German automaker Volkswagen AG said it was expanding its Chattanooga factory in Tennessee to make electric vehicle cells and battery packs in the United States, alongside assembling electric vehicles.

The company said it plans to break ground for a laboratory in Chattanooga to develop and test cells and battery packs for its upcoming car models assembled in the U.S., with the goal of a fully operational lab by spring 2021.

"A lot of auto companies will farm out the development and testing of batteries to another company, and some will actually do the work of developing and testing in-house. We are doing the latter," said Wolfgang Maluche, vice president of engineering, Volkswagen of America.