German automobile major Volkswagen said it will be deciding on the location of the new factory in North America to build electric vehicles for the U.S. market.
Scott Keogh, the CEO of Volkswagen Group of America, said a new plant was needed to build.
Volkswagen is yet to reveal the name of the e vehicle that will be priced between $30,000-$40,000 and will hit the market 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,” Keogh told journalists at the Los Angeles auto show.
An electric car that could take on Silicon Valley’s Tesla is part of the massive investment in electric vehicles that Europe’s largest carmaker plans to make.
Volkswagen announced earlier this month it would spend almost 44 billion euros or $50 billion on developing electric cars, autonomous driving and new mobility services by 2023, while exploring areas of cooperation with U.S. automaker Ford Motor.
To meet a production timeline for 2020, the new electric car will initially be sourced outside of the United States, Keogh said, but then will be produced at the newly chosen site.
Volkswagen’s existing U.S. plant in Chattanooga, Tennessee, where the Passat and Atlas are built, could be one option as there is enough room at that facility, but it will not necessarily be chosen, Keogh said.
Tesla has captured the largest share of the U.S. market for electric vehicles, but a host of new models will hit the market from German automakers and others over the next two years.