Volkswagen Chattanooga on Wednesday unveiled a new battery engineering lab that officials say will help make the plant the epicenter of the automaker's electric vehicle efforts in North America.
"It's a magic moment for Volkswagen," said Scott Keogh, president and chief executive of Volkswagen Group of America, to about three dozen Chattanooga and state officials and others. "Electric vehicles are the fastest-growing market in America."
The $22 million lab and a new team of 30 engineers will join about 100 others already conducting research and development activities on vehicles at Volkswagen Chattanooga.
The 32,000-square-foot battery engineering lab will conduct climate, mechanical, electrical and corrosion tests of battery cells and battery packs as VW revs up production of the ID.4 electric SUV at the factory this summer, according to the company.
"This is our chance for independent innovation, thinking and competitive advantage," Keogh said. "The battery engineering lab is our Liberty Bell."
VW opens $22 million battery lab
Wolfgang Demmelbauer-Ebner, executive vice president and chief engineering officer for Volkswagen of America, said the lab's opening is "a milestone in our strategy" to build and sell more EVs.
He said VW is working with the University of Tennessee in Knoxville and Oak Ridge National Laboratory, and the lab "will strengthen technology" in the state.
"We've increased our competency exponentially in recent years," Demmelbauer-Ebner said.
The German automaker has completed spending $800 million it pledged several years ago to build electric vehicles in Chattanooga and make the plant its EV hub for North America.
The factory, in addition to soon assembling the ID.4 next to the combustion engine-powered Atlas and Atlas Cross Sport SUVs, previously added a facility where it assembles the battery packs for its EVs.
Wolfgang Maluche, vice president of engineering for Volkswagen of America, said the new battery engineering lab is unique and state-of-the-art.
He said the lab can simulate driving a battery-powered vehicle 9,000 miles a week. Also, the equipment can test an EV battery platform in both arctic and desert conditions.
"This is the front line ... of what's coming," Maluche said.
The lab was constructed so its walls can be pushed out should the company decide to expand it, he said. It was constructed at Enterprise South industrial park near the factory, where there is little else now except open land. Volkswagen has an option on hundreds of acres next to the plant where it can nearly double the size of the factory if it decides to do so.
In April, a report from a German magazine said Volkswagen is looking at building a second plant in the United States, and that it could sit next to its existing Chattanooga factory. Manager Magazin, citing unnamed sources, said the production capacity in the U.S. could more than double to 600,000 vehicles annually.
Keogh, asked about where such a plant in the U.S. could go, said that "it's completely open."
He said VW has become very profitable in the region.
"It's meeting the American market," Keogh said, adding that 70% of its business is now in SUVs. "We made a bet on electric vehicles. We took the bet in Tennessee."
To handle future assembly at the plant, the company has begun efforts to bring on nearly 1,000 new workers in the biggest hiring push since the factory opened more than 10 years ago.
Chris Glover, chief executive at Volkswagen Chattanooga, said to a group of journalists who toured the lab and the battery pack shop that the plant employs more than 4,000 and plans to increase that number to more than 5,000.
"We're building the future, literally and figuratively, of Volkswagen in the U.S.A.," he said.
Johan de Nysschen, Volkswagen Group of America's chief operations officer, said the company has a focus on growing its market share in the U.S.
In addition to the soon-to-be-produced ID.4 in Chattanooga, he said Volkswagen plans to start selling the ID.Buzz, the modern, electric version of the iconic Microbus in the U.S., in 2024.
Christy Gillenwater, president and CEO of the Chattanooga Area Chamber of Commerce, in an interview called the technology in the lab phenomenal. She said the lab helps Chattanooga compete for companies in the EV supply chain.
State Rep. Greg Vital, R-Harrison, said in an interview the lab shows Volkswagen Chattanooga is at the forefront of development.
The lab's opening is the latest step in Volkswagen's $7.1 billion plan to boost its product portfolio, research and development, and manufacturing capabilities in the North American region, according to the company.