BEV production, in general, is quickly growing as demand for all-electric vehicles rapidly ramps up. General Motors this week announced plans to produce 1 million battery vehicles in North America by 2025, most of them in the U.S., though it already has confirmed capacity in Canada, too.
But the launch of the ID.4 in Chattanooga, Tennessee marks a significant milestone as a broad range of foreign-owned automakers, including Mercedes-Benz, Volvo, Polestar and others, have now committed to U.S. production of BEVs.
“This is another milestone in Volkswagen’s ambitious electrification strategy for the U.S. market and globally.” said Thomas Schäfer, chairman of the global Volkswagen brand. “We’re just starting to write a new chapter for Volkswagen in America, and it is very much an American story.”
VW’s U.S. evolution
The Chattanooga plant was announced in 2008 and began rolling out the Volkswagen Passat three years later. It later added the Atlas, a midsize SUV developed primarily for the American market.
The factory went through an $800 million upgrade and expansion to handle the addition of at least two battery-electric models, part of the more than $100 billion the German automaker has committed to electrify its global line-up. The company said Tuesday its regional suppliers have committed another $2.7 billion to support the U.S. ID.4 launch in Chattanooga.
The automaker plans to hire 1,000 line workers as it escalates production at the factory. It is targeting production of 7,000 ID.4 SUVs a month by the fourth quarter of this year, “with the goal to further increase output in 2023,” it said in a statement. VW sold 17,000 of the ID.4 models in the U.S. during the first half of 2022, down from 18,500 during the January-June 2021 period.
VW has specifically committed $7.1 billion to upgrade its presence in the States. While that will include conventionally powered models, such as the Atlas, it also has expanded the line-up of EVs it plans to produce in, or export to — the U.S. According to a statement by the automaker, that includes, “a fastback sedan and the ID. Buzz electric microbus in 2024, and new electric SUVs from 2026.”
The automaker on Tuesday also confirmed it “aims for 55% of U.S. sales to be fully electric by 2030.”
That would be slightly higher than the 40% to 50% target set by President Joe Biden earlier this year.
Sales rising and more options coming
Sales of BEVs have escalated rapidly — though the U.S. still lags well behind Europe and China in the emerging segment. BEVs accounted for barely 1% of the American market in 2019, surging to 5% at the end of 2021. Demand reached 5.6% during the second quarter of this year, according to Cox Automotive. And a consensus forecast by industry analysts suggests demand could reach as high as 20% by mid-decade — though a variety of obstacles have yet to be overcome, including vehicle pricing, range, charging speed and the need for a nationwide EV charging network.
Automakers, on the whole, are scaling up both the number of BEV models they offer and their production capacity to take advantage of the forecasted sales growth. Domestic brands lead the push, but foreign-owned automakers aren’t idly sitting by.
- Mercedes-Benz plans to start building the EQS SUV at its assembly plant in Tuscaloosa, Alabama later this year;
- Hyundai Motor Group announced a $5.5 billion investment in a new BEV and battery assembly complex near Savannah, Georgia, set to go into production in 2025. The plant will produce both Hyundai and Kia products, and possibly vehicles for the Genesis luxury brand.
- Volvo and its all-electric spinoff Polestar plan to begin production of several BEV models at a factory near Charleston, South Carolina in 2023;
- BMW has pledged to build battery-electric vehicles at its own South Carolina complex. An all-electric SUV is likely, as the Spartanburg facility currently focuses exclusively on “X” models;
- Vietnamese EV startup VinFast in March announced plans for an EV production facility in North Carolina. The entire complex will cost $6.5 billion, and could jump to $10 billion. It will handle models like the new VF 8, as well as EV buses and batteries, production to launch in 2024;
- Nissan announced this year two BEVs will be produced at its assembly facility in Canton, Mississippi starting in 2025, a move expected to see a $500 million plant upgrade.
- And as part of a joint venture with General Motors, Honda will start marketing American-made BEVs by 2024.
A number of other foreign-owned automakers are expected to follow, including industry giant Toyota.
Automakers are investing heavily in U.S. production for a variety of reasons, according to industry analysts. In general, there’s a growing focus on localizing vehicle production. They hope to take advantage of potential local, state and federal incentives. And foreign automakers want to avoid the possibility that new consumer EV tax credits would provide lower payouts for imported vehicles than for those assembled in the U.S.
