It began with Nissan’s decision to bring a manufacturing plant to Tennessee in 1983.
Four decades later, Tennessee serves as the home of three major auto manufacturers – Nissan, GM and Volkswagen – with Ford on the way, and is the North American headquarters for Japan-based automotive giants Nissan, Mitsubishi and Bridgestone, all located in the Nashville area.
The Tennessee Department of Economic and Community Development lists more than 920 auto-related companies spread across 88 of the state’s 95 counties. They employ more than 136,000, placing Tennessee at the top of the list for auto industry employment in the Southeast.
The economic impact of the industry is equally staggering, with more than $26 billion in foreign investments and more than $3.1 billion in automotive exports in 2020. The state’s top export is transportation equipment, accounting for 12%.
In 2020, Tennessee accounted for 4% of all cars, light trucks and SUVs produced in the U.S.
TNECD commissioner Bob Rolfe says only agriculture and tourism contribute more to the state’s “tens of billions” gross domestic product.
“And then the No. 3 is advanced manufacturing, specifically, the automotive ecosystem,” Rolfe says. “That business really started about 40 years ago when Nissan came to Smyrna.
“They built their first U.S. plant, and then what happened is these companies – we call them original equipment manufacturers, OEMs – that’s Ford, GM, Volkswagen and Nissan, so those companies stand up these assembly plants, and then you have to have all the suppliers that provide an internal combustion engine.”
Jeff Wandell, manager of Nissan’s CUV and EV (crossover-utility and electric vehicle) communications, won’t say if or how Nissan plans to celebrate its 40th anniversary in Tennessee next year, but notes “Tennessee has a strong automotive industry and Nissan is happy to be a major part of that. We’re very proud to have had a manufacturing presence in Tennessee for the past 40 years with our Smyrna manufacturing facility.”
Here’s a deeper look at Tennessee’s flourishing automotive industry, from the high stakes recruiting of these companies to the shift from a gas-powered industry to an electric future and other issues.
The new Detroit?
While the vast number and variety of Southeastern auto manufacturers are in Tennessee, this is a regional phenomenon.
Alabama has Honda, Hyundai, Mazda, Toyota and Mercedes-Benz, while Corvette calls the Bluegrass State its old Kentucky home. Kia is in Georgia, while Nissan and Toyota touched down in Mississippi. South Carolina boasts BMW and Volvo, while Texas has Tesla.
But Tennessee is the hub of this wheel of fortunes, earning the top ranking in automotive manufacturing strength from Business Facilities magazine for five of the last 10 years.
So it begs the question: Is Tennessee the new Detroit?
“It’s kind of funny because every time there’s a new hub of automaking, everyone always says that it’s the whatever of Detroit,” laughs Alisa Priddle, Motor Trend magazine’s Detroit editor. “I’ve even seen in Thailand, the Asia of Detroit. Everybody wants to be Detroit.”
“I don’t think anyone is ready to say that Tennessee is necessarily the new Detroit but, certainly, there’s been a very continual movement of automaking to the southern states. Alabama obviously has a number … Tennessee … Georgia … there’s a lot of states that are really emerging as automaking hubs.”
“I think that the industry is expanding all over the place right now. The South is definitely getting a big share of it, but I’m not sure that any one state is quite the new Detroit yet.”
Dave VanderWerp, the director of vehicle testing for Car and Driver magazine, agrees that Tennessee “definitely is becoming” an automotive hub.
“It certainly seems like it’s on the rise, especially recently with the big announcements from both GM with the battery factory there in conjunction with LG,” VanderWerp says.
“And then also obviously the massive Ford announcement very recently. Also, to make that a battery hub for them, which I think that they were touting at the time was the biggest single investment ever in automotive (history).”
The question of whether Tennessee is the next Detroit was also put to TNECD’s Rolfe.
“We get asked that all the time. Are we, from a Southeastern competitive perspective, certainly at the top of a lot of conversations? I think the state of Tennessee is,” he says.
When you talk about the electric vehicle, you know the transformation from the ICE (internal combustion engines) to the EV, I think Tennessee is in that conversation.”
But Rolfe notes it’s a different situation for bringing company headquarters and research and development projects to Tennessee.
“Will we ever recruit the HQ’s? Will we ever recruit these big R&D opportunities? I’m not sure because they all cluster in Detroit and around Detroit. And there’s a whole cluster out in the Silicon Valley. There’s a lot of that.”
Blue Oval City
Of all the “gets” in Tennessee’s 40-year-old automotive industry, none rank higher than the 2025 arrival of Ford’s West Tennessee megasite – Blue Oval City – located in Haywood County near Stanton, about 50 miles northeast of Memphis. Joining Ford on the $5.6 billion, 3,600-acre campus is battery maker SK innovation.
In making the announcement in September, Tennessee Gov. Bill Lee called it “a watershed moment for Tennesseans as we lead the future of the automotive industry and advanced manufacturing.
“West Tennessee is primed to deliver the workforce and quality of life needed to create the next great American success story with Ford Motor Company and SK Innovation,” Lee added.
The state’s incentive package totals more than $500 million for the project, which is expected to bring 5,800 jobs to West Tennessee. At the time, Ford announced the Memphis plant will produce the next generation of all-electric F-Series trucks.
But thanks to the growing demand for Ford’s F-150 Lightning EV, the Memphis megasite’s role is already growing, says Motor Trends’ Priddle, who broke the news last week in an interview with Ford CEO Jim Farley.
“The thing that I broke … was that there is yet another F series truck that we don’t know about that’ll be electrified. It will come out of that (Tennessee) plant,” she says. “They haven’t given us more details on that, but that plant is going to be the main supplier of the future F series – all electrified.”
Automotive recruiting 101
Exactly how did Tennessee become the Southeast’s top automotive state? Part of it the centralized location with a strong rail system across the state and access to major waterways. Another part is having plenty of available property across the state on which to build these sites.
Another major component is an aggressive recruiting pitch to bring in investors and companies.
“Our job at ECD is to recruit companies to Tennessee. And obviously we recruit to great companies. They will hire great employees and the taxpayers of Tennessee will win,” Rolfe explains.
“We spend our energy recruiting new companies to Tennessee and we spend the same amount of energy making sure that if a company already calls Tennessee home, that when it comes to an expansion opportunity, that Tennessee is at the very top of that conversation – a phase two or phase three project which we think are just as important as certainly phase one new recruiting.”
The department has both home and away “teams” to handle recruiting.
“We have a team spread across 12 different countries that recruit for our foreign direct investment projects. The (Nashville) team on the ground are typically split up by industry expertise,” Rolfe says, reeling off teams like the names of family members … automotive, headquarters relocation, bioservices, food and beverage.
“The process typically starts long after a company has decided just what they need – meaning it’s either a new product, it’s an expansion of existing product line,” he adds. “They have spec-ed out exactly what their costs are to build or stand up a new plant – spec-ing the size … what they need is far as utilities, access to rail, access to port, access to interstates, etc.
“They bring those specs, typically, to the state. Then our job is not to tell a company where to stand up their next investment. Our job is to provide all of the data.
“Think of us as a clearinghouse to provide all the data and then it’s up to the company to start that down selection process. And as part of that down selection process, we don’t traffic in sites. (With 95 counties) we try to be – and we are – very deliberate about making sure that we don’t encourage a company to go to one county versus another county.”
As far as overseas recruiting, Rolfe notes that, “before COVID, one out of three projects were foreign direct investment projects. So, think of international companies that are coming to the U.S. for years. A lot of international companies that are either selling in the U.S. or want to distribute and sell their product in the U.S. or North America.
“More recently, they’ve made the decision that they’re going to build the product here,” he adds. “And so, we are very intentional about recruiting. We take a lot of international trips. We have representation in 12 different countries. There are probably 32 different countries of origin that have a foreign direct investment in our state. That’s also very intentional about how we go about recruiting.”
How incentives work
Priddle says state incentives are just part of the business of doing business.
“It’s absolutely very, very competitive. There is no automaker anymore that’s ever going to put up a new plant without incentives. It’s become the price of admission anywhere that you do it,” she says. “It really is the price of entry to – at the very least – give free land and tax incentives to locate there. Tennessee knows that, just like everyone else.
“I think what’s going to start to differentiate where people go in the future … it’s not going to be incentives per se, it’s going to be availability of land – especially as all these automakers are now announcing battery plants as well. You need a ton of room and there are places that are filling up.”
It’s like a high-stakes poker game for states in many ways. And may the best hand win.
“Every project today is very competitive and we’re always being banked off against mostly other southeastern states,” Rolfe says. So, think of the contiguous states to our state.
“The General Assembly provides us an enormous budget that allows us to be competitive with our incentives.”
He explains that incentives vary from package to package based on a formula that considers the number of new jobs being created, the company’s capital expenditures, wages an employer will pay, and where the company intends to build. Incentives for “at-risk” counties are greater than building in Davidson County – but not as much as those “economically distressed” counties.
“Not everybody wants to come to Nashville,” Rolfe acknowledges, citing labor, the cost of living, traffic and certain skill sets as possible reasons.
“If you’re an advanced manufacturer, you’re not gonna move into downtown Nashville. You’re likely going to look at certain parts of our state that have certain skill sets that apply to what you’re trying to manufacture.”
Feeding the ‘Ecosystem’
Following Nissan’s footsteps, GM opened its Spring Hill plant in 1990 with the debut of the Saturn, which it manufactured there until 2007. After some rocky years of retooling, GM reopened the plant in 2015 and in 2020 announced a $2 billion project to build electric cars there, including the Cadillac Lyriq as well as the Ultium batteries.
Rolfe calls such projects the “ecosystem” of the state’s auto industry, how suppliers flock to be near the manufacturers. And that will only grow as the all-electric industry grows.
“There’s 30,000 individual parts that go into a car. So you’ve got all the suppliers that wrap around, typically, the OEM that they support. So that creates an enormous ecosystem. So a whole new set of suppliers who have come to Tennessee.”
“Nissan has transformed our product portfolio into one of freshest in the U.S. Our suppliers have made significant contributions to this effort and will continue to play a key role in our shared success,” Wandell adds.
Volkswagen America CEO Scott Keogh spoke recently on 60 Minutes about Chattanooga plant’s all-electric challenges: “We will get into the battery business. We will build more plants in America. Because it’s a core necessity.”
Then, just a few days ago, it was reported by elektrek.com that Chattanooga is in the mix for the company’s battery cell plant. The company makes the ID.4 EV in Chattanooga.
Volkswagen is flirting with the idea of opening a second US production facility, possibly in Chattanooga, where its current footprint is, a recent report out of Germany states. In addition to significantly expanding its capacity on US soil, Volkswagen also is reported to be considering implementing a battery cell plant nearby.
Gas stations
The EV future could have a negative effect on gas stations. Some larger companies like Tennessee-based Pilot will adapt by adding charging stations, but that likely won’t work for smaller, locally owned stations.
It’s a cause for concern, the need to adapt, says Bill Packard. owner of Packard’s Shell gas station and repair shop in Donelson.
“I think it’s the wave of the future. Everybody’s realizing that. But by the same token, I don’t think gasoline combustion engines are going away. We’ve still got a lot of useful life right now in the combustion engines that are there,” Packard says.
“They are built so much better than they were back in the day, so to speak. It’s not unusual to be driving a 20-year-old car now.”
Packard says adding a charging station would make sense – not for customers, but for employees who would work on EVs.
“I don’t know what the maintenance will be on them. Some of the drivetrain issues will be the same. Brakes are brakes. They’re not your father’s brakes now, but they’re still brakes. So the training is going to be very important,” Packard says.
“We rely on an in-and-out (business). People don’t come to our place to browse,” Packard explains with a chuckle. “(With) the charging station, the car is going to have to be stationary for however long. And if it’s stationary at a gas pump, it’s going to hinder customers from coming in to get gasoline.”