers will make. VW's Cross-blue SUV will not even make it one way to work before you start burning - and paying for- gasoline. Unless you can charge at work, you'll burn gasoline all the way home. The cost savings and environmental benefit will be a fraction of what they could be with a battery properly sized to eliminate gasoline use for in-town driving.

You're right, DaveMart, the Prius plug-in sells well. But it is the latest edition of a hugely popular model. That momentum is what propels sales forward, rather than any accolades for being a great car. As more all-electric and longer AERO hybrids become available, that market share is Toyota's to lose.

People may be slow to catch on, because word gets out fairly slowly. But pretty soon it will be common knowledge that a Prius driver's BEV driving neighbor is paying half as much for fuel. The vehicle life ime saving will be on the order of $8-10k. Prospectice VW SUV drivers will compare it to the Misubishi Outlander and make the same calculation.

And I am certain that Toyota and VW will lose sales as a result.


The payback from a small battery pack is much more certain than for bigger pack.
As the EV mileage increases the proportion of people who use it each and every day and so get full worth out of it decreases.
The decreasing marginal utility of every kilowatt hour added is obscured somewhat by the subsidies, but Toyota and VW seem to be ploughing on with what they think is the optimum size rather than playing the Government incentive game very much,at least in the US.

That's a good point, so the question is what is the right size for a PHEV? Toyota is the only other manufacturer to put such small batteries in their PHEV. All other auto manufacturers size their batteries for 20-40 mile range.

Part of that extra cost is offset by larger incentives at both the state and Federal level. Why? Because the agencies in charge of cleaner air have identified a clear benefit from a battery big enough to give you 100-120 mpg.

Consumers will figure this out. An extra 10 miles of range would be only 3.5 kWh. At Nissan's recently published retail price for their battery, that's only $970.

The breakeven point on cost is driving only 8,083 miles. So if you're driving even an extra 673 miles per year on gasoline, they bigger battery pays for itself in cost alone, environmental benefits aside. Not to mention far better NVH for all those extra electric-only miles.

Really pretty hard to argue convincingly for the virtues of small plug-in hybrid batteries.

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