As an emissions cheating scandal turns into a full-blown crisis for Volkswagen, worry is building for the automaker’s future in Tennessee. VW is one of the most heavily subsidized industrial companies in the state.
Volkswagen’s Chattanooga plant builds the Passat sedan, which hasn’t been selling well already. The one bright spot had been the high-efficiency diesel, until it came to light the company was rigging them to cheat on emissions testing.
The union representing a majority of employees declined to comment.
Justin King, who worked for VW until July, says the company will find a way forward, but he’s concerned for his former colleagues.
“Better than 40 percent of our production of Passats were diesel engines because it was such a popular engine," he says. "You’ve got to wonder what that’s going to do to our sales.”
Dealers have been forbidden from selling diesels for the 2015 and 2016 model years. This comes as a blow. In recent months, diesel vehicles have accounted for a quarter of all U.S. VW sales.
Volkswagen is also facing unprecedented fines totaling as much as $18 billion, though the final amount will likely be much less.
Can VW Weather The Storm?
Congressman Marsha Blackburn, R-Brentwood, who sits on the House Energy and Commerce Committee, says VW should be punished. But she also doesn’t want to threaten the company’s viability to carry on.
“All fines should be appropriate for the damage that has been done," she says. "It just seems like a little bit of a heavy-handed fine when you look at that dollar amount.”
Blackburn is organizing a congressional hearing, which could occur late next month.
State lawmakers are also throwing together a public inquiry as soon as possible. They’re looking to protect their investment after initially sinking $577 million into the VW plant, plus another $168 million to help fund an expansion under construction now.
The second line being added to build the CrossBlue SUV is safe — for now — says Chattanooga Mayor Andy Berke.
"I spoke with VW leadership earlier today to express my concerns about the current situation and what impacts, if any, it might have on the Chattanooga plant," Berke said in an email to the Chattanooga Times Free Press on Tuesday. "VW officials assured me they are taking this matter seriously and explained how critical the B SUV is to their North American market strategy."