In this 2016 staff file photo, a Passat is parked at the main entrance to the Volkswagen manufacturing plant in Chattanooga, Tenn.

This story was updated Dec. 11, 2018, at 5:51 p.m. with more information.

CLEVELAND, Tenn. — Tennessee Gov. Bill Haslam said Tuesday the state is "in the middle of serious conversations" with Volkswagen about the carmaker expanding production in Chattanooga.

"Volkswagen is going to build an electric vehicle. We're hoping and encouraging them to build that vehicle right here," said Haslam.

The governor, speaking after the groundbreaking of a $142 million expansion of the Mars M&M plant here, said that building electric vehicles in Chattanooga would be "the next logical step" for the German automaker.

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Tennessee Gov. Bill Haslam attends a news conference Wednesday, Nov. 7, 2018, in Nashville, Tenn. (AP Photo/Mark Humphrey)

"We're very hopeful," he said. "We continue to be in discussions."

Volkswagen Group CEO Herbert Diess said earlier this month in Washington, D.C., after a White House meeting that the company is in advanced talks with Tennessee about a second plant.

But he added that there are other options. Diess said VW is talking with Ford Motor Co. about potentially making vehicles at the American automaker's plants as part of a wider agreement.

Bob Rolfe, commissioner of the Tennessee Department of Economic and Community Development, said Tuesday that VW appears in a hurry to make a decision.

"We've had great conversations with the VW team," he said. "In our last conversation, they were in a hurry to decide where they're going to stand up or expand their new facility."

Last month, Volkswagen Group of America's new chief executive said at the Los Angeles Auto Show that the automaker was scouting sites in North America for electric vehicle production.

"We are 100 percent deep in the process of 'We will need an electric car plant in North America,' and we're holding those conversations now," said CEO Scott Keogh.

Keogh said VW's Chattanooga plant is an option because there's enough room for extra assembly at the factory that makes the Passat sedan, the seven-seat Atlas sport utility vehicle and, soon, a five-seat version of the SUV.

The German company is planning to offer a $30,000 to $40,000 electric vehicle in 2020, Keogh said. The new car initially will be sourced outside the U.S. before production begins in North America, he said.

Antonio Pinto, CEO of VW's Chattanooga plant, said earlier this year that electric vehicle production could begin there with new equipment and "some optimization" of space.

"We would like to have electric vehicles here," he said. . There's an opportunity for much more employment."

The plant now employs about 3,500, and Pinto has said a third shift could be added next year and boost the worker headcount further.

Also, Volkswagen has an option on hundreds of acres next to the existing Enterprise South industrial park plant to physically expand, should company officials decide to make the investment.

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