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Staff file photo / Volkswagen employees work around vehicles moving down the assembly line at the automaker's Chattanooga production plant.

This story was updated Thursday, Feb. 4, 2021, at 7:55 p.m. with more information.

A company that will assemble electric vehicle axle components for Volkswagen's Chattanooga production plant plans to invest $42 million into a new facility that will employ 240 people.

Sese Industrial Services is raising a 300,000-square-foot axle assembly plant at 6153 Hickory Valley Road at Enterprise South industrial park to make the components for the automaker's planned battery-powered vehicle line, officials said Thursday.

The site is a 27.3 tract that Chattanooga and Hamilton County earlier agreed to sell to a private developer, Chattanooga Industrial LLC.

Jeff Londis of Chattanooga Industrial said Thursday that the structure is expected to be mostly complete by early August for Sese Industrial to set up its assembly operation.

"We're working on preparing the site and pad," he said. "We intend to go vertical with concrete walls ... later in February or early March."

Also, on an adjacent 18-acre tract it purchased, Londis said that Chattanooga Industrial is looking for another industrial user that could be automotive-related or in another business.

"We don't have anybody lined up," he said about filling 250,000 square feet of space. "We've had discussions with a number of interested parties. It could be a single large tenant or a multi-tenant project."

Sese Industrial Services operates under parent company Grupo Sesé, an international logistics conglomerate headquartered in Zaragoza, Spain, according to the Tennessee Department of Economic and Community Development.

Grupo Sesé provides logistics, distribution and assembly services primarily in the automotive sector, and the company already has operations in Chattanooga and a longstanding history with Volkswagen, the department said.

Volkswagen is expected to start production on the battery-powered ID.4 SUV in 2022.

"Tennessee has built its reputation as a global leader in the automotive industry and is at the forefront of the electric vehicle evolution," said Tennessee Gov. Bill Lee in a statement.

Charles Wood, the Chattanooga Area Chamber of Commerce's vice president for economic development, said the tract where Sese is going off Hickory Valley Road is near food giant Archer Daniels Midland's operations.

He said there were no local incentives offered to Sese, but there are state tax incentives.

Jennifer McEachern, a spokeswoman for the Tennessee Department Economic and Community Development, said grant information for the project will be posted within 30 days on its FastTrack Projects Pending Contract dashboard.

Londis, whose company is a partnership between his White Oak Enterprises of McDonald, Tennessee, and Tenby Partners of Columbus, Ohio, said that Grupo Sesé already has a small presence in Ooltewah that houses a logistics operation.

The new plant will focus on wheel assemblage for the electric SUV, he said.

"It's a very different drive train," Londis said, noting it depends on battery-power generation to the vehicle's wheels. "It's interesting to see a whole new industry coming together."

Chattanooga Industrial's purchase price for the 27.3 acres was $851,600. The price for the option parcel was $570,400, according to an earlier resolution that went before local government.

Charita Allen, the city's deputy administrator for economic development, said earlier that the Enterprise South parcels presented a challenge with access and site prep that had been unattractive to previously interested parties.

"This particular developer came to us — meaning the city, county and Chamber — with a plan that would allow for maximum development of the property, which is in the best interest of the city and county," she said.

Contact Mike Pare at mpare@timesfreepress.com. Follow him on Twitter @MikePareTFP.

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