"We hope that with the investment in Chattanooga we could make a contribution, step forward, to avoid tariffs between Europe and the U.S., and we will work further on it," Diess said at the sidelines of the Detroit Auto Show.

Diess also said the multi-brand carmaker was considering building a U.S. factory for its premium brand Audi.

The German automaker said it is adding 1,000 new jobs and that electric vehicle production in Tennessee will begin in 2022.

"We have been strongly encouraged to invest more which we will do" Diess said on Monday.

(Reporting by Jan Schwartz; Writing by Edward Taylor; Editing by Ludwig Burger)