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How Local Automotive Manufacturing Shapes Chattanooga

By Kristen Dee | Top Photo Courtesy of Volkswagen Chattanooga

In recent years, Chattanooga and the surrounding areas have become attractive locations for automotive and part manufacturers looking for a city to house their operations. Many of these manufacturers, such as Volkswagen and NOVONIX, are focused on the shift toward electric vehicles and sustainable materials. Here, we look back on the history of manufacturing in the area and speak to local business leaders and elected officials who are helping shape the future of automotive manufacturing in Chattanooga.

volkswagen chattanooga

Photo Courtesy of NOVONIX.

Early Opportunities in the Industry

The manufacturing industry in Chattanooga has a rich history with many products and goods made in local factories, including cars and car parts as early as 1912. Nyberg Cars was the first automobile manufacturer to call Chattanooga home; Henry Nyberg announced the building of Nyberg Auto Works in an article for a local newspaper in February of 1912. Despite support from the local Chamber of Commerce, Nyberg’s dream was short lived and his factory closed in 1914.  Car enthusiasts can still check out a Nyberg-made car at the Coker Museum in downtown Chattanooga.

The U.S. experienced an economic boom after World War II, thanks in part to the transition to peacetime manufacturing efforts and an increase in advertising as televisions became more common in households. Families began to purchase cars and became more dependent on their personal vehicles, and auto ownership doubled from 1940 to 1960.  During this time, the tire industry became lucrative due to the increase in the demand for automobiles and the supply of rubber that was no longer needed for military vehicles. Mitchell Industrial Tire Company (MITCO) opened in Chattanooga in 1953, manufacturing tires for a variety of industries such as off-road vehicles, construction, and airlines. Today, MITCO still operates their plant in South Chattanooga. 

worker in volkswagen chattanooga

Photo Courtesy of NOVONIX

During the post-war economic boom, cars quickly became more popular and available, and in 1956, Congress passed The Federal-Aid Highway Act. The $33 billion bill allowed for the construction of the Interstate Highway System, significantly changing the American lifestyle and the automobile industry. Major interstates such as I-40 and I-24 were built during this time, allowing for easier travel within Tennessee and the surrounding states, and making travel on Monteagle Mountain a possibility. According to TN.gov, “the interstate system in Tennessee played a vital role in our economic growth. In what some have called the largest public works project in our nation’s history, the construction of the 1,105-mile system in Tennessee itself provided jobs for thousands. Interstate 40, a major link across the country, provides access to 20 Tennessee counties.” 

During the ‘60s, a sharp increase in car crashes and deaths resulted in a federal law that made automobile manufacturers responsible for the safety of their products. This presented a challenge as auto manufacturers needed to heavily invest in materials for seatbelts, stronger door latches, and other safety features, but these adjustments succeeded in increasing the overall safety of vehicles and decreasing motorist casualties.

Consumer preferences began to shift toward foreign vehicles in the ‘70s , causing Ford, General Motors, and Chrysler (often referred to as “The Big Three”) to begin investing in Japanese automakers, and ultimately introducing Tennessee to the possibilities of local auto manufacturing. In the 1980s, Nissan built Tennessee’s first large-scale auto manufacturing plant in Smyrna. By the ‘90s, automotive and parts manufacturers began popping up all across the state. General Motors established a Spring Hill, Tennessee, plant in 1990. In 1995, Shiroki built a large plant in Dalton, Georgia, to make window regulators and doors frames, followed by two Tennessee-based plants in Smithville and Gordonsville, producing parts such as seat recliners and adjusters. This trend would prove to continue, with more and more automotive and parts manufacturers putting down roots in the area.

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volkswagen chattanooga

Volkswagen’s Chattanooga campus sits on roughly 45 acres in East Chattanooga. | Photo Courtesy of Volkswagen Chattanooga

Today’s Thriving Automotive Manufacturing Landscape

Fast forward to today, Chattanooga and the surrounding areas are a hot spot for auto and parts manufacturers. The city is located at the intersection of three major interstates, allowing automotive distributers an easy trip and the ease of one-day shipping to “one-third of U.S. consumer markets,” according to the Greater Chattanooga Economic Partnership.  Companies are drawn to the area for tax incentives as well as relatively affordable and reliable utilities, in addition to sustainability efforts by the Tennessee Valley Authority. Organizations considering the area are also drawn to the highly-skilled workforce, thanks to several advanced STEM and manufacturing courses and training programs in local schools and universities. As a result of these factors, Chattanooga is now home to dozens of auto and parts manufacturers including key players like Volkswagen, Denso Manufacturing, Gestamp, Plastic Omnium, Faurecia, and NOVONIX.

NOVONIX, a leading battery technology company founded in 2013, produces components for lithium-ion batteries for electric vehicles and energy storage systems using innovative, sustainable technologies, high-performance materials and efficient production methods. At their Chattanooga plant, they manufacture battery-grade synthetic graphite that boasts a longer life, higher energy efficiency, and reduced waste generation and chemical usage. “These battery materials and technologies will play a significant role in the global expansion of lithium-ion batteries,” says NOVONIX Chief Operating Officer Darcy MacDougald. “Through advanced R&D capabilities, proprietary technology, and strategic partnerships, NOVONIX has gained a prominent position in the electric vehicle and energy storage systems battery industry and is providing a cleaner energy future. We’ve been creating the building blocks for a localized battery supply chain for over a decade and the work we’re doing in Chattanooga is a piece of the puzzle,” he shares.

tim kelly

Chattanooga Mayor Tim Kelly has been an outspoken supporter of the automotive industry since taking office in 2021. | Photo Courtesy of the City of Chattanooga

NOVONIX employs roughly 100 team members at its Chattanooga Riverside facility, which opened in 2021. MacDougald cites the cost of living and talent pool as two major factors in selecting Chattanooga as a home base, in addition to the ideal location. “Chattanooga offers a lot of the things we need as a manufacturing company, but also as a technology company. The city’s central geography positions us close to many of our partners and suppliers which helps keep things like shipping costs lower,” he says. “We also have access to the Tennessee Valley Authority electrical grid, which is made up of over 50% non-carbon-producing sources of energy like nuclear, hydro, wind, and solar. Prioritizing the use of more sustainable sources of energy is important to us.”

NOVONIX is set to continue growing and expanding in the near future. In October of 2023, they announced that they secured a $100 million grant award from the U.S. Department of Energy to expand domestic production to include high-performance, synthetic graphite anode materials at the Chattanooga plant, which will allow them to double their production capacity to 20,000 tonnes per annum (tpa).

tim kelly

Photo Courtesy of the City of Chattanooga

Another key player in the Chattanooga auto manufacturing industry, Volkswagen, recently debuted a Super Bowl commercial featuring the Chattanooga plant. The commercial shows a Volkswagen Atlas passing a Chattanooga city limits sign, and a shiny new electric vehicle at the production facility with “Volkswagen Chattanooga” signage displayed in the background.  Volkswagen’s Chattanooga plant, located on a large campus in East Chattanooga, currently produces the Atlas, the Atlas Cross Sport SUV, and most recently the ID.4, an all-electric compact SUV. While they will continue to manufacture the additional models, Volkswagen is currently focusing its efforts on electric vehicles including the ID.4.

volkswagen chattanooga

Photo Courtesy of Volkswagen Chattanooga

The demand for electric vehicles continues to increase nationally. According to Volkswagen Group of America’s President and CEO Pablo Di Si, Volkswagen plans to introduce “more than 30 new battery electric vehicle (BEV) models in the U.S. by 2030.” They hope to accomplish this through their localization strategy, which helps keep costs lower. “Volkswagen distinguishes itself through its commitment to electrification and localization. Localizing the supply chain for our all-electric ID.4 has made it eligible for the $7,500 federal EV tax credit – something other international automakers haven’t achieved,” says Di Si. “One major challenge all automakers are facing is making EVs more affordable. By localizing our supply chain and meeting the qualifications for tax credits, we’ve made the ID.4 one of the more affordable EVs on the market. Our localization strategy, from working with suppliers to assembling vehicles, presents opportunities for us to further invest in our Chattanooga workforce, create new jobs, and help stimulate our regional economy.” 

Since opening in 2011, Volkswagen has consistently increased production and added jobs to their operations, attracting local jobseekers in a variety of ways. “By offering some of the best jobs in Chatta-nooga that pay well and come with attractive benefits, we’ve been able to meet our staffing needs. We strive to be an employer of choice to attract the talent we need. We have an incredible workforce who take pride in producing safe, innovative vehicles that American families love,” shares Di Si. 

volkswagen chattanooga

Photo Courtesy of Volkswagen Chattanooga

After considering hundreds of different locations, Volkswagen chose Chattanooga for a variety of reasons. “Volkswagen looked at more than 300 sites, and Chattanooga quickly became the top choice, providing a construction-ready site and a workforce to power it,” Di Si says. “Chattanooga and Tennessee have a skilled workforce, and local and state leaders who see potential for economic growth.”

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illustration of cars driving on road

Milestones in Chattanooga’s Auto Manufacturing History

  • 1912 – Henry Nyberg opens Chattanooga’s first automotive plant, Nyberg Auto Works.
  • 1953 – Mitchell Industrial Tire Company begins operations in Chattanooga.
  • 1956 – Congress passes the Federal-Aid Highway Act
  • 1950s – Construction begins on I-40.
  • 1968 – I-24 is completed, allowing for travel on Monteagle Mountain.
  • 1995 – Shiroki builds large auto plant in Dalton, Georgia.
  • 2008 – Volkswagen announces plan to build Chattanooga Assembly Plant.
  • 2015 – Manufacturers Yanfeng and Gestamp announce expansions into Chattanooga.
  • 2017 – Volkswagen and the State of Tennessee announce $1 million partnership to build Volkswagen e-Labs in local schools.
  • 2020 – Tennessee Valley Authority (TVA) announces $5 million investment into continued carbon reduction efforts.
  • 2021 – NOVONIX opens Chattanooga Riverside facility to produce components for lithium-ion batteries.
  • 2022 – Volkswagen starts production of all-electric ID.4 model.
  • 2024 – Volkswagen’s Chattanooga plant featured in Super Bowl commercial.
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workers of volkswagen chattanooga

Volkswagen’s production and employee base continue to grow, with operations currently supported by 5,500 team members. | Photo Courtesy of Volkswagen Chattanooga

A Bright Future Filled With Possibility

Chattanooga Mayor Tim Kelly is among the local leaders who are highly supportive of Chattanooga’s auto manufacturing industry. Since taking office in 2021, he has been outspoken about the city’s opportunity to be a key player in the automotive industry. “Chattanooga’s central location has set us up to be a cornerstone of manufacturing and logistics – the heart of freight alley. Our city is within a day’s drive of half of our country’s population, putting us in a prime position as the hub of our region’s growing automotive sector,” Kelly says. “This is also just a great place to live. We have unmatched natural resources and outdoors spaces. We are building great parks, capitalizing on our green spaces, and using them to our advantage in setting Chattanooga up to be a global magnet for top-notch talent and industry. Chattanooga is a city of hard workers and forward thinkers. We have the opportunity to be the buckle of the battery belt and the supply chain that extends around the electric vehicle industry.”

Mayor Kelly also believes that the auto manufacturing industry is one of the keys to economic prosperity in Chattanooga, sharing, “It’s been said that every politician has a ‘theory of change.’ If so, mine is economic. And the great jobs that Volkswagen and the constellation of automotive suppliers around the industry are bringing to Chattanooga are going to be the primary engine for creating a happier, healthier, and wealthier city, so I am deeply grateful for their presence here and their confidence in us.”

Looking to the future, it’s likely that Chattanooga will continue to be an attractive option for potential auto manufacturing companies. But Mayor Kelly is hopeful for an even more expansive future with a wider variety of jobs related to auto manufacturing. “At some point, I would like to see us go beyond vehicle assembly to not only build vehicles here, but expand our reach into the upper ranks of the industry and attract the higher-wage jobs in design, research, engineering, and management,” he says. “We need to close the gap with larger metros and attract more high-wage, white collar jobs here, and the auto industry is a logical sector in which to make that happen.”

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