Last week, Volkswagen of America announced it would build it's first US factory since it's Pennsylvania factory closed in 1984 in Chattanooga Tennessee. The new plant will build a new mid-sized replacement for the Passat. What CEO Stefan Jacoby didn't announce was where powertrains will come from. The new car will be available with gasoline, diesel and hybrid power-plants. The power-train is one of the most expensive components in the vehicle so getting the most out of building cars in the dollar zone means building them here as well. The gasoline engines will likely be sourced from the Puebla Mexico factory that also supplies the assembly plant there. The Mexican factory doesn't currently produce transmissions. VW is apparently waiting on Audi's decision on a US factory before finalizing plans for new engine and transmission plants. Audi and VW share powertrains, so the two brands will likely want to build in a location convenient to both assembly plants. If VW does decide to build hybrid transmissions in North America they may even end up exporting some of those back to Europe as well.
[Source: Automotive News - sub. req'd