Chattanooga at center of 'magic moment' as Volkswagen plans to sell electric vehicles

CEO sees electric vehicle opportunity

Staff photo by C.B. Schmelter / Volkswagen Group of America President and CEO Scott Keogh speaks after the 2020 Atlas Cross Sport was revealed at the Volkswagen Assembly Plant on Friday, Oct. 11, 2019 in Chattanooga, Tenn. The five-seat Atlas Cross Sport, which takes design cues from its larger seven-seat Atlas SUV, will hit dealerships early next year, according to the German automaker.

Volkswagen Group of America CEO Scott Keogh says the automaker is approaching what he terms "a magic moment" regarding the sale of electric vehicles in the United States.

VW experienced such a moment in the 1960s with the Beetle, the top selling car of all time with more than 21 million vehicles shipped around the globe, including peak U.S. sales of more than 570,000 vehicles in 1970. To a lesser extent, Keogh said, VW also showed American success in the 1960s with its Microbus.

The German automaker is expected to break ground before year's end on a new $800 million expansion to its Chattanooga factory to assemble electric vehicles. An all-electric SUV is slated to come off the line in 2022.

Keogh spoke about VW's growth [up 4.5 percent through September], EVs, the launch of the five-seat Atlas Cross Sport SUV and the United Auto Workers in a wide ranging talk with reporters in Chattanooga this month. Here are some of his comments.

Q. What do you see the growth in SUVs doing to overall sales and where do you go now?

A. There's been a lot of substitution. It was not all net positive growth obviously. We made up for [car] losses with SUVs. We're pursuing doubling up the SUV strategy. We're going to add a vehicle. That will sit a little bit smaller [than the current Tiguan].

Q. And electrification in SUVs?

A. The first vehicle will be an all electric SUV. It will be the first car in America off the electric platform. We'll be showing that car sometime in February. We'll have a market introduction in that car around the very end of 2020. This car will be imported for two- or two-and-a-half years and we'll manufacture that car here.

Q. What's the timetable for the electric vehicle plant here?

A. Sometime this year we'll hold a groundbreaking event here. We anticipate cars coming off the production line sometime in 2022. As you can imagine, this is a lot work to do.

Q. When you put the electric vehicle line in here, how much of the existing footprint of the plant will you be able to use?

A. We're not doing a full mirror of the factory for this. We'll smartly align what will now become a four-car factory. Exactly how the plant will lay out, we'll hold that for the groundbreaking.

Q. How many cars are you making in Chattanooga?

A. Next year ... we're knocking on the door of 180,000 to 190,000. That basically will be a doubling of capacity for this year. There's a lot going on here.

Q. How many more jobs?

A. We've got 3,800 active right now. If you look at electric vehicles and some more Cross Sport..., 1,000 more jobs. Some are on board already. Full ramp up is the middle 2023.

Q. Talk about electric vehicles in the United States. How do you turn VW into, in varying degrees, an electric company?

A. We're fortunate at VW Group that we have a global platform with a global scale. The electric vehicle platform will make millions of cars, and millions of cars is the holy grail. In America, I do see it as a new opportunity. I very much want Volkswagen to take advantage of a new opportunity.

I view it like SUVs. Do you want to come 20 years after SUVs become a trend? Or do you want to get right after it now? I think the math is aligning well now. We're getting the cost in a decent position.

On the battery front, we're seeing the market response getting stronger and better and better. So I think the timing now is quite right. So it's a game of when can you get the right cost at the right market reaction and get the price that we need.

The third piece of the puzzle is VW specific. I think we had a magic moment that manifested itself in the Sixties when we provided transportation literally for the millions. We did it for the Beetle. We did it for the vans to a lesser extent. It was a moment that kind of moved America. I think we have that opportunity for electric vehicles. I'm excited to give that thing a real crack.

Q. What's the magic number that makes [the new electric SUV] an affordable car?

A. The average transaction price of a car in America right now is $33,000, somewhere around there. That's where I'd put the dart in the market. That's a decent space to approach the center of the market. It will be a car for the heart of the market.

Q. It's been four years since the diesel emission scandal broke. What is the legacy now? How much do you have to deal with it?

A. For someone who navigated through it and listened to customers and dealers, I'm not one of these people who just forget things. You're always going to get bruises and dings in life. In many regards, these bruises, while they sting and are unfortunate, they're sort of a little character mark that stays with you. It's not something we should put away and forget. What it's done is that it's in the process of making us a better company, in terms of corporate responsibility, in terms of corporate compliance and integrity.

It's making us ask the right questions. It's making us do the right thing. I view that as a positive. What do I hope the legacy is? I hope it's a legacy of a company that made a god-awful, stupid mistake. I think it's a legacy of becoming a better company. There is no switch, there is no campaign, there is no email that's going to fix it. The only thing that's going to fix it is each and every day put better products on the road ... swing for the fences.

Q. There's been a couple of bruising union elections at this plant. What's your view of the United Auto Workers moving forward here?

A. Without a doubt, I don't vote. The workers vote. I have every confidence the workers will vote as they see fit, with all independence and all ability to make that vote and secure that vote.

Also, one word came up again and again and that was respect. I view it quite simplistically it's my job and the plant manager's job and people here to make sure employees are treated with respect. Respect has a lot of ramifications, it has ramifications in terms of how you communicate and the handing of your shifts and how to communicate and handling overtime and literally communicating. Teamwork, transparency, respect, and then the employees can vote the way they vote. What Americans want is that they want to be treated with respect.

The other thing that's exciting is that it's going to put some stress in the system with all the growth we have next year. But that's what factories are made to do. They are made to make cars, so I think it's exciting. but it's going to get a little stressful for everybody.

Contact Mike Pare at or at (4323) 757-6318