Volkswagen is set to commence production of the new mid-size SUV in Chattanooga, Tennessee, with an investment of about $600m.
The company plans to invest around $900m in the production of seven-passenger SUV, a move which will create 2,000 jobs in the US.
The SUV will be integrated into existing plant structures and existing production areas will be used for the assembly of the midsize vehicle. A floor space of 50,000m2 will also be added to the existing facility.
Volkswagen Aktiengesellschaft board of management chairman Martin Winterkorn said: "The United States of America is and will remain one of the most important markets for Volkswagen."
"We are now launching the second phase of the Volkswagen campaign in the US," added Winterkorn.
"With the midsize SUV, the expansion of the Chattanooga plant and the new development center, the focus is on the wishes of the US customer."
The mid-size SUV is based on the CrossBlue concept, which made its global debut at the 2013 North American International Auto Show in Detroit.
Volkswagen plans to launch a new National Research & Development and Planning Center in Chattanooga for project coordination in the North American market.
The company also intends to invest over $7bn in the US and Mexico, as part of efforts to deliver 800,000 vehicles in the country by 2018.
