The United States' Environmental Protection Agency (EPA) has reportedly floated a proposal for Volkswagen to build electric vehicles in the US as part of its settlement for the dieselgate emissions cheating scandal.
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The two parties are currently in discussions regarding fixes for the roughly half-a-million Volkswagen and Audi cars in the States equipped with the affected EA189 2.0-litre turbo-diesel engine.

These vehicles feature a cheat device, which significantly restricts the output of oxides of nitrogen (NOx) whenever laboratory emissions testing conditions are detected. During normal driving, NOx emissions are up to 40 times above the legally allowed limit.


Above: Volkswagen Budd-e concept.

According to Welt am Sonntag (World on Sunday), Volkswagen and the EPA are also allegedly discussing the fines that may be levied against the automaker.

The German newspaper says that the EPA has proposed a solution that involves Volkswagen producing electrified vehicles at its factory in Chattanooga, Tennessee.

In addition to this, the company would also be required to roll out a network of charging stations throughout the US. Neither party has responded on the record regarding these claims.

If this plan, or something similar, is agreed to by both parties, it's not clear which electrified model Volkswagen will produce in the US.

Volkswagen CrossBlue

Above: Volkswagen CrossBlue concept.

The Chattanooga facility currently produces the larger North America-specific Passat, and is scheduled to produce a new three-row crossover based on the CrossBlue concept.

Since news of the dieselgate affair broke, the company has placed a greater emphasis on electric vehicle development. At recent motor shows, Volkswagen has rolled out the Tiguan GTE plug-in hybrid concept and the Budd-e electric people mover.

At present, the company's two fully-electric models are the Volkswagen e-Golf and the e-Up, both of which are built in Germany.

Reports suggest that the Volkswagen board has approved a production version of the Budd-e, and is working on a number of other electric vehicles across its brand portfolio.

The company has already approved the Porsche Mission E for production.