VW to build e-Golf in its Dresden 'Transparent Factory'
Volkswagen will convert its glass-walled Transparent Factory in Dresden to build the e-Golf, which will only be assembled in Germany and exported to the US and other markets. The factory has been used as an exhibition space since production of the luxury Phaeton sedan for Europe ceased in March. A Phaeton EV was announced last year, however, it is suggested that it is unlikely to arrive before 2020, due to the resources required and in view of VW's now limited R&D budget.

When it launched its Phaeton luxury sedan back in 2002, Volkswagen decided that its most opulent car ever should have an equally opulent assembly plant.

So it built the "Transparent Factory," a glass-walled plant in Dresden, Germany, that was intended solely to handle Phaeton production.

The Phaeton was a vanity project of VW Group's then-chairman, Ferdinand Piech, meant to compete against traditional luxury flagships like the Mercedes-Benz S-Class and BMW 7 Series.

DON'T MISS: 2017 Volkswagen e-Golf: 124 miles of range, more motor power, LA Auto Show debut

It was pulled from the U.S. after the 2006 model year due to minimal sales, and production for the European market finally ended early this year.

But the Transparent Factory will not remain idle: VW has announced it will be converted to build the e-Golf electric car, providing a very public display of the company's growing interest in electric vehicles.

While all other Golf models sold in North America are now built at a plant in Mexico, the e-Golf is assembled only in Germany and exported to the U.S. and other markets.

Volkswagen Phaeton production at the Transparent Factory in Dresden, Germany

Since Phaeton production ended in March, the Transparent Factory has been used as an exhibit space, housing more than 40 displays showing off technologies related to electric cars and what Volkswagen calls "digitalization."

VW said it would invest 20 million euros (about $21 million) in the Transparent Factory to prepare it for e-Golf production, which is set to begin in April 2017.

The company will also continue building the e-Golf alongside other Golf models at its main assembly plant in Wolfsburg, Germany.

ALSO SEE: Electric cars will require 10,000-plus job cuts at VW, says HR chief

An updated 2017 Volkswagen e-Golf was unveiled last week at the 2016 Los Angeles Auto Show.

Along with the many updates made to other models in the 2017 Golf lineup, it has a 50-percent boost in battery capacity and a more powerful electric motor.

Battery capacity increases from 24.2 kilowatt-hours to 35.8 kwh, boosting its range rating from 83 miles to what VW expects to be 124 miles.

2017 Volkswagen e-Golf

Output increases to 100 kw (134 hp) and 214 pound-feet of torque, compared to 86 kilowatts (115 horsepower) and 199 lb-ft for the 2016 model.

Meanwhile, the Phaeton may also make a return by the end of the decade—with an all-electric powertrain.

Volkswagen announced the electric Phaeton late last year, shortly after it was revealed the company used illegal "defeat device" software to cheat on U.S. emissions tests.

MORE: Electric VW Phaeton Delayed To 2020, May Use Audi e-Tron Quattro Powertrain

However, the new luxury sedan likely won't arrive before 2020, as its development will require a significant amount of VW's now-limited R&D resources.

With VW planning a workforce reduction over coming years, due to the many fewer components required for electric cars, some observers view plans for the next generation of the Phaeton as vulnerable to cost-cutting.

At least the humbler e-Golf will put its Transparent Factory to good use in the interim.

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