Volkswagen giving electric vehicles chip priority as assembly to start in Chattanooga plant

Staff photo by Mike Pare / An Volkswagen ID.4 SUV sits outside of Chattanooga Airport. The automaker's Chattanooga plant will build the electric vehicle this year.

Volkswagen's electric vehicles are getting priority over conventional models in terms of the availability of semiconductor chips as the company's Chattanooga plant soon launches a battery-powered SUV, an official said.

The move comes as Volkswagen Group of America became the No. 2 seller of EVs in the United States last year with its ID.4 SUV and other electric vehicles, trailing leader Tesla, according to the German automaker.

"The ID.4 is off to a very strong start," said Scott Keogh, chief executive of Volkswagen Group of America, in a conference call earlier this month with journalists about the vehicle to be built in Chattanooga.

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VW is spending $800 million in an expansion at the Chattanooga plant to ready for production of the ID.4 later this year. Early prototypes are already coming down the assembly line.

"It's the perfect investment at the perfect time," Keogh said.

Also, more hiring is expected this year at the plant, which already employs more than 4,000, to produce the ID.4 along with the existing Atlas and Atlas Cross Sport SUVs.

The battery-powered ID.4, which is now made in Germany and imported to the U.S., has created the most excitement on VW dealership floors since the Beetle was initially brought back more than two decades ago, Keogh said.

"There are 20,000 to 25,000 reservations in the wings," he said.

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Volkswagen reported that its group, which includes the VW, Audi and Porsche nameplates, tripled delivery of EVs in the U.S. last year to 37,200 and pushed it to No. 2 in the market.

Ralf Brandstatter, chief executive of the Volkswagen brand, said the company is continuing to press ahead with the transition to EVs despite the limited supply of semiconductors.

"Before the end of the year, the ID.Buzz will represent yet another emotional model in our ID. family," he said in a statement, citing its sale in Europe.

However, Keogh said he doesn't see production of the ID.Buzz, the much-awaited electric vehicle that hearkens back to the Microbus, coming to Chattanooga.

He said he didn't think there will be enough volume for the vehicle to warrant production in the U.S. The American version of the ID.Buzz isn't expected go on sale in the U.S. until late 2023 or 2024, Keogh said.

He said the Chattanooga plant isn't now running at full capacity because of the shortage of semiconductors in producing vehicles, but that EVs get priority when it comes to the chips.

Keogh predicted the EV market could reach 10% "relatively soon," driven by product and investment coupled with consumer adoption and demand.

In North America last year, 908,400 customers took delivery of a new group vehicle, an increase of 15.6%. In the U.S., deliveries rose by 16.9% to 671,800 units, the company reported.

Also, Volkswagen Chattanooga's Engineering and Planning Center has taken on a new task as the electric vehicle test hub for the automaker in North America, according to the company.

The center has already assisted on the first battery cell tests and battery pack assembly, and it will add new responsibilities as the ID.4 begins rolling off the line in Chattanooga.

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"As we add EV assembly to Chattanooga soon, we'll have even more opportunities to grow," said Wolfgang Demmelbauer-Ebner, executive vice president and chief engineering officer at Volkswagen Group of America, in a statement. "We're launching a massive push of EVs in the United States, our engineers are breaking new ground, and the EPC will play an increasingly important role in shaping Volkswagen's electric future in the North American region."

Contact Mike Pare at or 423-757-6318. Follow him on Twitter @MikePareTFP.