Volkswagen selected its Chattanooga manufacturing plant for the company's first electric vehicle facility in North America, state officials announced Monday.

The $800 million project by the German automaker is expected to generate 1,000 additional jobs. Volkswagen expects to roll out its first Volkswagen electric vehicle from the Chattanooga facility in 2022.

“The shift toward electric vehicles is a trend that can be seen worldwide, and Volkswagen’s decision to locate its first North American EV manufacturing facility in Chattanooga underscores Tennessee’s manufacturing strength and highly-skilled workforce,” Gov. Bill Haslam said.

The Volkswagen announcement comes as Tennessee's auto sector defies international trends and gains employment. General Motors announced Sunday it will produce a third vehicle, the Cadillac XT6, in Spring Hill, adding hundreds of jobs to the Middle Tennessee plant amid a restructuring that cuts 15 percent of its workforce. Ford recently announced a reorganization expected to cut thousands of jobs in Europe.

VW expects to sell 1M electric vehicles by 2020

Volkswagen expects to sell 150,000 electric vehicles by 2020 and 1 million by 2025. In addition to Chattanooga, the company is also building an electric vehicle facility in Zwickau, Germany, and is adding electric vehicle production to two plants in China and to two other facilities in Germany.

“Today’s announcement is a tremendous win for Tennessee as it shows that our state continues to be a prime location for foreign direct investment,” said Department of Economic and Community Development Commissioner Bob Rolfe.

Volkswagen employs 3,500 people in Tennessee and at year end will have invested $2.3 billion in the facility. The Chattanooga plant produces the midsize Atlas SUV and Passat sedan and will begin building the Atlas Cross Sport, a five seat version of the model, this year.

“The U.S. is one of the most important locations for us, and producing electric cars in Chattanooga is a key part of our growth strategy in North America,” said Volkswagen AG CEO Herbert Diess. "Together with our ongoing investments and this increase in local production, we are strengthening the foundation for sustainable growth of the Volkswagen brand in the U.S."

Diess told reporters Thursday that he has a great relationship with the people and the elected officials of Chattanooga, Still, he noted, “It’s not so easy to attract labor there. The labor market is a constraint.”

Financial incentives not yet revealed

State officials said they could not yet provide information on financial incentives for the electric vehicle production and that they are still completing negotiations. The agreement will be made public once the project is contracted. The plant has received more than $800 million in federal, state and local incentives in the past decade, according to the Chattanooga Times Free Press.

Global sales of new electric vehicles passed 1 million in 2017, and that figure could nearly quadruple by 2020, according to a 2018 McKinsey & Co. report. China has been a leader in electric vehicle sales, with a larger market than the U.S. and Europe combined. New models are expected to be introduced amid tougher emission regulations and an emphasis on rolling back gas- and diesel-powered cars in areas including China, Norway, California, France and the United Kingdom.

Volkswagen Group of America's CEO Scott Keogh will lead the Volkswagen electric vehicle management team, Diess said.

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Phoebe Wall Howard of the Detroit Free Press contributed.

Reach Jamie McGee at 615-259-8071 and on Twitter @JamieMcGee_.