VW will increase heat on Tesla with its EV factory in North America

With the entry of Europe’s largest carmaker in the United States, the electric vehicle segment in the country is set to heat up.

In a strategic development, Scott Keogh, the newly appointed CEO of Volkswagen Group of America stated, Volkswagen is weighing its options to locate a new factory in North America wherein it will build electric vehicles for the U.S. market.

Vehicles from the new plant will be priced in the range of $30,000 to $40,000 and is expected to be completed in 2020.

“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 Keogh to journalists at the Los Angeles auto show.

VW’s electric car will face competition from offerings from Tesla Inc’s stable.

The move is part of a broader strategy that focuses on electric vehicles. Earlier this month, Volkswagen announced it would be spending $50 billion (almost 44 billion euros) on developing autonomous driving, electric cars, and new mobility services by 2023 and will also explore areas of cooperation with Ford Motor Co.

In order to meet the production timeline for 2020, its new electric car will initially be sourced outside of the United States, said Keogh but production will shift to the newly chosen site.

One of the options on the table is Volkswagen’s existing plant in Chattanooga, Tennessee, where the Passat and Atlas are made; this plant could be an option since it has sufficient room for expansion, but it will not necessarily be chosen, said Keogh.

Although Tesla has so far captured the largest share of the EV market in U.S., with new EV models from different carmakers scheduled to enter the U.S. market over the next two years, competition in this segment is likely to increase significantly.

Although Volkswagen is lagging behind Tesla in the U.S., Keogh said, it is not too late to capture the U.S. market, which presents a “massive opportunity”.

“The market timing actually is quite perfect,” said Keogh. “You need to have this intersection of, ‘Can you get costs down enough that you can produce a car at that price point, make enough money, have the technology capabilities that this is a car that we would want to put in the marketplace, and have market acceptance?’.

“And when all these things intersect that’s ideally when you want to throw the dart.”

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